(Bloomberg) --
Canada and the European Union are in talks to preserve the World Trade Organization’s embattled appellate body, which is expected to run aground by year-end due to pressure by the U.S. to cut its power.
“We’ve been working with the European Union to find an interim fix,” Canadian Prime Minister Justin Trudeau said in Montreal on Thursday after a summit with the EU. “After this summit we’re closer to finalizing an agreement which would help preserve the function of an appeal system within the WTO until we find a more permanent solution.”
The EU has already started the process of finding an interim solution for when the adjudicative body of the WTO becomes hamstrung, as is expected later this year, according to internal EU documents seen by Bloomberg.
The U.S. is blocking new appointees to the seven-member WTO appellate body, which will lead to it being incapacitated in December because there won’t be enough judges to issue rulings. The EU plan would implement an arbitration process that would continue the “essential principles and features” of the appellate body, according to the memo.
Stopgap Measure
The approach would provide a legal alternative to the appellate body, which has the final say in upholding, modifying, or reversing WTO rulings that often affect some of the world’s biggest companies and billions of dollars in commerce. This would enable them to voluntarily arbitrate their WTO dispute rulings.
An interim solution would be a stopgap measure pending the resumption of the selection of new WTO appellate body members.
Canada and the EU have few commercially meaningful disputes at the moment so the agreement is intended to provide political support behind a proposed solution to avoiding the systemic paralysis of the WTO appellate body, and in turn the WTO dispute settlement system.
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