The World Trade Organization has lost some of its clout.
The Appellate Body at the WTO, a key part of the dispute settlement process at the trade organization, basically ceased to exist today.
That could have a massive impact on smaller countries, like Canada, who rely upon the WTO to enforce the rules of global trade.
“In the absence of a fully functioning dispute-settlement system, the World Trade Organization simply cannot do its job of protecting the rights of Canadian exporters and importers,” a coalition of business groups said this morning.
The four groups are the Business Council of Canada, the Canadian Agri-Food Trade Alliance, the Canadian Chamber of Commerce and Canadian Manufacturers & Exporters.
The Appellate Body comprises three judges, which rule on trade disputes when a country appeals the decision of a lower-level court at the WTO.
“(It) is effectively the last court of appeal in trade disputes,” the Canadian business groups said in the release.
The terms of two of the three judges ended today, and it’s unlikely they will be replaced because the United States continues to block the appointment of new judges for the Appellate Body.
If the panel doesn’t have three judges to rule on cases, the appeal process grinds to a halt and the WTO cannot enforce the rules of trade.
The Appellate Body played a crucial role in Canada’s WTO case against the United States, challenging America’s mandatory country-of-origin labelling for meat.
In 2012, the WTO appellate judges ruled that COOL discriminates against Canadian livestock and the U.S. was not honouring its WTO obligations.
“We are pleased with today’s World Trade Organization appeal decision in favour of our livestock industry,” federal Agriculture Minister Gerry Ritz said at the time.
“Our government has always stood with our cattle and hog producers in order to create a stronger and more profitable integrated North American livestock industry.”
Canada and Mexico eventually won the WTO dispute after the U.S. government repealed the COOL regulation in 2015.
The Americans were displeased with that ruling and other WTO decisions. Some U.S. officials have complained that the Appellate Body undermines the sovereignty of American courts and lawmakers.
If the WTO appeal process does grind to a stop, the organization will be less relevant.
“We call on all WTO members to engage and intensify efforts to restore the full functionality of the Appellate Body,” the business organizations said.
“By reducing trade and investment barriers, establishing fair and predictable rules, and resolving disputes, the WTO enabled an enormous expansion in global trade and prosperity. Countless jobs and industries in Canada and around the world depend on the preservation of a rules-based global trading system.”