What happened to the World Trade Organization?

Although the General Council of the World Trade Organization largely agreed to proposed reforms; Ambassador David Walker of New Zealand, who was appointed as the leading facilitator to oversee American complaints over WTO’s functioning; eventually took a brushing by the US trade envoy. The United States of America had been lobbying continuously to curtail the functions of the world trade body. Just when the Appellate was due for another hiring, the US cut down significant funds for renewal. Now, the Appellate body, designed to solve transnational trade disputes, is looming large. How did the multilateral organization reach a new low?

The Trump administration is largely to blame. Historically, as the council members in the WTO pointed out after the American verdict; the appellate has decided more in favour of American interests against disputes. Members spoke brazenly about how the US had used the resolution body to win significant disputes in the past. Downsizing it was a surprise, a rash move by the Trump administration to influence winds in the current trade war with China. Trade disputes are now pending and without the hiring of three positions, it will cease to function altogether. Poor nations will face the brunt; a lack of representation will sway justice in the favour of nations that are more powerful. United States was looking for increased autonomy in forcing countervailing and anti-dumping activities; which was clearly non-aligned with the core values of WTO. Donald trump is heating the challenge by limiting neutral committees to conduct fair operations. America has questioned the efficiency of the body to issue judgements within the stipulated 90 days, accusing members of straying away from the boundaries of understanding and interpreting dispute settling mechanisms. The absence of a functioning appellate body will lead to various consequences. The act of processing a trade complaint by nation states will take a major hit.

What next for the WTO?

The United States has undermined a global institution that has been hugely successful in combating disputes that could have blown out of proportion. Over the years, World Trade Organization came out of its shadows; from a flawed GATT, the trade dispute mechanism was duly added to improve institutional effectiveness. Negative attitudes from the United States has brought about the disease of unilaterism over a multilateral setting. It is difficult to guess how the transition would take place for the trade body, especially under the circumstances of other nations possibly being guided by similar apprehensions. American actions last year mean that there is a great need to revive the system that governs the organization, a possible change in the core rules that determine trading would be the first step. There is a point to consider on how WTO has not transformed the way it was first perceived after China’s inclusion in 2001. There was widespread illusion that China would act a nuisance to the functions and capacity of the organization; instead national interest concerns resurfaced, while American displeasure mounted. Since the end of 2001, China has lodged less than 25 cases at the WTO, only 6% of the total and significantly lesser than the US and the EU. The Chinese problem in the WTO was much anticipated, rather,the existence of productive organs quietly subsided in the last decade. In the same time, global GDP has increased by more than 250%. Nullification of the appellate body points to a new direction. There needs to be provisions where nation states cannot just block a nominee; likewise, an extensive group of judges would ease the workload. While it should have been actively involved in sorting out the current trade war, the World Trade Organization is not being handcuffed; sadly, it does not have the limbs anymore.

Sisir Devkota
Sisir Devkota
Global Affairs Analyst based in Kathmandu, Nepal. Founder, Trainer & Researcher at "The Protocol" which facilitates analytical research on current affairs and workshops on Diplomacy and Leadership. Masters of Social Science in Democracy & Global Transformations from the University of Helsinki, Finland. Author for a book chapter titled as "Armed Conflicts in South Asia 2013".