The World Trade Organization’s (WTO) important judicial institution, the Appellate Body (AB) has been ineffective since 2019. The 12th ministerial conference concluded without addressing the topic. The lack of functional AB poses challenges to the global trade scenario and raises concerns for several developing economies like India.
About the WTO’s Appellate Body
Coming into existence in 1995, the WTO was created to ease trade negotiations, frame rules and closely watch and maintain multilateral trades. It also aimed to redress disputes between its member countries. Acting like a court for global trade, the Appellate Body comprises seven members with four-year terms, designed to oversee appeals against judgments in trade-related disputes.
These trade disagreements occur when a country notes another government breaching a commitment that had been formally agreed upon. Each member can be reappointed for another term of four years. They must have proven expertise in law, international trade, and not be associated with any government.
Structure and Responsibilities of the Appellate Body
Members of the Appellate Body are chosen by the Dispute Settlement Body (DSB), serving for four years. The DSB has the authority to form dispute settlement panels, refer matters to arbitration, adopt panel, Appellate Body and arbitration reports, and more. A chairperson is elected from among the members for a one-year term, responsible for the overall direction of Appellate Body business.
Challenges Surrounding the Appellate Body
Some issues plaguing the Appellate Body include the halt of judges’ appointments led by the United States in 2017. This brought the number of judges in the court below three – the minimum required. Accusations of bias and unfairness from the U.S have also led to a lack of faith in the WTO. Other criticisms include inefficiency at rulings, with over 600 cases reaching the body since 1995, and only around 350 receiving verdicts.
Implications of Appellate Body’s Inaction
The Appellate Body’s inability to process new applications has created a significant amount of uncertainty over the WTO’s dispute settlement process. If the body becomes non-functional, countries may be forced to implement panel rulings even if they believe gross errors have been made. This could lead to countries refusing to comply with panel orders due to a lack of appeal avenue. At risk are also arbitration proceedings initiated by the other party in the dispute.
India’s Role in Disputes at the WTO
Rising trade tension between the US and China, coupled with an escalating number of dispute cases involving India, particularly regarding agricultural products, underlines the urgency of the issues surrounding the Appellate Body. India is currently involved in several disputes, both as a complaining and responding party.
Path Forward: Strengthening the Appellate Body
To strengthen and revive the Appellate Body, it’s important to consider appointing new members as a priority. While proposed amendments are generally endorsed by all WTO members, voting can be an alternative if consensus can’t be reached. Despite the potential obstacles, it’s essential for the developing nations to support any proposal that aims to end the impasse at the Appellate Body.
Formulating a swift correction mechanism and implementation of suitable response if a country continues to breach an agreement is also recommended. A reformative approach, coupled with regular meetings between WTO members and the Appellate Body, can ensure effective communication and timely redressal. It’s crucial for all nations to come together to prevent the unfolding of worst-case scenarios in global trade.
Last Modified: February 15, 2024