On Jan. 1 the World Trade Organization turned 25 years old, but there was little celebrating for the international trade body that is limping into 2020 at a fraction of its potency.
The WTO Appellate Body – key to resolving disputes among its 164 member nations – ceased to function about a month ago, indefinitely putting key cases on hold that the U.S. ag sector would like to see settled. The body has but one of the three minimum judges needed.
The U.S. ag sector is keen to see suits filed that would challenge the European Union’s efforts to clamp down on endocrine disruptors, its ban on poultry treated with chlorinated rinses, and its lengthy biotech approval system.
For example, the U.S. has been increasingly frustrated with its inability to get the EU to approve new biotech traits.
“The U.S. continues to see persistent delays that affect dozens of applications that have been waiting approval for an extended period,” the U.S. stated at a recent Dispute Settlement Body meeting. “The EU has previously suggested that the fault lies with the applicants. We disagree. Our concerns relate to delays at every stage of the approval process.”
But it was the U.S. that effectively hobbled the dispute settlement system by blocking the appointment of new appellate judges for months. Now, American farming, manufacturing and other groups are calling on the Trump administration to use what leverage it has to negotiate the changes it demands.
“America’s economic interests will be harmed if there is no internationally agreed upon mechanism for combatting unfair trade practices of other nations,” more than two dozen ag and other organizations stressed to the Trump administration in a recent letter. “Now is the time to put forward a specific, detailed U.S. proposal aimed at reforming the dispute settlement system so that global trade rules can be predictably enforced.”
The USA Poultry and Egg Export Council, U.S. Grains Council, North American Association of Food Equipment Manufacturers, National Corn Growers Association, National Council of Farmer Cooperatives, International Dairy Foods Association and American Soybean Association were among the groups that signed on to the letter to President Donald Trump.
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For months, as the Trump administration blocked the appointment of appellate judges, U.S. officials listed many complaints with the system, ranging from the level of WTO salaries — up to approximately the equivalent of $300,000 per year for some part-time officials — to the length of time it takes for cases to be adjudicated.
Those are mostly minor grievances, though, says Marc Busch, a professor of international business diplomacy at Georgetown University. The primary U.S. complaints are over allegations of “judicial activism” and concerns that previous precedents set by so-called activist judges will hurt the U.S. in future cases.
There are available remedies, Busch tells Agri-Pulse, but the Trump administration has yet to put forward any as solutions.
Instead, the U.S. has been asking other member nations to come forward with complaints similar to the Trump administration's.
“The U.S. seems to want as a precondition for further negotiation everyone to agree that the Appellate Body has overstepped, but there are members who are not willing to agree to that,” Busch said. “But even if they were to agree, then the question becomes what to do about precedent, and the U.S. has not said what it wants done about precedent.”
The U.S. has spent months building leverage at the WTO, and now it has enough to force acquiescence, said one trade official who asked not to be named. Now, the country could use that leverage to get what it wants.
WTO Director General Roberto Azevêdo has made the situation a priority, announcing last month that he would “launch more intensive, high-level consultations on how to resolve the longstanding impasse.”
That hasn’t happened yet, but U.S. trade groups say it should not have to. New Zealand Ambassador to the WTO David Walker drafted last year what many in the WTO see as a compromise solution that addresses all of the U.S. complaints.
Walker’s proposals stipulate that precedents from previous WTO cases are not binding, the appellate body is prohibited from issuing advisory opinions, appeals cases cannot drag on longer than 90 days, judges cannot stay on longer than their terms, and appeals decisions cannot rewrite WTO rules. These are all key complaints lodged by the U.S. as it blocked the appointment of new judges.
Still, the U.S. has not budged or offered specific counterproposals.
Ironically, the U.S. on Dec. 18 filed an appeal with the WTO to contest a decision against U.S. tariffs on carbon steel products from India. Noting that the appellate body had ceased to function on Dec. 10 because it only had one of the three minimum judges needed, the U.S. offered to settle the dispute out of court. The WTO Dispute Settlement Body was scheduled to meet Monday to discuss the situation, but that was canceled “at the request of India.”
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