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Abu Dhabi, UAETuesday 11 December 2018

US refusal of WTO trade judge could cripple arbitration system 

After the latest block, the terms of the last two judges in the body will expire in 2019 leaving no one to rule on trade disputes

World Trade Organization director-general Roberto Azevedo looks on under the agency's sign at their headquarters in Geneva.  AFP 
World Trade Organization director-general Roberto Azevedo looks on under the agency's sign at their headquarters in Geneva.  AFP 

The United States this week blocked the reappointment of a judge at the World Trade Organization, increasing the risk that the global body could soon find itself unable to fulfil its key role in arbitrating trade disputes.

At a time when US President Donald Trump's protectionist policies have sparked a wave of trade wars, the institution best placed to help settle international trade differences and avoid further escalation is facing a deepening crisis.

The WTO's Dispute Settlement Body is battling with the effects of Washington's long-time refusal to sign off on the appointment of new judges to the court's appellate chamber.

And on Monday, the crisis worsened further when the US for the first time baulked at even renewing the mandate of an existing judge.

Shree Baboo Chekitan Servansing of Mauritius will see his term end at the end of September, leaving only three judges to handle the appellate body's large caseload.

Washington's refusal to join the consensus needed to hand him another term has pushed the WTO's dispute settlement system to the edge of the abyss.

The appellate body, which offers a last resort to settle international trade disputes and avoid escalation between countries, normally counts seven judges.

But the number has gradually dwindled amid Washington's refusal to agree to fresh appointees.

Three judges is the bare minimum needed for the appellate body to function.

Yet two of the three judges remaining once Mr Servansing steps down next month will themselves see their mandates expire at the end of 2019.

The 164-member WTO is confronting a long line of headaches linked to Trump's trade policies, but trade experts have said the DSB blockage may prove the most severe, since it could cripple the organisation's ability to resolve disputes -- one of its key functions.

"For more than 15 years, across multiple US administrations, the United States has been raising serious concerns with the Appellate Body's disregard for the rules set by WTO members," the US envoy to the WTO Dennis Shea said during a meeting in Geneva Monday.

He charged that the body was guilty of "persistent overreaching" and of not respecting proper WTO procedures by "adding obligations that were never agreed by the United States and other WTO members".

The US has complained that the 90-day limit for the judges to reach a verdict is consistently overstepped, while the appellate body allows judges to complete work on a case even after their mandate has lapsed, contrary to the US interpretation of WTO rules.

But Mr Shea said "our concerns have not been addressed".

"In this circumstance, the United States has determined that it is not prepared to support the reappointment of Mr Servansing to the Appellate Body," he said, insisting that this decision was "no reflection on any one individual but reflects our principled concerns."

US scepticism to the WTO appeals court is nothing new.

The administration of former president Barack Obama also blocked appointments to the court, but the crisis has spiralled since Mr Trump entered the White House last year.

Addressing the issue in an opinion piece published in the Swiss daily Le Temps last week, WTO chief Roberto Azevedo stressed that "there is a need for true engagement from all sides to get out of this impasse.