The United States sped up its challenge to the global trading system on Friday. The USA was seen telling the World Trade Organization trade disputes could be vetoed if they took longer than the allowed 90 days.
The statement by U.S. Ambassador Dennis Shea threatened to erode a key element of trade enforcement at the 23-year-old WTO: binding dispute settlement, which is widely seen as a huge defensive wall against protectionism.
It came as U.S. President Donald Trump hailed against the WTO judges in the past, threatened to levy a 20 per cent import tax on European Union cars, the latest in an unprecedented campaign of threats and tariffs to punish U.S. trading partners.
Shea told WTO’s dispute settlement body that rulings by the WTO’s Appellate Body, effectively the supreme court of world trade, were invalid if they took too long. Rulings would no longer be governed by “reverse consensus”, whereby they are blocked only if all WTO members oppose them.
“The consequence of the Appellate Body choosing to breach (WTO dispute) rules and issue a report after the 90-day deadline would be that this report no longer qualifies as an Appellate Body report for purposes of the exceptional negative consensus adoption procedure,” Shea said, according to a copy of his remarks provided to Reuters.
Rulings are routinely late because, the WTO says, disputes are abundant and complex. Things have slowed down even further because Trump is blocking new judicial appointments, increasing the remaining judges’ already bulging workload.
Without him, the Appellate Body will only have three judges, the minimum required for every dispute, putting the system at severe risk of breakdown if any of the three judges cannot work on a case for legal or other reasons.
“Left unaddressed, these challenges can cripple, paralyse, or even extinguish the system,” chief judge Ujal Singh Bhatia said.
Sixty-six WTO member states are backing a petition that asks the United States to allow appointments to go ahead. On Friday, U.S. ally Japan endorsed the petition for the first time, meaning that all the major users of the dispute system were united in opposition to Trump.
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