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WTO problems may persist

America’s relationship with the rest of the world is expected to change now that Joe Biden is president of the United States.

The new president won’t make nasty comments about American allies, and the U.S. will likely co-operate with groups like NATO.

However, Canadian farmers and ag exporters shouldn’t expect the U.S. to quickly restore the status and importance of the World Trade Organization.

“I would never use the words ‘quickly’ and the ‘WTO’ in the same sentence,” said Ryan Cardwell, associate professor in agricultural economics at the University of Manitoba.

The administration of U.S. President Donald Trump was hostile toward the WTO and took aggressive steps to neuter the organization.

One of the critical actions was refusing to appoint judges to the Appellate Body, which makes the final ruling on trade disputes brought to the WTO.

In December 2019, the Appellate Body stopped functioning because the terms of two judges came to an end and they were not replaced.

At the time, a coalition of Canadian business groups said the Appellate Body is critical to the WTO.

“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,” said the Canadian Agri-Food Trade Alliance, the Canadian Chamber of Commerce and other groups.

“(It) is effectively the last court of appeal in trade disputes.”

As an example of its importance, in May 2015 the Appellate Body ruled in favour of Canadian farmers, saying America’s mandatory, country-of-origin labelling rules on red meat discriminated against imports from Canada and Mexico.

That ruling forced the U.S. Congress to repeal COOL legislation for beef and pork.

Reappointing judges and restoring the Appellate Body will not happen quickly because America has questioned its role for years.

“(This) is not just a Trump administration issue. (It) preceded the Trump administration,” said Cardwell, who studies international trade policy.

Resolving this issue will require lengthy negotiations between the U.S .and Europe because America believes Appellate Body rulings have over-reached its mandate, Cardwell said.

Telling the U.S. government it can’t implement COOL for red meat is an example of the perceived over-reaches.

“For more than 20 years, successive administrations and the U.S. Congress have voiced significant concerns that the Appellate Body has failed to function according to the rules agreed by the United States and other WTO members,” said Robert Lighthizer, former ambassador for the office of the U.S. Trade Representative.

“Unfortunately, the conduct of the Appellate Body has converted the WTO from a forum for discussion and negotiation into a forum for litigation.”

Joe Glauber, former chief economist at the U.S. Department of Agriculture, is more optimistic about America’s relationship with the WTO.

“I think the Biden administration will be much more internationalist in their foreign policy approach and that would include trade,” said Glauber, senior research fellow at the International Food Policy Research Institute.

The U.S. will likely begin talks with Canada and other countries to restore the Appellate Body, he said.

But it’s not a simple process “because many of the issues that were raised by the U.S. were held during the Obama administration,” he said.

In the meantime, Europe, Canada, Australia and other nations have created an ad-hoc body to hear appeals at the WTO.

Sixteen WTO members, including China, have signed on to something called the Multiparty Interim Appeal Arbitration Arrangement.

This temporary body can rule on disputes between the 15 nations and the EU.

Looking beyond the Appellate Body, Biden may support the WTO and other global institutions, but millions of his voters are hostile to trade.

“There are a lot of members of the Democratic party who are just as anti-trade as the Trump administration,” Cardwell said.

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