The Office of the U.S. Trade Representative released a comprehensive report on the World Trade Organization’s Appellate Body, criticizing it for “persistent overreaching” in the interpretation of trade agreements and its failure to comply with WTO rules.
“The Appellate Body’s failure to follow the agreed rules has undermined confidence in the World Trade Organization and a free and fair rules-based trading system,” according to the USTR.
What Is Washington’s Case All About?
The 174-page report provides many examples to back up the USTR’s complaints that the WTO’s appeals body has illegitimately stepped on the rights of member countries and altered their obligations through its “erroneous interpretations.”
“These errors have favored nonmarket economies at the expense of market economies, rendered remedy laws ineffective and infringed on members’ legitimate policy space,” the USTR report said. It accuses the body of having “seized” sovereignty from WTO members while at the same time steadily increasing the scope of its own power.
In a statement, the USTR claims the highlighted decisions “have directly harmed the ability of the United States to counteract economic distortions caused by non-market practices of countries like China that hurt our citizens, workers, and businesses.”
Even so, the report made clear that its purpose was “not to propose solutions to the problems facing the WTO dispute settlement system.” It, therefore, unfortunately offers little insight into how it believes Washington’s longstanding concerns should be resolved.
Ottawa Spearheading Reforms
An initiative launched by Canada late in 2018 to find common ground among a representative group of “like-minded” nations on “pragmatic” reforms has reportedly made some progress in recent months, but concedes that no meaningful reform to the WTO will be possible without the U.S. and China. So far, neither country has participated in discussions with the group.
Why It Matters To Importers - WTO Currently Sidelined
- Global interdependence is considered vital to the economic and security interests of the U.S., Canada, and the rest of the world - the multilateral trading system of the WTO is critical to maintaining this
- Increased risk of greater uncertainty exists
- Serious new regulatory burdens may arise for businesses operating within a far less stable and more complex legal environment
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