Key WTO body may become dysfunctional from December 11

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News:The World Trade Organization’s(WTO) appellate body could become dysfunctional on December 11,2019 as the United States continues to block the appointment of members.

Facts:

About WTO’s Appellate Body:

  • The World Trade Organization’s(WTO) Appellate Body was set up in 1995.
  • It is a standing committee of seven members that presides over appeals against judgments passed in trade-related disputes brought by WTO members.
  • The countries involved in a dispute over measures purported to break a WTO agreement or obligation can approach the Appellate Body if they feel the report of the panel set up to examine the issue needs to be reviewed on legal basis.
  • The Appellate Body can uphold, modify or reverse the legal findings of the panel that heard the dispute.Countries on either or both sides of the dispute can appeal.

What is the problem with the Appellate Body:

  • Over the last two years, the membership of the body has dwindled to just three persons instead of the required seven. 
  • This is because the United States which believes the WTO is biased against it has been blocking appointments of new members and reappointments of members who have completed their four-year tenures.
  • At least three people are required to preside over an appeal and if new members are not appointed to replace the two retiring ones, the body will cease to be relevant by December 11,2019.

What happens if the body becomes dysfunctional?

  • If the appellate body is declared non-functional,it will not be able to review the new applications.
  • This will compel the countries to implement rulings by the panel even if they feel that gross errors have been committed.
  • However,if a country refuses to comply with the order of the panel on the grounds that it has no avenue for appeal, it will run the risk of facing arbitration proceedings initiated by the other party in the dispute.

Additional information:

About WTO:

  • The World Trade Organization (WTO) is an intergovernmental organization that is concerned with the regulation of international trade between nations.
  • The WTO officially commenced in 1995 under the Marrakesh Agreement signed by 124 nations replacing the General Agreement on Tariffs and Trade (GATT).
  • Currently,it has 164 members and 22 observer governments with Afghanistan and Liberia being the latest to join.