The WTO’s Appellate Body will become unable to function when the U.S. blocks new judges from being appointed to replace two whose terms are expiring.
The governance of international trade is on track to suffer serious damage this week as the United States carries out a long-standing threat to cripple the World Trade Organization’s system for settling disputes.
The European Union, which has sought to create a temporary alternative to the Appellate Body, is set to unveil a legal tool this week allowing it to impose trade sanctions against countries even after the WTO system freezes up. Although not explicitly aimed at the United States, the new enforcement regulation would allow the EU to raise tariffs against imports from countries that seek to frustrate WTO litigation by appealing cases to an Appellate Body that has ceased to function.
The U.S. also has sought to paralyze the system by blocking budget allocations for the Appellate Body.The EU has proposed an ad hoc temporary version of the Appellate Body while the full version is in abeyance, and so far it has recruited Norway and Canada. EU officials say they hope bigger economies such as China, Russia and Brazil will join their temporary system once the Appellate Body stops functioning.
U.S. Democratic and Republican administrations alike have long been unhappy with what they see as the judicial overreach of the Appellate Body. In particular, rulings by the body have repeatedly held that American anti-dumping rules, which allow the United States to impose tariffs against imports deemed to be priced unfairly low and to be damaging to U.S. producers, contravene WTO law.
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