Diplomats search for ways to save trade system

GENEVA: Diplomats are searching for ways to prevent the global trade dispute resolution system from freezing up, after the Trump administration blocked appointments to the body that acts as the supreme court for global trade. US President Donald Trump has vetoed the appointment of judges to fill vacancies on the seven-member Apellate Body of the World Trade Organization, which provides final decisions in arguments between countries over trade.

“Members are already having a conversation about what to do with this situation,” WTO Director General Roberto Azevedo told reporters. “They are floating ideas, they are discussing. We have to see how that evolves.” The WTO normally has seven judges and needs three to sign off on every appeal ruling. But two have left and another goes in December, leaving only four - just one above the minimum - to deal with a growing backlog of trade disputes.

Azevedo said he did not think the situation was a threat to the WTO’s survival but it was already having an impact, and the longer it went on the more acutely it would be felt.

In a confidential note sent to all WTO members on Monday, a copy of which was reviewed by Reuters, the Appellate Body said departing judges would continue working after they left on appeals filed before their terms ended. The United States has objected to that practice in the past.

Appointments to the Appellate Body are meant to be unanimously agreed by all 164 members, like all decisions at the WTO. The fine print says the WTO can switch to majority voting if necessary, but diplomats are reluctant to do that for fear of unravelling a system that relies on consensus as a bulwark to protectionism. Azevedo said the Trump administration had made clear it had misgivings about the way the world trade system has functioned, although it had not linked any specific demands for reform with the decision to halt appointments to the appeals panel.

The Trump administration has not publicly explained why it is blocking the appointment of judges to the trade panel. The US mission to the WTO in Geneva declined to comment.

Emergency

Several trade experts said the move seemed to fit Trump’s ideology of favoring bilateral trade deals over the multilateral system embodied by the WTO. Pieter Jan Kuijper, professor of law at the University of Amsterdam, said Trump’s trade representative, Robert Lighthizer, preferred the pre-WTO practice of negotiating the outcome of trade disputes rather than being bound by WTO rulings. —Reuters