The Great World Trade Organization Workaround

The travails of the World Trade Organization are fairly well known, even to those not immersed in international trade. The WTO’s vaunted dispute resolution system is in crisis. Longstanding U.S. concerns about the jurisprudence of the WTO’s Appellate Body crystallized under the Trump administration into a refusal to appoint any new members. As regular terms have expired, that has left the Appellate Body with only one member and rendered it incapable of issuing decisions.

The paralysis of the Appellate Body does not mean that WTO adjudication of trade disputes has ended. “Panels” still convene and issue rulings. But it does mean that there can be no final appeal of these initial decisions, leaving member states free to insist that they are not yet binding. Diplomatic efforts to resolve the impasse have continued fitfully, but there is no prospect of an immediate solution.

The possible demise of the WTO’s appellate system has significance well beyond the boundaries of international trade law. The WTO system, adopted in the mid-1990s, was part of a multifaceted push to bolster and expand international adjudication. Its creation roughly coincided with the launch of the brand new International Criminal Court and the International Tribunal for the Law of the Sea. Even more than these institutions, however, the WTO system put to the test whether national governments, including those of powerful states, would accept regular, binding international adjudication of sensitive disputes.

It would be tempting to conclude that the answer is no. Long allergic to being judged by international courts, the United States’ seeming abandonment of the field is not all that surprising in historical context. But the Appellate Body paralysis is not the end of the story. A group of WTO members have established an interim arrangement to provide appellate review. Last month, the invaluable Simon Lester explained how it works:

Inspired by a 2017 paper from a group of experienced WTO lawyers, the EU initiative has now been joined by 22 other WTO members and is known as the Multiparty Interim Appeal Arbitration Arrangement Pursuant to Article 25 of the [Dispute Settlement Understanding. MPIA appeals are only available to parties to the MPIA, but other WTO members may join the MPIA at any time.

As Lester points out, it is far from certain that this interim arrangement will pave the way to a resolution of the underlying dispute. But it does at least allow member states to explore possible compromises while sheltering the embers of binding dispute resolution.