EU proposes way forward for WTO's appellate body

Geneva

THE European Union (EU) has unveiled a new proposal that seeks to stave off paralysis of the dispute settlement system of the World Trade Organization (WTO), by unblocking the appointment of its appellate body members, it said on Monday.

The proposal has the backing of Australia, Canada, China, Iceland, India, Korea, Mexico, New Zealand, Norway, Singapore and Switzerland.

"The appellate body function of the WTO dispute settlement system is moving towards a cliff's edge," EU trade chief Cecilia Malmstrom said in the statement. "Without this core function of the WTO, the world would lose a system that has ensured stability in global trade for decades." The proposal will be presented at the WTO's General Council on Dec 12.

For more than a year, the Trump administration has blocked appointments to the appellate body, which has the final say in upholding or modifying rulings that often affect some major companies and billions of dollars in commerce. If the US continues its hold, the body will be paralysed late next year.

The EU's paper is important because it aims to shift the WTO's nascent reform discussions toward negotiations on a concrete text. The proposal won't advance until the US and the rest of the WTO's 164 members agree to amend the WTO dispute settlement understanding, considered a significant undertaking. The proposal is unlikely to gain the backing of the US, which has criticised the appellate body for overstepping its mandate.

Some of the main provisions include creating new rules for outgoing appellate body members, defining when they can stay on to complete ongoing proceedings; another provision ensures that appeal proceedings are completed in the 90-day timeframe set out by the WTO. There is also a proposal for annual meetings between WTO members and the appellate body.

In a separate but complementary proposal, the EU suggested reinforcing the appellate body's "independence and impartiality to improve its efficiency" by adding two new appellate body members to the seven-member panel, give them full-time jobs and give the appellate body additional administrative and legal support.

It also calls for modifying the term limit for appellate body members from two four-year terms to a single six- or eight-year term and creating an automatic selection process to replace outgoing appellate body members months ahead of the expiration of their terms. BLOOMBERG