The European Union is working on alternative dispute resolution measures to get around an impending blockage in the World Trade Organization's Appellate Body, according to documents seen Thursday by dpa.
For several years, the United States has blocked new nominations to the WTO's dispute settlement panel, due to dissatisfaction about the way it operates. If nothing changes by the end of the year, the Appellate Body will have too few members to function.
EU member states have therefore given the go-ahead for the European Commission to hold talks with third countries on arrangements that would mirror the functioning of the Appellate Body if this is paralyzed, an EU official told dpa.
‘The EU should seek to enter into appropriate arrangements with other WTO members as an interim solution,’ trade ministers agreed at a meeting last month, according to an internal document seen by dpa.
They stressed the importance of preserving the ‘binding character’ of WTO dispute settlement, as well as its independence and impartiality.
If enough other WTO members back the EU's initiative, member states would have to give the go-ahead for formal arrangements to be made, the EU official said.
The Appellate Body handles challenges to initial decisions of the WTO's lower-level dipute panels. Its trade experts examine whether measures such as tariffs are in line with WTO rules. If they are not, the offending country must pay compensation or can be hit with retaliatory measures.
German lawmaker Gerald Ullrich of the liberal FDP on Thursday welcomed the commission's ‘innovative’ approach, noting that disputes should be resolved ‘through legal proceedings rather than with escalating punitive tariffs.’ The standoff between the US and other WTO members overshadowed a meeting of the trade body in late May in Geneva, when Washington's representative reiterated charges that the Appellate Body judges have been overstepping their mandate to create legal precedents.
The US again blocked a 75-country proposal to fill vacancies in the Appellate Body.
Mexico, speaking on behalf of the group of 75, warned that the current stand-off is affecting the WTO's ability to settle trade disputes.