The world’s trade ministers will meet on November 30, on the one-year anniversary of the World Trade Organization’s (WTO) high court being completely dismembered by then-US president Donald Trump.
But while president Joe Biden has renewed the US’s talk of global order, he continues to block the seating of any judges to hear WTO appeals. Former WTO appellate body president James Bacchus says: “I see no chance whatsoever that the appellate body will be restored [at this meeting]. I very much doubt it will happen any time soon.”
The US insists that the appellate body oversteps its authority and errs when it tries to limit US trade remedies. But, says Mr Bacchus, this position “has nothing to do with law and everything to do with politics”. Republicans and Democrats are both vying for industrial voters in the Midwest, while Mr Biden needs to placate his progressive allies. “I don’t think this administration wants to throw any capital into the renewal of the WTO,” says leading trade scholar Robert Howse.
In practice, any sore loser now has the ability to block a panel ruling by “appealing into the void”. So far, eight cases have suffered this fate – including three lost by the US. Perhaps the US is also loath to revive WTO appeals because it fears losing challenges to Mr Trump’s trade actions, not to mention future cases over Mr Biden’s envisioned carbon tariffs, or his global minimum tax.
With losers reclaiming the power to block adoption of a panel report, Mr Bacchus says trade law has returned procedurally to the pre-WTO world of 1994. But on the law’s substance, there’s no going back. As Mr Howse notes, the appellate body case law forms a jurisprudence that continues to be followed, and cannot be erased. Moreover, not every losing nation will throw a tantrum.
In the absence of an appeal, what recourse is there for a loser willing to play by the rules? The EU and 24 other members, including China and Brazil, have jury-rigged a ‘multi-party interim appeal’ (MPIA) over the US protest. The MPIA calls for a consensual arbitration that would mimic an appellate body case, with former WTO judges as the arbitrators. So far, parties have agreed to such a shadow appeal in six or seven cases; none have yet reached the point of trying it out.
Beyond appeals, has Mr Biden changed Mr Trump’s trade strategy? And will he break the logjam at the quadrennial ministerial meeting in Geneva?
Mr Biden’s early trade record is decidedly mixed. “On some of the larger issues” — for example, imposing punitive tariffs on China and abusing the WTO’s national security exception — he “seems to have embraced a Trump trade policy without the tweeting”, says Mr Bacchus.
On the multilateral side of the ledger, the US has rescinded Mr Trump’s capricious ban on TikTok, and allowed Nigeria’s Ngozi Okonjo-Iweala to become WTO director-general, while negotiating in good faith on e-commerce, fisheries and environmental goods. “One never knew when Trump would get up one morning and demand to leave the WTO entirely,” notes Mr Howse. “That kind of destabilising rhetoric has disappeared.”
Whether anything will be accomplished in Geneva is another question. The only time this century the WTO finished an agreement was eight years ago in Bali. Andrew Shoyer, who served as legal adviser to the US Mission in Geneva, fully expects a commitment to emerge on domestic regulation of services, to make licensing less burdensome. Mr Bacchus despairs of progress on trade in medical goods — despite the crying need for Covid-19 vaccines — but guardedly holds out hope for agreements on digital trade, fisheries, and environmental goods.
“It's make or break time for the institution,” he says. “WTO members must prove they’re capable of agreeing on something, or be pushed further and further toward the periphery of world trade.”
Michael D Goldhaber has been tracking the world’s largest disputes since the turn of the millennium. Email: firstname.lastname@example.org
This article first appeared in the October/November print edition of fDi Intelligence. View a digital edition of the magazine here.