This is from Manfred Elsig, Mark Pollack and Gregory Shaffer:
The future of the world trading system is at stake thanks to an impasse in Geneva over the appointment of members of the Appellate Body (AB) of the World Trade Organization (WTO). The Trump administration has been waging a behind-the-scenes campaign against the WTO’s dispute settlement system. It is holding hostage the selection of new members to the AB, which functions as the WTO’s de facto court of appeals, unless unspecified U.S. demands are met.
This U.S.-made crisis threatens to undo the multilateral rules-based trading system that the U.S. created after the Cold War and replace it with a return to aggressive power politics unchecked by the rule of law. Here’s what you need to know.
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The Trump administration is pushing things much further
The Trump administration appears to want to intimidate and even paralyze the WTO Appellate Body. It suggests that it wants to change the rules over whether former AB members can continue to serve after their term expires on cases to which they were appointed during their term. The current European member Peter van den Bossche, for example, recently was selected (by random draw) to be on a new appeals panel pitting the U.S. (defending Boeing) against the European Union (defending Airbus) regarding aircraft subsidies. The U.S. says it intends to hold up any new appointments pending a satisfactory agreement on this question. The U.S. demands go against the explicit AB working procedures, which allow this kind of continuity. What particularly troubles the WTO membership is that the U.S. refuses to approve the launching of the selection process of new AB members until this issue is resolved, without the U.S. proposing what should be done.
The U.S. is in a strong position to shut down the AB, because the AB is already down from its allotted number of seven members to five, and will be down to four soon, and to three in less than a year. The Latin American seat has been vacant since July, and the E.U. seat will become vacant in December. Now, the South Korean member suddenly resigned his seat effective Aug. 1, to return home as South Korea’s new trade minister. This means there will be only four out of seven AB members in December — and potentially three when the African seat opens next September.
Unless new AB members are appointed, the Appellate Body will face severe delays. If the AB dips down to two members, it could not formally operate, since each case requires at least three sitting judges. But even a court with fourth or five judges will find it hard to manage its caseload, and face legitimacy problems, because decisions will be taken by only a few judges from a few countries with particular legal traditions (such as the U.S. and China). This could lead — in an extreme scenario — to the crumbling of the WTO dispute settlement system.
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The edifice of the rules-based international trading system has stood for decades, but international courts and the rule of law are fragile, and there is no guarantee that they will stand up to a sustained assault.
Their take on what happens when the AB gets down to two members is probably legally correct, but I have another take that is more fun. Here are the dates when the current AB Members' terms expire:
- Peter Van den Bossche - December 11, 2017
- Shree Baboo Chekitan Servansing - September 30, 2018
- Tom Graham - December 10, 2019
- Ujal Singh Bhatia - December 10, 2019
- Hong Zhao - November 30, 2020
So, if no progress on new appointments is made, as of the end of 2019, perhaps Hong Zhao of China will get to decide all appeals until her term ends.
