Background

Left without a functioning method for resolving trade disputes at the World Trade Organization after the Appellate Body ceased to function in December 2019, more than a dozen WTO members announced March 27 their own arrangement that they said will provide an “independent and impartial” appeal mechanism.

After the terms of two of its judges expired in December, and in light of the continuing blockage of new appointments by the U.S., the WTO Appellate Body was left unable to hear appeals of cases decided by Dispute Settlement Body panels. As a result, a number of ongoing disputes involving tariffs and other trade restrictions around the world, including the U.S. Section 232 tariffs on steel and aluminum, currently lack a path toward final resolution.

In response, 16 WTO members have established a multi-party arrangement that mirrors the usual WTO appeal rules and can be used between any WTO members willing to join. Australia, Brazil, Canada, China, Chile, Colombia, Costa Rica, the European Union, Guatemala, Hong Kong, Mexico, New Zealand, Norway, Panama, Singapore, Switzerland, and Uruguay are the initial participants (Korea appears to have dropped out), and the new arrangement will become operational once they complete the requisite internal procedures. Other WTO member countries are also being invited to participate.

The interim arrangement will remain in effect only until the WTO Appellate body is again fully functional. Toward that end, the participants said they remain committed to resolving the impasse that has shut down the Appellate Body, including through any necessary reforms. President Trump had announced plans to discuss such reforms with WTO Director-General Roberto Azevedo earlier this year, but those talks do not appear to have taken place.

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