WTO's Dispute Settlement System Crisis
The WTO is set to miss its target of revitalising its dispute settlement system by the end of 2024.
The Appellate Body (AB), the second-tier of the system, has been non-operational for five years due to the U.S. blocking the appointment of new members.
This has led to the stalling of trade dispute resolutions, as losing countries appeal to a non-functional AB.
The WTO’s Past Promise
The WTO, established in 1995, was seen as a milestone in global trade, offering binding rules and dispute resolution mechanisms.
It shifted trade from diplomacy-based multilateralism to a rule-based system, offering international law supremacy over politics.
The WTO was viewed as a constitutional project ensuring adherence to trade laws globally.
The Unraveling of the WTO
The rise of China and its failure to align with free-market principles led to U.S. frustrations with the WTO system.
The U.S. perceives China’s actions as exploiting the WTO and seeks to undermine the system, including the Appellate Body, to address the Chinese challenge.
The Trump administration’s actions, like imposing tariffs, exemplify the shift from international law to political influence in trade.
A Shift from Legal Multilateralism to Diplomacy
International trade is undergoing a "regime change," with countries reclaiming control over trade policy and moving away from WTO's legal framework.
The WTO’s rule-based system is being replaced by a return to GATT-like diplomacy, reversing the legal revolution initiated in 1995.
This shift indicates a move away from global legal governance towards nationalistic trade approaches.
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