Alicia Nicholls

The World Trade Organisation’s Appellate Body – the highest arbiter of trade disputes – has lost its quorum. The terms of two of its three remaining Members expired on December 10, 2019. This means that as of December 11, the Appellate Body is no longer be able to review new appeals of panel decisions as it now lacks the minimum number of members required to do so.

It is a day which many who have been following global trade matters have feared. For the past two years, the US has been blocking the appointment of Appellate Body members unless its concerns related to the substantive and procedural aspects of the Appellate Body’s work were addressed. Successive US administrations have raised issues with the Appellate Body, but anti-WTO sentiment intensified under the Trump Administration which has repeatedly accused the WTO of being “unfair” to the US.

In a press conference delivered at the final WTO General Council Meeting for 2019, WTO Director-General Roberto Azevedo stated that WTO Members could not achieve consensus on a draft decision to reform the Appellate Body submitted by Ambassador David Walker of New Zealand. Ambassador Walker had been appointed earlier this year to facilitate an informal process to overcome the deadlock on Appellate Body member appointments. The draft decision was an outcome of that process.

Mr. Azevedo emphasised that the current paralysis of the Appellate Body “does not mean that rules-based dispute settlement has stopped at the WTO”. He pointed to other mechanisms under the DSB for resolving disputes. However, he noted that most Members prefer the two-tiered system and that he would launch “more intensive, high-level consultations on how to resolve the longstanding impasse over the appointment of Appellate Body members”.

A group of 54 mainly developing WTO members, including many Caribbean countries, released a statement in support of the rules-based multilateral trading system. Inter alia, they called the dispute settlement system of the WTO “a central element in providing security and predictability to the multilateral trading system”. They also stressed the urgency “of filling all current vacancies on the Appellate Body”.

During the General Council Meeting held December 9-11, Members finally approved the WTO’s 2020 Budget. Members also agreed to extend the moratorium on customs duties on electronic transmissions and the initiation of “non-violation” complaints under the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS).

UPDATE: It has been reported that the two outgoing Appellate Body members will stay on temporarily to complete some existing appeals. 

To watch the WTO DG’s press conference, please click here.

Alicia Nicholls, B.Sc., M.Sc., LL.B., is an international trade and development consultant with a keen interest in sustainable development, international law and trade. You can also read more of her commentaries and follow her on Twitter @LicyLaw.

DISCLAIMER: All views expressed herein are her personal views and do not necessarily reflect the views of any institution or entity with which she may be affiliated from time to time.