The Trump administration is threatening to undermine the World Trade Organization’s dispute settlement system, often considered the crown jewel of the multilateral trade system, by blocking efforts to fill a number of vacancies at the WTO Appellate Body (AB). The AB hears appeals by WTO Members from reports issued by WTO dispute settlement panels. It can uphold, modify, or reverse these panels’ legal findings. It is a standing body of seven persons serving renewable four-year terms. Each appeal before the AB is heard by three of its members.

In recent years the AB has been hearing an increasing number of appeals, such that even with seven members available to consider multiple appeals at once, the limits of the system were being tested. In accordance with the WTO Dispute Settlement Understanding, the AB should rule upon an appeal within 60 days, extendable to a maximum of 90 days. Given the complexity of many recent cases, these are tight deadlines in the best of times. However, the AB is now down to five members, with the term of one set to expire in December 2017, and another in September 2018. Absent the approval of new members, the AB might be reduced to three members in one year’s time.

To the frustration of many WTO Members, the Trump administration has not clearly articulated its reasons for blocking the approval of new AB members. Past administrations have expressed concern over what has often been perceived in the U.S. as judicial activism on the part of AB members. There is also the perception that the AB has failed to act in the U.S. interest in important disputes. However, beyond these general concerns, the Trump administration appears to remain purposefully vague in a seemingly willful attempt to undermine the WTO, which President Trump has often denounced.

Given a lack of progress in key areas of the multilateral trade negotiations under the aegis of the WTO in recent years, the dispute settlement system has become the organization’s most important feature and has been instrumental in preserving confidence in the organization’s usefulness. By obstructing what until now has been the largely routine exercise of approving new members of the AB, the Trump administration is striking at the heart of the WTO with no clear resolution in sight.

For more information, contact: Charles De Jager