- There was no discussion to revive the World Trade Organization’s (WTO) Appellate Body (AB), which has been redundant since 2019, at the recently concluded 12th ministerial conference.
- WTO was established to provide a platform for negotiations for liberating trade and creating rules, as well as to monitor and administer multilateral trades.
- One of the key objectives was also to address the grievances between its members by acting as a court for global trade.
- The Appellate Body, set up in 1995, is a standing committee of seven members with a limited four-year term that presides over appeals against judgments passed in trade-related disputes brought by WTO members.
- Disputes arise when a member country observes that another member government is breaching a commitment, or a trade agreement made at the WTO.
- Trade remedies under WTO guidelines mean that members are prohibited from raising their tariffs above a certain margin. But it offers a provision for governments to break these rules to apply trade remedies, which include anti-dumping duties, wherein the market is distorted by the manufacturing country by exporting the goods at a cheaper rate than the market.
- Countries are allowed to make the move to defend its cheap imports and other offsetting duties to protect itself from subsidised imports to safeguard tariffs countering the import hikes.
- The United States stopped the process of reappointing judges, after their terms expired in 2017. In December 2019, the number of judges in the court fell below three — the minimum required.
- It believes the WTO is biased against it, and has criticised it for being “unfair”.
- At least three people are required to preside over an appeal, and if new members are not appointed to replace the two retiring ones, the body will cease to be relevant.
- Over 600 cases reached the body since its formation in 1995 and rulings were issued in some 350.
- It has even blamed that the AB has failed to issue rulings within the 90-day deadline.
- Several U.S. provisions for imposing countervailing and anti-dumping measures are found to be inconsistent with core provisions of the WTO agreements.
- With the Appellate Body unable to review new applications, there is already great uncertainty over the WTO’s dispute settlement process.
- If the body is declared non-functional, countries may be compelled to implement rulings by the panel even if they feel that gross errors have been committed.
- Countries may refuse to comply with the order of the panel on the ground that it has no avenue for appeal. It will run the risk of facing arbitration proceedings initiated by the other party in the dispute.
- This also does not bode well for India, which is facing a rising number of dispute cases, especially on agricultural products.
- In the backdrop of rising trade tension between the US and China, the overall weakening of the WTO framework could have the effect of undoing over two decades of efforts to avoid protectionism in global trade.
- The other long-term solutions include regular meetings of the WTO members with the Appellate body to ensure effective communication and immediate redressal mechanism.
- Thus, all the nations must come together to bring in a common ground to address the crisis so as to not be faced with the worst-case scenario.
SOURCE: THE HINDU,THE ECONOMIC TIMES,MINT