US blocks fresh proposal to restart dispute settlement mechanism at WTO

This is the 73rd occasion when a proposal moved by Guatemala, a Central American country, on behalf of 130 members was not able to launch the selection processes. The US has been blocking the appointment of new judges to the WTO’s seven-member appellate court since 2017 on grounds of judicial activism at the WTO and concerns over US sovereignty.

The lack of a functional Appellate Body is concerning as global trade is already slowing with growing geo-political tensions. Moreover, developed countries are turning inward with the introduction of several environment related trade measures such as carbon tax which could hurt India’s trade prospects. India’s goods exports have seen a decline during the better part of 2023 largely due to weakening demand globally.

“Guatemala said that on behalf of the 130 members it regretted that for the 73rd occasion members have not been able to launch the selection processes. Ongoing conversations about reform of the dispute settlement system should not prevent the Appellate Body from continuing to operate fully, Guatemala said for the group,” an official WTO statement released late on Friday read.
This comes ahead of the 13th ministerial conference (MC) of the WTO in Abu Dhabi on February 26-29 where India is set to bat for a resolution of the system. The US repeated that it does not support the proposed decision to commence the appointment of Appellate Body members as its longstanding concerns with WTO dispute settlement remain unaddressed.

“While members may prefer the status quo, the old system was not working for the US and it was not working for many other members. As members engage in reform, they must bear in mind that re-launching the Appellate Body selection process will not address these concerns, and calls for the restoration of the Appellate Body undermine collective efforts for reform, the US said,” the statement read.

“One member said the US comment that the appeal mechanism was not working for many members was surprising given the 130 members that are co-sponsoring the proposal for appointing new Appellate Body members,” the statement further said.

Seven members made reference to the multi-party interim appeal arrangement (MPIA) as a means of maintaining appeal rights in the absence of a functioning Appellate Body, WTO said.

The United States Trade Representative (USTR) had earlier stated that the proper functioning of the WTO Appellate Body has a disproportionate impact on the United States because more than one- quarter of all disputes at the WTO have been challenges to US laws or other measures and 155 disputes have been filed against the United States and no other member has faced even a hundred disputes.

The US said that up to approximately 90 percent of the disputes pursued against the US have led to a report finding that the US law or other measure was inconsistent with WTO agreements. “This means that, on average, over the past 25 years, the WTO has found a US law or measure WTO-inconsistent between five and six times per year, every year,” the USTR had said.