U.S. Rejects the EU's Trade Reform Proposal, Putting WTO at Risk

(Bloomberg) -- The U.S. rejected the European Union’s proposal to reform the World Trade Organization, dealing a blow to international efforts to bolster the Geneva-based body, which has come under attack from President Donald Trump’s administration.

At a WTO General Council meeting on Wednesday, the U.S. said it won’t support the EU’s plan to avert the paralysis of the organization’s appellate body, which mediates trade disputes that affect some of the world’s largest companies.

“The proposals would not effectively address the concerns that members have raised,” Deputy U.S. Trade Representative Dennis Shea said in prepared remarks seen by Bloomberg. “With respect to the proposal advanced by the European Union, China, and India, it is hard to see how it in any way responds to the concerns raised by the United States.”

The move comes after the EU on Wednesday formally deposited blueprints aimed at addressing U.S. concerns that the appellate body has overstepped its mandate. The WTO now enters a precarious year in which it may lose its ability to mediate disputes.

Appellate Crisis

The EU on Wednesday circulated two proposals that are both ambitious and symbolically important in that they represent the first concrete texts aimed at fundamentally reforming the WTO’s dispute settlement system in a quarter century. The WTO requires consensus to amend the dispute settlement process.

Over the past year, the U.S. has refused to consider any appellate body appointments because it says the forum’s members have strayed from their original mandate. Absent any reforms, a U.S. block on new appointments will paralyze the forum by the end of 2019 because it won’t have the three panelists required to sign off on rulings.

“We are deeply concerned that continued vacancies in the appellate body present a risk to the WTO system as a whole,” EU Ambassador to the WTO Marc Vanheukelen said, according to a copy of his prepared remarks. “We therefore emphasize the urgent need to unblock the appointment of appellate body members.”

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