Over the past two years the Trump administration has blocked all new appointments to the WTO appellate body, which has the final say in upholding, modifying, or reversing WTO rulings that often affect some of the world’s biggest companies and billions of dollars in international commerce.
The seven-member appellate body is now operating with just three active members, which is the minimum required to sign off on WTO appellate rulings. The terms for two of those members are set to expire on Dec. 10.
Thomas Graham, a U.S. lawyer who is one of the appellate body’s last remaining members, recently said he may leave at the end of his term on Dec. 10, rather than stay on to adjudicate the cases he has already been assigned -- as has been done in the past.
One of the Trump administration’s key complaints is that former appellate body members have continued to deliberate appeal cases they were assigned prior to the expiration of their terms.
Graham’s departure would throw all pending and future appeals into legal limbo because there wouldn’t be enough appellate members to resolve disputes.
About a dozen appeal cases are pending, including a dispute over EU restrictions on Russian natural-gas imports and a pair of U.S.-Canadian disputes over paper and softwood lumber.
Canada, the EU and Norway have already agreed to set up an alternate channel for settling trade disputes in order to sidestep the looming deadlock.
The EU plan would create an alternate arbitration process that would continue the “essential principles and features” of the appellate body with a panel of former appellate body members. It’s envisaged as a stopgap measure to be used until the U.S. resolves the impasse.
Outgoing EU Trade Commissioner Cecilia Malmstrom argues that the step is necessary to prevent the the international trade system from devolving into the “rule of the jungle.”
“If you have no rules, everyone can do what they want and that would be really, really bad, not least for the smaller and developing countries,” she said in July.