The shutdown of the World Trade Organization’s (WTO) Appellate Body Dec. 10 came as no surprise.
What’s more opaque is the United States’ end game — WTO reform or removal?
“Under the current administration it’s both,” said University of Manitoba agricultural economist Ryan Cardwell.
“Prior to the current U.S. administration the objective was more to reform the Appellate Body and keep the WTO. The current administration has kept on with opposing the way the Appellate Body has operated, but the administration also has a less favourable view of multilateral trade negotiations. The current U.S. administration has a strong preference for bilateral negotiations because those type of negotiations give more weight to the larger player, which in every single case is the United States.”
University of Laval agricultural economist Bruno Larue has a similar take.
Some observers see the U.S. decision to kibosh the Appellate Body as a way to force a WTO ‘do over,’ Larue said.
“Others say it’s one way for the United States to have more leeway to bully whomever they want,” he added.
“Under the Trump administration they are very much anti-international organization and so I am more pessimistic. I think it’s just a way to not feel hindered in any way. So like we are seeing now, if they (U.S.) want higher tariffs on Chinese goods they want to be able to do it without going to Geneva to explain themselves.”
According to Larue the U.S. has been fairly treated by the WTO.
“I think they’ve won more cases than they have lost,” he said.
But Carlo Dade, director of the Canada West Foundation’s Trade & Investment Centre, says the U.S. has a legitimate complaint about the Appellate Body overstepping its authority.
“You can’t paper over it so that’s why it’s no surprise we are where we are,” he said.
The Americans argue WTO rules intend the Appellate Body to judge dispute panel appeals on a case-by-case basis rather than referring to past decisions as precedent.
Larue said he understands U.S. frustration with China allegedly breaking WTO trade rules, but instead of undermining the WTO, the U.S. could’ve worked to get like-minded countries, including the European Union and Canada, to make rule changes to discipline China.
“That would’ve been a lot more productive,” he said.
The rule requiring unanimity among WTO members to reach a trade agreement could be changed to perhaps a two-thirds majority, Larue said.