U.S. Files a WTO Appeal After Neutralizing That Very Process

(Bloomberg) -- The Trump administration this week seized an early opportunity to reap the rewards of its effort to paralyze the World Trade Organization’s dispute-settlement system.

On Wednesday the U.S. lodged a formal appeal of a recent WTO ruling that found the U.S. did not adequately amend a series of illegal tariffs on Indian hot-rolled carbon steel products.

Because the WTO appellate body no longer has a sufficient quorum of members to sign off on new rulings, the U.S. move will effectively act as a veto of the ruling because the case was appealed into a legal void.

In a meeting Wednesday, a U.S. trade official acknowledged that there were not enough appellate body members to hear the appeal, and said the U.S. would work with India to seek a solution, even if it occurs outside the WTO’s appellate process, according to a Geneva trade official who attended the meeting.

The Indian delegate said India was deeply disappointed with the dysfunctional state of the appellate body and described the WTO dispute system as one of the most effective international courts in history, the official said.

Trade officials have warned that moves like this will hurt the functioning of the multilateral trading system, increase uncertainty for businesses and create the potential for escalating trade wars.

Last week, the European Commission moved to strengthen its trade-policy arsenal to allow new penalties against nations that undermine WTO rulings by appealing them into a legal void.

If the proposal is approved, it would enable the EU to unilaterally impose countermeasures against any WTO members that appeal an EU dispute into the legal void and fail to seek final adjudication via other means.

European Trade Commissioner Phil Hogan said he expected EU capitals and the bloc’s Parliament to endorse the measure by mid-2020.

©2019 Bloomberg L.P.

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