WTO Appellate Body and Structural Crisis

World Trade Organization’s (WTO’s) Appellate Body based in Geneva, Switzerland hears appeals in trade disputes.

About the Appellate Body

• WTO’s Appellate Body is a standing body of seven persons that hears appeals from reports issued by panels in disputes brought by WTO Members.
• The Appellate Body can uphold, modify or reverse the legal findings and conclusions of a panel, and Appellate Body Reports.
• Once adopted by the Dispute Settlement Body (DSB), must be accepted by the parties to the dispute.
• 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 points of law.
• Appellate Body does not re-examine existing piece of evidence and only legal interpretations are reviewed.
• The Appellate Body has so far issued 152 reports and has played a key role in ensuring smooth international trade flows.

Structural Crisis

• The membership of the Appellate Body has dwindled to just three persons instead of the required seven. Further, two more members will complete their tenures in December this year, leaving the body with just one member.
• If new members are not appointed to replace the two retiring ones, the body will cease to be relevant since at least three people are required to preside over an appeal
• The vacancies are due to the blocking appointments of new members and reappointments of some members by the United States of America.
• The understaffed body is unable to stick to its 2-3 month deadline for appeals filed in the last few years, and further, the backlog of cases has prevented it from initiating proceedings in appeals that have been filed in the last year

If the vacancies are not filled it may lead to the collapse of the rule-based trade principle. Countries will be in fix to implement rulings by the panel even if they feel that gross errors have been committed. The countries may refuse to comply with the order of the panel on the ground that it has no avenue for appeal. This may lead to further arbitrations and deadlock

Breaking the Impasse

Even though the members of the Appellate Body are usually made by a consensus of WTO members, there is a provision for voting where a consensus is not possible.

17 least developed and developing countries, including India, which have committed to working together to end the impasse at the Appellate Body can submit or support a proposal to this effect, and try to get new members on the Appellate Body by a majority vote.