The US president poses a direct threat to the WTO’s future and the UK could be badly exposed, says a former advisor to the WTO director-generalby David Tinline / September 24, 2019 / Leave a comment
Boris Johnson loves the WTO, or so he said to the WTO director-general and I as we left Downing Street after a meeting in May last year. Certainly, in any likely Brexit scenario the UK will soon be relying on the WTO more than ever in managing its trading relationships. However, we are betting on this organisation just at the moment that its very viability is being called into question. As the floodwaters rise in global trade, the UK has made the bold decision to seek lower ground.
According to President Trump the WTO is a “catastrophe” and “the single worst trade deal ever made,” and his policies now pose a direct threat to the organisation’s future. The most immediate risk is that the WTO’s vital dispute settlement function could cease hearing new appeals from December this year. This is because the US is blocking the appointment of the judges it needs to function. The WTO provides the legal bedrock of global trade, so this crisis in its Appellate Body should be of real concern to everyone. It would matter to the UK with or without Brexit, but there is a clearly a difference between facing this situation as part of the EU as the world’s largest trading bloc and doing so alone.
Any WTO member can bring a dispute against another member if they think that it has violated the rules. The dispute then follows a three-part process. First, the members involved try to settle the issue through consultations. If that doesn’t work, you can move to the second stage where a panel is appointed to assess the evidence and deliver a ruling. This ruling can then be appealed via the Appellate Body, which is the third part of the process.
If the appeals stage ceases to function then the process cannot be completed and the dispute remains unsettled. In this scenario a member who has brought a dispute and had a panel finding in their favour would not be able to act on that finding (unless the losing side agreed, which seems highly unlikely). That means they couldn’t insist that the other party complies with the ruling, demand compensation or pursue appropriate retaliation. There is a strong possibility that this member would therefore act unilaterally, raising…