WTO faces crisis as appellate body deadline looms

Industry News | | MIC Customs Solutions |

The situation is not looking good for the WTO as the US continues to shut it down.

The World Trade Organization (WTO) is facing what is being described as the 'biggest crisis in its history' as the deadline approaches for new judges to be appointed to its appellate body.

At midnight on Tuesday (December 10th 2019), two of the remaining three judges will reach the end of their terms and will have to step down. With a minimum of three required for it to function, the Geneva-based body will no longer be able to settle disputes between its member states.

It is feared this inability to police global trade will lead to a backlog of unresolved disputes and tempt some countries to break WTO regulations without facing penalties.

Some have even suggested there could be a free-for-all in tit-for-tat tariff wars and potentially even the end of the 24-year-old WTO itself.

The US has recently been blocking the appointment of new judges on the seven-member panel in protest against what it sees as unfair treatment by the WTO.

It claims the US is being prevented from protecting its workers and that little is being done to halt unfair trade practices in China.

Indeed, the Trump administration insists China should no longer have its special status within the WTO for developing countries, since it is now the world's second-largest economy.

Although other WTO member nations have repeatedly tried to initiate a new appellate body selection procedure - most recently in November - the US said no. It also rejected the extension of the terms of the retiring judges so ongoing appeals could be heard.

Hopes are also fading that president Donald Trump will agree to a proposed blueprint from Geneva that would keep the body operating beyond December 10th.

As a stopgap measure, attempts will be made to settle disputes by arbitration.

Meanwhile, in a last-ditch attempt at resolution, New Zealand's trade ambassador to the WTO David Walker is to put forward a deal that would include reforms to the WTO at a meeting of the general council this week.

The WTO was founded by the US and Europe as a way of opening up global markets, promoting peace through orderly dispute resolution and regulating commerce.