SINGAPORE: Singapore is working with other countries to explore viable interim solutions that “preserve or replicate” the functions of the now-halted appeals court at the World Trade Organisation (WTO), said the Ministry of Trade and Industry (MTI) on Friday (Dec 13).
The Appellate Body – the WTO’s highest dispute-resolution body – ceased to function earlier this week after losing the minimum number of judges required to hear appeals due to a blocking strategy by the United States. This comes amid a protracted trade war between the US and China.
The WTO’s appellate function is “crucial” in ensuring the robust enforcement of multilateral trade rules, a spokesperson said in response to CNA’s queries.
But the current impasse “does not mean the end of the WTO and its dispute settlement system”.
“Trade disputes at the WTO will continue to be adjudicated by the Panels, the first stage of dispute settlement,” the emailed response added.
“While the Appellate Body is non-functional until the WTO members can arrive at a consensus in appointing new judges, Singapore and other members are exploring possible interim arrangements.”
These include tapping on “appeal arbitration” arrangements if trade disputes escalate to the appeals stage, according to the ministry spokesperson.
WHAT HAPPENED AND WHY
Resolving a trade dispute at the Geneva-based WTO is a two-tier process.
According to the WTO’s website, a panel is formed to hear the dispute only after consultations between the parties have failed. The panel will issue its recommendations. If that is appealed, the dispute will be referred to the Appellate Body.
The body, seen as the ultimate arbiter of trade disputes, requires a minimum of three judges to make a decision.
However, the terms of two of the three remaining judges expired on Dec 10 without replacements.
This as the Trump administration refused to consider new nominees to the judges’ panel for the past two years, with US officials having long criticised the Appellate Body for going “beyond its mandate”.
Much of the US displeasure stems from how the WTO has tied its hands in dealing with China. In binding rulings, WTO judges have given Beijing the benefit of the doubt on subsidies and rejected Washington’s treatment of dumping.
Reuters on Dec 10 reported WTO director-general Roberto Azevedo as saying: “We cannot abandon what must be our priority, namely finding a permanent solution for the Appellate Body.”
In a separate interview with the BBC, he said “significant changes in the dispute settlement mechanism” will be needed and that "intensive consultations" will start immediately, though it might take “a few months” to fix the top dispute body.
The shutdown has been met with dismay by several WTO members.
The Dec 10 Reuters report cited China’s trade ambassador Zhang Xiangchen as saying the shutdown is “the most severe blow to the multilateral trading system since its establishment”, while the European Union’s (EU) ambassador Joao Aguiar Machado put the blame squarely on Washington.
Mr Machado added that the EU would continue supporting efforts to unblock new judge appointments, while preparing its own contingency measures.
The EU has already reached agreements with Canada and Norway to subject any appeals to ad hoc adjudication by former Appellate Body members, according to Reuters.
Asked if this could be a possible interim solution and if Singapore is working with other WTO members on both short- and long-term arrangments, MTI said: “Singapore will continue working with like-minded members, including but not limited to the European Union, to discuss meaningful solutions on WTO issues, including viable interim solutions that preserve or replicate the appellate function of the WTO.”