The United States once again blocked a proposal supported by 130 members of the World Trade Organization (WTO) to restart the selection process for filling vacancies on the WTO’s Appellate Body. This action signals a potential escalation in disputes within the top trade body, potentially exacerbating global trade protectionism.
The Appellate Body serves as the highest authority for resolving trade disputes.
This marks the 73rd time that a proposal put forth by Guatemala, representing 130 members, has failed to initiate the selection process. Since 2017, the US has hindered the appointment of new judges to the WTO’s seven-member appellate court, citing concerns over judicial activism at the WTO and the preservation of US sovereignty. The absence of a functional Appellate Body is troubling amid slowing global trade and increasing geopolitical tensions. Furthermore, developed nations are adopting inward-focused policies, including environmental trade measures such as carbon taxes, which could adversely affect India’s trade prospects. India’s goods exports experienced a downturn for much of 2023, largely due to weakening global demand. “Guatemala expressed regret on behalf of the 130 members that, for the 73rd time, members have been unable to initiate the selection processes. Guatemala emphasized that ongoing discussions on reforming the dispute settlement system should not impede the full operation of the Appellate Body,” stated a WTO press release issued late on Friday.
This development precedes the 13th ministerial conference (MC) of the WTO in Abu Dhabi on February 26-29, where India is expected to advocate for a resolution to the issue. The US reiterated its opposition to the proposed decision to commence the appointment of Appellate Body members, citing longstanding concerns with WTO dispute settlement. “While some members may prefer the status quo, the previous system did not meet the needs of the US or many other members. As members engage in reform efforts, they must recognize that restarting the Appellate Body selection process will not address these concerns. Calls for the Appellate Body’s restoration undermine collective reform efforts,” the US stated.
“One member found it surprising that the US claimed the appeal mechanism was ineffective for many members, given the support from 130 members for the proposal to appoint new Appellate Body members,” the statement added. Seven members referenced the multi-party interim appeal arrangement (MPIA) as a means of preserving appeal rights in the absence of a functioning Appellate Body, according to the WTO.
The United States Trade Representative (USTR) previously emphasized that the proper functioning of the WTO Appellate Body disproportionately impacts the US, as more than one-quarter of all WTO disputes have challenged US laws or measures. The US has faced 155 disputes, while no other member has encountered even a hundred. The USTR noted that nearly 90 percent of disputes against the US have resulted in findings that US laws or measures were inconsistent with WTO agreements. “This means that, on average, the WTO has found US laws or measures to be WTO-inconsistent between five and six times per year over the past 25 years,” the USTR stated.