The US has finally spiked the World Trade Organization’s Appellate Body, the highest adjudicating body for resolving global trade disputes. It shall remain dysfunctional after December 10, when it will be reduced to one member, said trade envoys.

As a parting shot, the US on Tuesday blocked an initiative under Rule 15 of the Working Procedures for Appellate Review for adjudicating pending 14 appeals with the retiring members who had already conducted proceedings.

The chair for the WTO’s Dispute Settlement Body (DSB) Ambassador David Walker has pursued the initiative under Rule 15 by consulting with India, the US, China, the European Union, Japan and Canada to ensure that the Appellate Body completed work on appeals in the pipeline.

At a specially-convened DSB meeting on December 3, Ambassador David Walker of New Zealand informed members that there is no consensus for pursuing the pending appeals under Rule 15.

The US refused to approve the DSB chair’s initiatives for pursuing the 14 pending appeals under Rule 15. As a result, the Appellate Body will be reduced to one member.

Pending appeals

India has three pending appeals before the Appellate Body. In two of them, India challenged panel rulings involving the US that sought the termination of export subsidy schemes in India, and Japan, which won a case against New Delhi’s safeguard measures against Japanese steel products.

The third appeal is by the US against a panel ruling in favour of India that Washington had violated core global trade rules by providing billions of dollars of subsidies and pursuing mandatory local content requirements. All three appeals will now go into limbo due to the unilateral US’ actions that ensured the Appellate Body remains dysfunctional from December 11, said a trade envoy, who asked not to be quoted.

The US also ensured that the deadlock is complete at the Appellate Body and cannot be unlocked anytime soon, the trade envoy suggested.

Global criticism

The EU, Turkey, and China severely criticised the US at the DSB meeting saying that the US’ blockage has raised several systemic problems at the WTO.

The EU pointed a finger at the US for causing this grave crisis, by suggesting that “the member blocking new appointments is also opposed to the continued service of any former member of the Appellate Body beyond the end of their term of office.”

China added, “the uncertainty of these pending appeals has raised a serial of systemic concerns to the whole Membership.” China blamed the US for causing the “illegal blockage” for filling the six vacancies at the Appellate Body and, thereby, undermining the functioning of the body. The US also did not consider Rule 15 as a problem if it served its interests, China added.

As the crisis became unsavoury due to news reports about the concerns raised by an outgoing American member on the Appellate Body about a WTO official, two serving and one retired member of the body — Ujal Singh Bhatia, Hong Zhao, and Shree BC Servansing — wrote a scathing letter to the WTO’s Director-General, Roberto Azevedo, on December 3.

They condemned news reports “regarding recent media articles, we have deep concerns about the breach of confidentiality and the misrepresentations disseminated about meetings between Appellate Body members and the Director-General.”

The US, however, dismissed the criticisms levied against its actions on the pending appeals by saying that several members seem to argue that the Appellate Body should continue to breach the rules under the DSU to deem Appellate Body members whose terms have expired to continue being members.

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