EU in WTO bid to appease Trump and ease tensions
Commission drafts plan to save under-fire World Trade Organisation, writes Bryce Baschuk
THE European Commission has proposed ways to resolve the Trump administration’s concerns over the functioning of the World Trade Organisation, in a bid to avert a looming crisis that could undermine the WTO’s ability to arbitrate trade disputes.
“The dispute settlement function of the WTO is at grave danger, and swift action by members is needed to preserve it,” according to an internal memo drafted by the EU’s executive arm and seen by Bloomberg.
The memo, dated July 5, has been circulated to the EU’s 28 national governments and is subject to consultations and approval.
The commission offered several ways to fix the WTO dispute system, including a proposal to increase the number of appellate body members from seven to nine, and respond to US concerns it has overstepped its mandate.
The US is blocking nominees to the appeals body, which has the final say in upholding, modifying or reversing WTO rulings that often affect some of the world’s biggest companies and billions of dollars in commerce.
The commission’s proposal seeks to address a half-dozen US complaints about the way the panel works that the Trump administration cited in its 2018 trade policy agenda report.
The main concern was the “activist approach of the appellate body on procedural issues, interpretative approach, and substantive interpretations,” according to the report.
The US has blocked nominees to the WTO’s appellate body since August 2017, and if it continues the body will be paralysed in late 2019 because it won’t have the three panellists required to sign off on rulings.
WTO director-general Roberto Azevedo has said the US move could eliminate the WTO’s role as a trade-dispute forum and lead to a “domino effect” of trade retaliation.
The EC said the appellate body should seek to meet its statutory 90-day deadline to decide appeal cases, or ensure extensions. The US has repeatedly criticised the fact that the appellate body hasn’t completed a case within 90 days since May 2014. The commission said WTO members should agree to permit outgoing appellate body members to complete their analysis on any pending appeal cases that began during their term. The US has repeatedly criticised that former panel members stay in service after their term expires.
Both the Trump and Obama administrations have criticised the appeals body for making unnecessary findings or issuing advisory opinions that exceed the mandate of WTO rules. The commission said rules should be clarified to ensure appellate body members do not seek to interpret the meaning of national regulations — another US complaint. It called for upholding a WTO rule that prohibits a single-country veto. That’s a rebuff to the Trump administration, which has signalled it wants to revert to the procedure that allows any WTO country to reject dispute rulings.