The WTO Faces a New Threat From Trump, This Time Over Its Budget
U.S. Criticizes WTO Fees in New Threat to the Trade Organization
(Bloomberg) --
The Trump administration on Friday criticized the World Trade Organization’s compensation structure for appellate body members, laying out a case for potentially blocking the institution’s budget and effectively halting its work starting next year.
Deputy U.S. Trade Representative Dennis Shea said during a meeting in Geneva that the WTO’s compensation structure creates an incentive for appellate body members, who make more than 300,000 Swiss francs ($301,000) a year, to spend more time on their appeal cases in order to receive higher compensation.
“Prolonging the duration of an appeal would appear inconsistent with the objective behind the” WTO’s rule providing for the prompt resolution of disputes, Shea said during Friday’s meeting.
The statement comes 10 days after a U.S. delegate first raised the possibility that the U.S. may block the approval of the institution’s biennial budget for 2020 and 2021, according to people familiar with the matter. Because WTO decisions must be made by a consensus among all 164 members, a U.S. blocking maneuver would threaten the proper functioning of the organization responsible for overseeing the rules of global commerce.
The American actions could also force countries to fundamentally rethink their reliance on it to negotiate trade deals and settle the surging number of disputes.
The budget threat comes as the U.S. continues to prevent new appointments to the WTO 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 international commerce. The seven-member appellate body will be rendered useless at midnight on Dec. 10 if the hold persists.
The U.S. also expressed its concerns about funding being diverted to a proxy dispute settlement system recently championed by the European Union, Canada and Norway.
‘Year-Round Apartment’
The U.S. said the WTO’s current fee structure for appellate body members is a monthly retainer of 9,415 Swiss Francs with a daily working fee of 791 Swiss Francs for each day worked. The U.S. said the working fee for WTO appellate body members has ranged from 12,000 to 15,000 Swiss Francs per month.
As part of the per diem arrangement, appellate body members have the option to receive 3,000 Swiss Francs per month to pay rent on an apartment in Geneva. In such cases, the member still receives a per diem allowance for meals of 150 Swiss Francs per day.
“We do not think it reasonable for an individual to be provided a year-round apartment in Geneva, at WTO Member expense, when that individual’s duties require him or her to be in Geneva perhaps a dozen days per year,” the U.S. delegation said.
Big Spenders
It’s not immediately clear what would happen if the U.S. made good on its threat to block the WTO’s biennial budget. Members of the budget committee plan to meet again on Nov. 27 and governments have until Dec. 31 to adopt a spending plan for 2020 and 2021.
The U.S. contributes more money than any other single country to the WTO -- 22.7 million Swiss francs 2019, according to WTO data. The total budget for 2019 was 197.2 million francs, the same as a year earlier and the WTO has proposed to maintain the same budget level for the coming biennium.
The dual threats marks an escalation in the Trump administration’s approach toward the trade body, which President Donald Trump has threatened to withdraw from entirely. His administration also blames the WTO partly for allowing China to grow into a rival economic power over the past two decades by flaunting the rules.
To contact the reporter on this story: Bryce Baschuk in Geneva at bbaschuk2@bloomberg.net
To contact the editors responsible for this story: Brendan Murray at brmurray@bloomberg.net, Richard Bravo
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