This article is from the WeChat public account: Economic Observer Observer (ID: eeoobserver) , author: Liu Zichuan, from the title figure: vision China
The 25-year-old World Trade Organization (WTO) is facing the largest crisis in its history. From December 11th, the appellate body in the WTO dispute settlement mechanism will be shut down due to “empty chairs.”
The culprit behind the closure of the WTO Appellate Body is not difficult to find: The United States exercises its veto power and prevents the appointment of new Appellate Body members to replace two members whose terms have expired, preventing the institution from continuing operations. Because there is only one member left, it does not meet the minimum requirements for the number of members.
The United States has been blocking the appointment of members of the new Appellate Body since July 2017, and there is no indication that its position will loosen. Trump’s opposition to the WTO is clear-cut: The United States has spent more than two years weakening the WTO, criticizing it for being unfair, blocking its personnel entry channels, and spare no effort to crack down on the authority of the WTO.
Of course, the United States does not acknowledge that it is maliciously interfering with the normal operation of the WTO mechanism. In fact, regardless of whether the Republican Party or the Democratic Party is in power, the US government has for years accused the WTO Appellate Body of exceeding its authority. U.S. Representative to the WTO Dennis Shay asserted that the United States has been working to improve the WTO dispute settlement process, and that other countries have not paid much attention. US Trade Representative Lighthizer has repeatedly claimed that the WTO Appellate Body goes beyond its responsibilities and is not interpreting the WTO agreement, but creating legislation. Lighthizer previously served the US steel industry as a lawyer and was committed to protecting the interests of the US manufacturing industry. He can imagine the attitude of the WTO. In fact, obstructing the appointment of members of the Appellate Body can hardly be seen as malicious destruction, not to mention that the United States has been trying to prevent the WTOAppropriation for the Appellate Body.
Facing the crisis, representatives of the WTO’s 164 member states will meet later in Geneva, but it is estimated that the United States cannot be persuaded to relax its hardline stance. At the same time, the European Union has been seeking to establish a mechanism that can temporarily replace the WTO Appellate Body, so that after the WTO system collapses, it can continue to impose trade sanctions on other countries. The European Union has now reached such agreements with Norway and Canada. EU officials said they hope that China, Russia, Brazil and other big countries can join the temporary mechanism it has established after the WTO’s appeals agency has collapsed. U.S. unilateralism has forced countries to set up their own stoves, but it is still difficult to say whether the new “stoves” can be successfully established and operated.
One
The WTO Appellate Body was born with the WTO in 1995. The agency includes seven people with fixed terms, and three of them form an arbitration panel to hear appeals in the event of an appeal. If a country is found to have violated WTO law, the agency can authorize trade sanctions. The United States has historically played a role in the creation of the WTO and its appellate bodies, but the United States has long accused the WTO of judicial oversteps, especially in the verdicts of the appellate bodies. The US government insists that the WTO Appellate Body often tries to fill loopholes in the WTO rules system by itself, instead of using its original intention to interpret existing laws.
The WTO Appellate Body has also repeatedly ruled that US anti-dumping rules violate WTO law, which has led to US dissatisfaction. Ironically, however, the United States will gladly accept WTO rulings in favor of the United States, such as the pending ruling on the Airbus subsidy case.
In 2011, the Obama administration blocked a routine re-election of a member of the American Appellate Body, and Trump intensified after taking office, adopting a comprehensive boycott. It is not difficult to see that the Trump administration’s attitude towards the WTO Appellate Body is by no means simply a “call for reform”, but it wants it to be a technical advisory body, not a regular appeals court. America wants peopleIt is widely acknowledged that the WTO Appellate Body has gone astray since its establishment in 1995 and must be deprived of its authority. In fact, as a powerful country, the United States hopes to have the highest trade legislation power, rather than falling into the hands of multilateral organizations such as the WTO Appellate Body. This is the fundamental goal of the United States to interfere with the WTO Appellate Body.
Obviously, this is a damage to the rules-based international trade order. At present, the WTO Appellate Body is an independent arbiter for the entire international trading system. All countries can resolve their differences through fair institutions and abide by their decisions. This is the basic principle on which the existence of the WTO rests. Now the US is tantamount to trying to force the “top arbiter” out.
Of course, the suspension of the Appellate Body does not affect the WTO’s ability to organize new trade negotiations, nor does it theoretically mean that the entire dispute settlement mechanism has failed completely. This is because the establishment of an appeal body gives the parties to the dispute an opportunity to appeal, which does not mean that all cases must go through two trials, and the parties to the dispute can reach a consensus not to appeal. However, since the disputes submitted to the WTO rulings are related to fundamental national interests, and often have deep contradictions, the possibility of such a choice by the two parties in reality is very small. So the suspension of the Appellate Body actually means that the dispute settlement mechanism is dead.
This also means a historical retrogression. In the ruins of World War II, the United States and its allies recognized the need to establish an international trading system to help curb protectionism and break trade barriers. As a result, the General Agreement on Tariffs and Trade of 1948 emerged, which later developed into the WTO. The WTO introduced a binding dispute settlement mechanism, including an appeals body. In the case of lawsuits between member states, the agency can rule on violations of existing WTO laws and can authorize retaliatory measures to increase tariffs, making the rule of law in international trade no longer just meaningful on paper. Can operate and execute.
Currently 98% of global trade volume is subject to WTO rules. The WTO-based multilateral trading system has truly realized the rule of law in international trade, and the dispute settlement mechanism is the crown jewel of the system. The dispute settlement mechanism has consolidated the rules-oriented background of the WTO system, making it no longer affected by the volatile will and strength of each country to compare the situation, representing a huge progress in international trade from the jungle to the state of law Is in danger.
Second
Although the solution proposed by the European Union is promising, it will only be effective in the short term. Without the support and matching of the United States,It is impossible for the WTO Appellate Body to resume its functioning and normal operation.
The 14 cases that have been appealed to the WTO are now in “floating”, including the Airbus subsidy dispute between the European Union and the United States. Without the supervision of the WTO Appellate Body, countries will no longer worry about being punished and will arbitrarily introduce trade policies and sanctions, which will increase the number of violations of WTO rules. With the weakening role of the WTO, the international trading environment will become more aggressive. Countries that have trade disputes with the United States will find that the United States only wants to resolve disputes through bilateral negotiations and exert unilateral pressure, rather than resolving problems through multilateral channels.
This is a reflection of Trump ’s pursuit of an “America First” strategy. He used the economic power of the United States to force other countries to accept more favorable trade terms to the United States. In Trump’s view, the WTO based on equality has affected the ability of the United States to formulate its own trade policy. So he circumvented WTO rules, imposed steel tariffs on Canadian, European and Japanese allies, and imposed punitive tariffs on Chinese goods. Facing the unilateralism of the United States, countries can only sue to the WTO, but the paralysis of the appellate body means that this last channel of relief is blocked.
Thanks to Trump’s view of world trade as a zero-sum game, American powers who are dissatisfied with the WTO have risen to their advantage and will play a long-term role. Because Trump uses punitive tariffs as a bargaining chip and other countries’ disputes over subsidies and state-owned enterprises, the WTO has also suffered from internal and external difficulties and crises in areas other than dispute settlement mechanisms.
Three
Of course, it is undeniable that there are some well-known flaws in the WTO dispute settlement mechanism, and reforms are indeed needed. For example: its rules system has not been updated since 1994; the processing time of appeal cases often exceeds the 90-day time limit prescribed by the rules; the selection of members of the appeal body will be interfered by political factors. At the same time, the WTO Appellate Body is not exactly the same as the Judiciary. For example, the decision of the Appellate Body does not take effect on the spot, but requires the approval of the dispute settlement body. The WTO’s Dispute Settlement Understanding Agreement provides that the scope of the appeals body’s hearing is limited to the legal facts involved in the appeal report and the legal interpretation of the review panel. Appellate bodies have no power to hear matters not mentioned in the appeal report, nor can they “send back to retrial” as in ordinary civil proceedings. The fact that it is not a formal judiciary in the strict sense also provides room for the United States to challenge and boycott the Appellate Body. But of course, the intention of the United States is not to reform it better, but to force it to fail.
The United States is committed to weakening the authority and effectiveness of the WTO, transforming the WTO according to its own wishes, in order to weaken the multilateralism of the international trading system, and establishing a rule system that will help the United States to exert its advantages. WTO and the entire international free trade system. The paralysis of the WTO Appellate Body is likely to reverse the general environment of the international trade dispute settlement mechanism since the establishment of the WTO, turning the dispute settlement method of in-depth consultation between parties into an irregular scuffle, and may trigger a tit-for-tat trade war. The wake-up call from the suspension of the WTO Appellate Body will reverberate over the world for a long time.
Facing the current crisis, on the one hand, countries need to promote the reform of the WTO system, and on the other hand, they must be fully prepared for the era of weakening WTO. The rule-based multilateral trading mechanism is gradually slipping back to a power-led system, which is the current reality. To prevent international trade from returning to the jungle era, it requires the sincerity and courage of all countries.
This article is from the WeChat public account: Economic Observer Observer (ID: eeoobserver) , author: Liu Zichuan