How the WTO deals with problem trade measures—it’s not just dispute settlement

By Peter Ungphakorn
POSTED DECEMBER 11, 2019 | UPDATED JULY 9, 2023

A very short summary and graphic:
Dispute settlement is not essential (but it helps)

The public discussion of the Appellate Body crisis in the World Trade Organization (WTO) has revealed some fundamental misunderstandings about how governments’ actions on trade are handled in the organisation.

This is important. The WTO is now a quarter of a century old. Its real achievements are hardly noticed. They never hit the headlines.

Instead, the impression we get is that it’s all about the dispute settlement crisis (and previously the struggle to conclude negotiations).

The Appellate Body has been unable to function since December 11, 2019. This has crippled WTO dispute settlement, we’re told, ultimately jeopardising a trading system that’s supposed to be based on rules — rules that can no longer be “enforced” as a result of the crisis.

We’re going to be left with the law of the jungle instead of the rule of law. Just watch and wait. It could be the end of the WTO, we’re told.

We might have to wait an awfully long time, because keeping international trade within agreed rules relies on much more than dispute settlement. In fact a key purpose of the WTO is to keep formal disputes to a minimum, and it does a pretty good job at that.

A bit of bother down at the WTO court — Why? And is it a killer? Long read

This looks at the WTO Appellate Body crisis in some depth.
A simpler version is here
.
See also:
How the WTO deals with problem trade measures—it’s not just dispute settlement and The WTO is surprisingly busy — considering it’s supposed to be dead

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Skip the updates

UPDATES

July 28, 2023 — By now, 130 WTO members (80% of the membership) were calling for Appellate Body judges to be appointed, but in the July 28, 2023 meeting the US refused for the 67th time to join consensus (see agenda). Go to the May 17, 2023 paper; WTO documents search for all versions (including possible newer ones with additional sponsors).

January 26, 2022 — Brazil moved to authorise (under Brazilian law) unilateral action against countries that lose in a panel ruling and appeal “into the void” to leave a dispute inconclusive.

Legal opinion seems to be that this could violate WTO rules, but so long as the Appellate Body was unable to function, Brazil could also appeal “into the void” any legal challenge in the WTO. “In the absence of the Appellate Body, this does not seem totally bonkers,” tweeted law professor Geert Van Calster

News of the move came from Tatiana Palermo, President of Palermo Strategic Consulting and a former Brazilian vice-minister and negotiator, who tweeted:

“Brazil’s President Bolsonaro has signed an executive order allowing #Brazil to retaliate unilaterally ([including] suspending IPR [intellectual property rights] obligations) in cases where the losing party appealed the #WTO panel ruling into the void & continues with unfair trade practices.”

The executive order is here, in Portuguese.

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October 26, 2021 — María Pagán, the Biden administration’s nominee ambassador to the WTO, told a US Senate Finance Committee hearing on her nomination that the US does want to “restore the Appellate Body”, a point that had never been clarified since the Trump administration blocked the appointment of appeals judges:

“I think there’s consensus that the WTO, and particularly the Appellate Body, need to be reformed. I guess on the other hand, we all have different views of what reform means, and particularly with respect to the Appellate Body. What we want, and if confirmed what I will work hard to do, is to have conversations so that we can restore the Appellate Body and the dispute settlement system to what we thought we had agreed to.”

To underscore that this is an official position, Henry Hodge, spokesperson of the Office of the US Trade Representative, tweeted Bloomberg’s story on the statement with the headline “Biden’s nominee to WTO wants to restore Appellate-Body function.”

Pagán’s remark came on the day the US blocked the appointment of appeals judges for the 47th time at a WTO meeting in Geneva. It was the first sign of any new thinking in Washington. But it was too late for anything to happen in time for the November 30 to December 3 Ministerial Conference.

Trade lawyer Simon Lester said the remark is “positive” but that restoring the system “to what we thought we had agreed to” may prove to be “tricky”, a point Pagán herself acknowledged.

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By Peter Ungphakorn
POSTED AUGUST 21, 2019 | UPDATED AUGUST 12, 2023

A casual glance at the headlines might have misled us into thinking the World Trade Organization (WTO) would grind to a halt at the end 2019, that the blame lay entirely with US President Donald Trump, and that the WTO’s demise would bring anarchy to world trade.

Only the last of those three assertions is possibly correct; and only if the WTO really does die — which it certainly won’t, not in the near future.

This is an attempt at an explanation. It shows that even WTO dispute settlement could well survive, but in a less powerful form. Other important work in the WTO will continue, and therefore so will the WTO itself.

But be warned: simple explanations of complex issues cannot tell the whole story. And even this attempt is not that simple. Sorry.

By Christmas 2019 the WTO was supposed to be dead — why wasn’t it? A short explanation

By Peter Ungphakorn
POSTED AUGUST 21, 2019 | UPDATED AUGUST 12, 2023

This short explanation skims the surface of some pretty complicated issues. If you want more detail, with more links and references,
then try this longer version
.
See also:
How the WTO deals with problem trade measures—it’s not just dispute settlement and The WTO is surprisingly busy — considering it’s supposed to be dead

Updates:
Brazil moves to act unilaterally, and the Biden administration signals for the first time it is willing to discuss restoring the Appellate Body

By mid 2023, 130 WTO members (80% of the membership) were calling for Appellate Body judges to be appointed, but by July 28, 2023 the US had refused 67 times to join consensus (see agenda).
The May 17, 2023 paper; WTO documents search for all versions

The doom-mongers had already written off the WTO. From December no new appeals in WTO disputes would be possible and the whole organisation would grind to a halt, they claimed. They were wrong.

The problem is with the appeals stage of WTO legal disputes. Some countries are finding ways to work around that. WTO disputes cannot be the same without a properly functioning Appellate Body, but they can continue even if the system is weaker.

As for the rest of the WTO’s work, it does not rely on dispute settlement. True, member countries participate in those functions more confidently if they know the disputes system is working well, but it will still take years before they lose confidence so badly that they give up on the WTO altogether.