At midnight Tuesday, the WTO's appellate body, whose decisions affect billions of dollars in trade, will lose its ability to rule on new dispute cases. Without having to worry about possible sanctions, countries could use tariffs or be tempted to implement protectionist measures.
In a statement released Tuesday, the EU Commissioner for trade, Phil Hogan, said “this is a regrettable and very serious blow to the international rules-based trade system, which, for the past 24 years, has relied on the WTO’s Appellate Body – and dispute settlement generally."
The panel is supposed to have seven judges. But their ranks have dwindled because the United States — under the past three presidents — has blocked replacements to protest the way the WTO does business. A minimum of three judges is needed and the terms of two of the last three judges neared their end at midnight Tuesday
“This is a critical moment for multilateralism and for the global trading system," Hogan said. “With the Appellate Body removed from the equation, we have lost an enforceable dispute settlement system that has been an independent guarantor, for large and small economies alike, that the WTO’s rules are applied impartially."
Anticipating the end of the appellate body, the EU and Canada agreed this summer on a new trade dispute resolution system as a temporary backstop. The EU wants to expand it, but it's unclear how many countries might join in.
“The European Commission will soon unveil further proposals to make sure that the EU can continue to enforce its rights in international trade matters should others block the system,” Hogan said.