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local time on the 11th, due to the United States obstructing the selection of new judges and the appointment of the two judges, the WTO Appellate Body was officially paralyzed. This became the first time that the WTO Appellate Body encountered a shutdown crisis in the past 25 years.
What happened to the WTO Appellate Body?
It is understood that as part of the dispute settlement mechanism, the WTO Appellate Body has 7 permanent judges, each with a term of 4 years, and at least 3 judges are required to hear each case. The selection process of judges follows the principle of consensus among WTO members, that is, the "one-vote veto" principle, that is, the selection process can proceed smoothly only when all 164 members agree.
Since 2014, old members of the Appellate Body have left their posts one after another, and new members have been unable to be elected because of repeated obstruction by the United States. As of the 10th of this month, the Appellate Body has only three judges including Chinese nationality Zhao Hong, American nationality Graham and Indian nationality Bhatia. However, the terms of Graham and Bhatia ended on December 11. Zhao Hong alone could not meet the basic requirements for the number of judges, and the WTO Appellate Body was forced to stop functioning.
WTO Director-General Roberto Azevedo (Roberto Azevedo) told the BBC that the WTO’s Appellate Body will take several months to repair. "We urgently need a major reform, and relevant consultations will begin today." It is reported that Azevedo plans to conduct a round of consultations with some WTO members including the United States in order to find a solution to the deadlock. At the same time, Azevedo does not believe that the resignation of the two judges means the suspension of the WTO dispute settlement mechanism. He said that member states can still resolve disputes through arbitration and other methods, but the WTO will still reinstate the Appellate Body. Operation is the top priority.
The United States ruined the WTO
Regarding the embarrassing situation, João Aguiar Machado, the EU’s ambassador to the WTO, bluntly stated that this is an unprecedented scene in WTO history. "WTO will no longer be able to propose binding resolutions on trade disputes, and will no longer guarantee the right of appeal review." In addition, many foreign media called it "the most serious blow since the establishment of the multilateral trading system."
It is understood that since 2017, the U.S. has linked the appellate body’s rulings to the selection on the grounds of the so-called “unauthorized rulings” by the Appellate Body, “overdue trials”, and judges’ “overdue service”. Right to unilaterally oppose the initiation of the selection process for new judges. In addition to obstructing the selection of new judges, the Trump administration is also putting pressure on the WTO budget. In the budget initially approved this month, the United States significantly reduced the 2020 budget and cut the operating expenses of the Appellate Body to 5% of the previous one, making the operation of the Appellate Body even worse.
Reuters stated that the reason why the United States is dissatisfied with the WTO is because the WTO's attitude towards trade frictions between the United States and other countries is not good for the United States. The United States uses the survival of the WTO Appellate Body as a bargaining chip to force other WTO members to agree to the US reform plan. Once the expectations of the WTO and the United States are different, the United States will try to paralyze the dispute settlement mechanism and avoid making further rulings against itself.
The former chief judge of the WTO Appellate Body and former US trade negotiator James Bacchus said that as long as Trump is in office, it is extremely unlikely that the WTO Appellate Body will remain independent. "The United States has won most of the cases it has filed with the WTO. At the same time, the United States has repeatedly violated WTO rulings. I have to say that it was the United States that destroyed the WTO."
WTO no longer established
after World War II The international economic and trade governance system with the International Monetary Fund, the World Bank, and the General Agreement on Tariffs and Trade as the core has brought stable and rapid development to the global economy and trade. The WTO is the authoritative organization and legal foundation of the multilateral trading system. Its rule system is the foundation and institutional guarantee for the development of the global market economy, and is the law that promotes economic globalization.And organizational guarantees, this is irreplaceable by any international agency or regional economic and trade organization.
It is reported that the World Trade Organization was established in 1995 with the original intention of establishing and regulating global trade rules. In recent years, the role of WTO has disappeared. Some countries have complained that the United States is using its influence as the world's largest economy to unilaterally impose trade sanctions and impose restrictions on other countries’ exports to the United States. Since Trump was elected, the United States has no longer resolved trade disputes through the WTO, but bypassed the WTO and directly imposed tariffs on China, Brazil, Argentina, Turkey and other countries. With no trade rulings and escalating tariff wars, countries can only rely on economic strength to compete.
WTO Director-General Azevedo warned that if global trade rules are not effectively implemented, the world economy will regress back to the era of "rules of the jungle." Simon Lester, an expert at the Cato Institute, an American think tank, also said that we will "shift from a rules-oriented international trading system to a power-oriented system."
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