WTO not dead yet: alternative appeals body set up, but fundamental change needed
December 18, 2019: For the past two years the US Trump administration has imposed unilateral tariffs outside of the rules of the 164-member World Trade Organisation. The WTO, although it has many flaws, is the only multilaterally-agreed rules-based trading system. WTO rules are enforceable through government-to-government disputes, heard by disputes panels whose initial decisions can be appealed to ensure they conform with WTO rules.
The US has also blocked appointments to the WTO disputes appeals a body, resulting in a shortage of appeals body members. This means that, while existing cases will continue to be heard, as of last week the appeals body is prevented from hearing future appeals.
The US stated reasons for its actions are that it wants changes to the WTO appeals process to address flaws, including lengthy and complex processes and allegations that appeals bodies have over-reached the boundaries of WTO rules. However, the US has not responded to proposals for change that would address these issues, showing that its objections are to the enforceable rules-based trade system itself, a conclusion reinforced by its unilateral tariff wars.
But despite claims of its demise, the WTO is not dead yet. The EU and Canada have initiated a temporary voluntary appeals system allowable under WTO rules. This will enable WTO member governments that join it to continue to lodge government-to-government disputes under WTO rules and to have access to an appeals body if there are grounds for appeals. But this is a temporary fix that does not address longer term issues.
AFTINET has criticised the power dynamics in the WTO which is dominated by the largest players and neoliberal economic principles. But we support the concept of a multilateral rules-based system that includes all governments, as it potentially gives more voice to the needs of poorer and smaller countries, and can have rules which recognise the needs of developing countries. This is preferable to bilateral trade wars based on might-is-right principles.
The WTO needs fundamental change to a fairer multilateral system that would give developing countries more negotiating power and be based on commitments to human rights, labour rights and environmental sustainability. Nearly all governments agreed to these principles through the Sustainable Development Goals (SDGs) in 2015, but they have not been integrated into WTO goals or practice. A blueprint for achieving these goals can be found in "A New Multilateralism for Shared Prosperity: Geneva Principles for a Green New Deal" published by the UN Conference on Trade and Development (UNCTAD).