Geneva (dpa) - International trade disputes over tariffs and subsidies have led to the establishment of the World Trade Organization (WTO) with a recognized dispute resolution mechanism.
This process is now threatened with a standstill: the US has been blocking the appointment of new appellate judges for years. Their number had already shrunk from seven to three. On 10 December, the mandate of two other judges ends.
This eliminates a central element of dispute resolution. "The WTO threatens the biggest crisis since its founding in 1995," wrote the Foundation Science and Politics in an analysis, the dpa was present. The problem could eventually "lead to the dissolution of the existing world trade system".
Unfortunately, there is no agreement to extend mandates, reported New Zealand ambassador David Walker, an intermediary, on Tuesday in Geneva. Only the disputes, at which the hearings already took place, are still to be completed.
The dispute settlement procedure is considered to be the biggest achievement of the WTO. All 164 members bow to the decisions. In one of the most protracted cases by all instances, the EU was defeated in the dispute over illegal Airbus subsidies and has therefore suffered billions of US punitive tariffs since October. Around two-thirds of all cases involve WTO members calling the Appellate Body.
The US has blocked the appointment of new judges for years. Even the predecessor of US President Donald Trump, Barack Obama, had already made serious reservations about the actions of the judges. Among other things, the USA complains that the appeal judges exceeded their competences. Not only did they legally review judgments originally obtained by arbitrators, but they also created new law through their own interpretation of WTO rules. Moreover, the practice of leaving judges in office beyond their mandate if cases they are looking after has not been completed violates WTO rules.
The US has called for reforms but has not put forward concrete proposals. The United States regretted on Tuesday that there was no consensus on how to proceed. "This is disappointing considering the great efforts that the US has made to explain its concerns that the Appellate Body is constantly violating WTO rules," said US Ambassador Dennis Shea.
More than 100 countries have spoken out in favor of negotiating reforms, but the US has called for it not to paralyze the appellate body in return. The US rejected that. The EU regretted the US blockade. "In our view, this undermines the stability of the dispute settlement process," said the EU representative.
Trump wants to solve trade disputes single-handedly, including massive tariffs against China, the EU and other countries. On the other hand, those concerned have filed lawsuits in the WTO. Without a functioning appointment committee these procedures can not be completed.
The WTO members could agree on a continuation of the previous practice without the US, says the Foundation Science and Politics in their analysis. But the consensus needed in the WTO would be broken. The US government has threatened to reduce its financial contributions, and Trump, in other contexts, has already spoken about leaving the WTO altogether. The EU may need to settle dispute settlement bilaterally or through its regional trade agreements in trade disputes, the Foundation said.