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Editorial: WTO Appellate Body needs quick fix to restore role in free trade

  • January 9, 2020
  • , The Asahi Shimbun , 12:30 p.m.
  • English Press

Nearly one month has passed since the World Trade Organization’s dispute settlement mechanism ground to a halt, depriving the world economy of a key system to ensure fair trade.


The WTO’s Appellate Body, which has the final say on trade disputes between countries, has stopped functioning because the United States has blocked the appointment of new members, or judges, to replace retiring ones, leaving the seven-member body with only one.


The body cannot take on new cases and issue rulings unless it has at least three sitting members. The process of examining 10 pending cases has also stopped, creating the first full-blown crisis for the global trade governing body since its foundation in 1995.


The Appellate Body is the higher court of the WTO’s two-instance dispute settlement system, which means it is the de facto supreme court of world trade. The Appellate Body hears appeals from reports issued by dispute settlement panels, the lower court, and hands down rulings on cases according to the WTO rules.


If the Appellate Body remains dysfunctional for long, many countries could, for instance, get away with unilaterally slapping high tariffs on imports in violation of the WTO rules.


The consequences of a wave of such protectionist moves could upset the global free trade regime the international community has spent decades building since the end of World War II.

This dire situation should be blamed on selfish behavior by the United States.


Washington has long accused the Appellate Body of making decisions that overstep the boundaries of its mandate. It has disapproved of the appointment of new judges to replace those whose terms have expired.


It has even rejected proposals made by other countries to reform the body in line with the desires of the United States.


Since the WTO acts on the principle of unanimous agreements among its member nations, one country’s opposition effectively kills any plan.


The United States should pay serious attention to the reform blueprints proposed by its trading partners and, if none satisfies it, offer an alternative all can accept.


To be certain, there are serious flaws with the WTO’s system to settle trade disputes, including the lack of the Appellate Body’s power to send a case back to the lower court.


Last spring, for instance, the Appellate Body issued a report that effectively approves South Korea’s ban on imports of fisheries products from areas affected by the Fukushima nuclear disaster. While quashing a panel’s decision to urge South Korea to stop the import ban, the Appellate Body did not say whether the country’s measure is consistent with the WTO’s rules.

Despite such drawbacks, however, there is no denying that the WTO’s dispute settlement mechanism has played an important role in protecting free trade as countries have used it and obeyed its rulings.


There have been some 600 cases that have been brought to the WTO for settlements.


There is also a system to monitor whether countries have taken steps in line with the WTO’s rulings and a program to deal with cases of noncompliance or inadequate compliance.


It is by no means easy to persuade the U.S. administration of President Donald Trump, who has pledged an “America First” approach, to support the WTO’s role as the global trade watchdog.


During last year’s Group of 20 summit, which was chaired by Japan, however, the 20 major nations including the United States agreed on the need to take actions for the WTO’s dispute-settlement mechanism.


Tokyo should work with other major trade powers including Europe to make active contributions to reviving and improving the system.


The collapse of the Doha Round of multinational trade talks under the WTO’s auspices has crippled the organization’s ability to create trade rules. The dispute-settlement mechanism, the other vital pillar for free trade, should not be left in tatters for long.

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