Interim arbitration arrangement allows some of the world’s largest trading regions to continue to appeal WTO decisions
Canada and 16 other World Trade Organization countries have figured out a temporary fix for its broken appeal system.
The WTO’s appellate body ceased functioning on Dec. 10 because the United States blocked the appointment of appellate judges.
The U.S. is using its veto on appointments to protest what it perceives as an anti-U.S. bias in the WTO’s dispute settlement system.
Without a functioning appellate body countries are no longer able to appeal WTO rulings, casting doubt on the entire dispute settlement process.
That is why Canada and other exporting and importing nations negotiated an interim arbitration arrangement, allowing some of the world’s largest trading regions to continue to appeal WTO decisions.
“It’s a very good thing,” said Cam Dahl, president of Cereals Canada.
He said one just has to look at the canola sector to see why this is an important development.
Canada has taken the first step toward launching a WTO dispute against China for its actions restricting the sale of the oilseed.
During the initial stage of the process there is consultation between the parties in an attempt to find a mutually agreed solution to the problem.
Canada and China began those discussions on Oct. 28 in Geneva, Switzerland. The Canola Council of Canada hopes they will lead to a resumption of trade with China.
If it doesn’t, Canada may proceed to the second stage, which involves adjudication by a panel and if applicable by the appellate body. Those decisions are binding upon the parties once adopted by the dispute settlement body.
The third and final stage is implementation of the ruling, which includes the possibility of countermeasures if the losing party fails to implement the ruling.
Dahl said the new interim arbitration arrangement will replace the WTO’s now defunct appellate body.
“My understanding is it doesn’t differ,” he said.
“There will be a body in place with adjudicators in place that will utilize the WTO appeal process.”
The only difference is the agreement includes only 17 of the WTO’s 164 members. But the seventeen include heavy hitters such as the European Union and China.
“It is a significant group of trading nations,” he said.
“The big exception of course is the United States.”
The interim arbitration arrangement is available to any WTO member willing to join the agreement.
Dan Darling, president of the Canadian Agri-Food Trade Alliance, applauded Canada for leading the effort to establish an interim mechanism.
“While this is good news for exporters, finding a permanent resolution to the current blockage of the appellate body should remain the priority,” he said in a news release.
“As Canada’s agri-food exports grow to record levels, this announcement is a reassurance there’s support for global trade continuing to be based on rules.”