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American ShipperInternationalNewsTrade and Compliance

US steps up campaign to reset WTO Appellate Body

The Office of the U.S. Trade Representative said the trade dispute settlement body has overstepped its function and makes “erroneous interpretations” of World Trade Organization agreements.

The Office of the U.S. Trade Representative (USTR) in a report on Tuesday blasted the World Trade Organization (WTO) Appellate Body for overstepping its role in settling trade disputes between countries and called for its overhaul.

“The Appellate Body’s failure to follow the agreed rules has undermined confidence in the World Trade Organization and a free and fair rules-based trading system,” USTR wrote in the 174-page report. “Given persistent overreaching by the Appellate Body, no WTO member can trust that existing or new rules will be respected as written.”

The USTR added that the Appellate Body’s conduct has “converted the WTO from a forum for discussion and negotiation into a forum for litigation.”

The Trump administration has made no secret of its disdain for the WTO’s dispute-settlement practices. The U.S. has continued to block nominations to serve on the Appellate Body for the past two years.

“For more than 20 years, successive administrations and the U.S. Congress have voiced significant concerns that the Appellate Body has failed to function according to the rules agreed by the United States and other WTO members,” U.S. Trade Representative Robert Lighthizer said in a statement. “President Trump is committed to a trade agenda that benefits all Americans, and a reassessment of the WTO and its role is a key part of that agenda.”

The USTR said the Appellate Body’s actions have led to a “disproportionate” impact on the U.S., since more than a quarter of the disputes before the body challenge U.S. laws and other trade measures, far more than any other WTO member. Specifically, the U.S. trade representative noted that 155 challenges have been lodged against the U.S. in the WTO.

The USTR said the WTO Appellate Body’s decisions within the dispute-settlement process have resulted in U.S. laws or measures being considered out of step with the country’s WTO agreements in about 90% of those challenges, particularly involving antidumping and countervailing duty actions taken by the U.S. against “nonmarket” economies such as China.

“These errors have favored nonmarket economies at the expense of market economies, rendered remedy laws ineffective and infringed on members’ legitimate policy space,” the USTR report said.

The WTO has not yet publicly commented on the U.S. report’s accusations. The Geneva, Switzerland-based trade body, founded in 1995, is made up of 164 member states.

The Washington, D.C.-based U.S. Chamber of Commerce has been outspoken about restoring the WTO Appellate Body’s intended purpose within a trade dispute-settlement process.

“Its rules protect U.S. firms from unfair treatment and hidden protectionism every day,” said Myron Brilliant, the chamber’s executive vice president and head of international affairs, in December. “Safeguarding this institution and its dispute-settlement system should be an urgent national and international priority.”

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Chris Gillis

Located in the Washington, D.C. area, Chris Gillis primarily reports on regulatory and legislative topics that impact cross-border trade. He joined American Shipper in 1994, shortly after graduating from Mount St. Mary’s College in Emmitsburg, Md., with a degree in international business and economics.

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