Biden Admin Says No To WTO Appellate Body Restart

By Kenneth Rapoza, CPA Industry Analyst

The US says there will be no new vacancy slots filled at the World Trade Organization’s Appellate Body due to a number of “systemic” problems. Biden sticking with Trump’s policy for now.

In continuing with the Trump administration’s hard tack against the World Trade Organization, the Biden administration said Monday that it will block new appointments to the Appellate Body over what it called “systemic concerns”.

The Appellate Body is equivalent to a “court” that rules on disputes between members states. Washington has said that the Body acts too much like a final judge and jury, however, whereas that is not what it was intended to do.

“The Obama and Trump administrations blocked WTO judges because their rulings created new law far beyond that agreed to by the Congress when it approved the original WTO agreement. The WTO is long broken and serious reforms need to be made before the US should okay new members of the Appellate Body,” says Michael Stumo, CEO of CPA.

The Biden administration said it was “not in a position to support the proposed decision” to go ahead with new appointments in a 12-page note on Monday. 

“The United States continues to have systemic concerns with the Appellate Body,” the US said. “As Members know, the United States has raised and explained its systemic concerns for more than 16 years and across multiple US Administrations.”

The Appellate Body lost its ability to hear new appeals in December 2019 when the Trump administration block the new vacancies. The administration detailed what Washington was opposed to, saying that it operates outside of its mandate. A number of WTO members in Europe expressed optimism that with Trump gone, things would return to normal within the US-WTO relationship eventually.  

Norway gave voice to this hope on Monday, saying WTO members could be entering a new era.

That would require the US and Europe to see eye-to-eye on China, we think. That new era doesn’t look to be around the corner, though we are still very early in the Biden administration. For now, we are seeing fairly similar action rather than a reverse course from Trump’s view on the WTO’s failings. We view this as a positive.

Biden’s team is still sold on working with allies on the China question, though. President Biden said so yet again during the Munich Security Conference, held virtually this year.

“We cannot focus only on the competition among countries that threaten to divide the world, or only on global challenges that threaten to sink us all together if we fail to cooperate.  We must do both, working in lockstep with our allies,” he said.  “So let me erase any lingering doubt: The United States will work closely with our European Union partners.” 

The US and its allies must “push back against the Chinese government’s economic abuses and coercion that undercut the foundations of the international economic system,” Biden said. “Everyone must play by the same rules.”

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