World Trade Organization Facing Crisis

The World Trade Organization (WTO) may be about to face the biggest crisis in its 25-year history. The organization is about to lose its ability to resolve international trade disputes. There are only three members left on the seven-member panel that hears appeals in trade disputes, the minimum needed to hear a case, and two members’ terms expire this week.

Over the past two years, the United States has blocked the WTO from appointing new members to the panel, which requires the consensus of all governments. Last week, the U.S. rejected the idea that the terms of the retiring judges should be extended so that they could hear appeals currently in the pipeline. U.S. officials were willing to agree to allow the judges to complete their deliberations on three cases where hearings had been concluded.

With the Trump administration blocking any new replacements, there will be no official resolution for many international trade disputes. There are hopes that the body can be restored once the Trump administration leaves office, in 2021 or 2025, but that would lead to a backlog of unresolved disputes. In the meantime, it would be easier for countries to break WTO trade rules without facing penalties. As a stopgap measure, the organization says attempts would be made to settle disputes by arbitration.

The United States has long criticized the organization for its stances towards global trade and particularly its actions towards China. China’s entry into the organization on Dec. 11, 2001 added more than one billion people to the global marketplace and roiled markets and workers around the world. The Trump administration has criticized the decision to allow China to claim a special status for developing countries, given that it is now the world’s second largest economy, and says the organization has failed to adequately police the country’s mix of private enterprise and state support to dominate global industries.