Appellate Body

The Appellate Body of the World Trade Organization (WTOAB) is a standing body of seven persons that hears appeals from reports issued by panels in disputes brought on by WTO members.^[1] The WTOAB can uphold, modify or reverse the legal findings and conclusions of a panel, and Appellate Body Reports, once adopted by the Dispute Settlement Body (DSB), must be accepted by the parties to the dispute. The WTOAB has its seat in Geneva, Switzerland. It has been termed by at least one journalist as "effectively the supreme court of world trade".^[1]

Since 2019, when the Donald Trump administration blocked appointments to the body, the Appellate Body has been unable to enforce WTO rules and punish violators of WTO rules.^[2]^[3] Subsequently, disregard for trade rules has increased, leading to more trade protectionist measures.^[3]^[4] The Joe Biden administration has maintained Trump's freeze on new appointments.^[3]

History

The WTOAB was established in 1995 under Article 17 of the Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU).^{[citation needed]}

“A standing Appellate Body shall be established by the DSB. The Appellate Body shall hear appeals from panel cases. It shall be composed of seven persons, three of whom shall serve on any one case. Persons serving on the Appellate Body shall serve in rotation. Such rotation shall be determined in the working procedures of the Appellate Body.”^[5]

Blocking of adjudicator appointments

Under the mandate of the Trump administration, the US held up appointments to the WTOAB. David Walker was appointed to chair the WTODSB with the mandate to solve this thorny problem.^[6] A journalist said that the delay was an effort to skew arbitration in the favour of the US.^[1] On 9 April 2019, US Trade Representative Robert Lighthizer said in reference to past adjudications over the policy of zeroing that the WTOAB had been "overreaching", as the government of Justin Trudeau was punished by the Trump administration over softwood lumber.^[1]

The Trump defect crystallised on 11 December 2019. In default of an WTOAB adjudication board, the EU and Canada reached an agreement whereby the WTOAB is replicated as closely as possible. Under this agreement, former WTO judges will hear appeals between the two entities after the Trump defect has been crystallized. The Trump administration has repeatedly pleaded for redress and is using the leverage at its disposal.^[7]

Multiparty Interim Appeal Arbitration

In March 2020, the European Union and 15 other WTO members agreed to a Multiparty Interim Appeal Arbitration Arrangement (MPIA).^[8] This gave access to an alternative appellate mechanism (arbitration as an appellate mechanism) while the Appellate Body is not functional. Its provisions mirror the usual WTO appeal rules and can be voluntarily used between any WTO members to resolve disputes. The European Commissioner for Trade Phil Hogan said: "This is a stop-gap measure to reflect the temporary paralysis of the WTO's appeal function for trade disputes ... We will continue our efforts to restore the appeal function of the WTO dispute settlement system as a matter of priority."^[9] Since being announced, the People's Republic of China and other WTO member nations have joined the MPIA.^[10]

A pool of ten arbitrators were announced on 31 July 2020 marking the operational start of the MPIA. The arbitrators appointed were José Alfredo Graça Lima (Brazil) Valerie Hughes (Canada), Alejandro Jara (Chile), Guohua Yang (China), Claudia Orozco (Colombia), Joost Pauwelyn (EU), Mateo Diego-Fernandez Andrade (Mexico), Penelope Ridings (New Zealand), Locknie Hsu (Singapore), and Thomas Cottier (Switzerland).^[11]