The World Trade Organization and trade disputes

The World Trade Organization is an intergovernmental organization and its history dates back to 1995. Its purpose is to deal with issues connected with international trade between countries. Also, it is an interesting fact that as part of the Marrakesh Agreement, it replaced the General Agreement on Tariffs and Trade.

One of the most important functions of WTO is to resolve disputes between its members. Currently, it has more than 100 members. 

However, it is facing a crisis due to the lack of judges. According to the WTO rules, three judges have to hear each case. The WTO has an appeal “court,” and this court should deal with disputes.

Nevertheless, starting from December 10, this process will become more complicated as only one judge will be left. The terms of the other two judges will expire this week. Moreover, there are no replacements.

Unfortunately, the process remains frozen due to the position of U.S authorities. The U.S. refused to allow the recruitment of new judges.

Most of the countries agreed to start a selection procedure. Last month, more than 100 countries stated that the procedure should commence, but the U.S. is reluctant to do so. It is worth mentioning that the U.S. is the only country that stated that it is against this decision.

In the past, it was described as “probably the busiest international dispute settlement system in the world.” 

The U.S. and the World Trade Organization

The United States, which has the largest economy in the world, made the decision that can endanger the future of WTO. The biggest issue for the U.S. is connected with legal aspects of  WTO’s dispute system. According to the U.S, the organization interprets the rules in a way that creates new obligations for its members.

U.S. authorities are not happy with dumping. Let’s explain what is dumping and how it affects the economy. For example, when a foreign supplier sells products abroad more cheaply than at home.

The U.S., as well as other countries, used this method to check whether the price is lower and what should be the optimal price this or that for that product. This method is known as “zeroing,” which is not forbidden by WTO rules. However, the Appellate Body ruled that it is against the spirit.

There are other issues, as well. For instance, the U.S. stated that rulings are going too fat. As a result, the WTO created new law.

Moreover, another problem is connected with procedural issues. Sometimes, the Appellate Body is not issuing its rulings on time. Also, judges are continuing to hear cases which started after their terms expired.

Nevertheless, the current administration is not the first one in U.S. history which is not happy with WTO and its rulings. Under President Barack Obama, the U.S. opposed a second term for a judge from South Korea.

They even opposed the American judge chosen by the Bush administration. However, in those cases, U.S. refrained from blocking the appointment of new judges. The current U.S. President is more critical than his predecessors regarding the WTO and he made it clear multiple times.