Trump could cause world trade system to freeze up

Donald Trump could cause the world’s trade dispute resolution system to freeze up after vetoing the appointment of judges to an appeals body, diplomats fear.

The seven-member Appelate Body of the World Trade Organization (WTO), which makes rulings on arguments between countries over trade, has already seen two judges leave, with a third going in December.

But the US President has blocked replacements, leaving just four judges to deal with a growing backlog of trade disputes. A minimum of three judges are needed to sign off on every appeals decision.

Officials are now scrambling to come up with an answer to the growing crisis.

“Members are already having a conversation about what to do with this situation,“ WTO Director General Roberto Azevedo told reporters. ”They are floating ideas, they are discussing. We have to see how that evolves.”

Mr Azevedo said he did not think the situation was a threat to the WTO’s survival but it was already having an impact, and the longer it went on the more acutely it would be felt.

In a confidential note sent to all WTO members on Monday, a copy of which was reviewed by Reuters, the Appellate Body said departing judges would continue working after they left on appeals filed before their terms ended. The United States has objected to that practice in the past.

Appointments to the Appellate Body are meant to be unanimously agreed by all 164 members, like all decisions at the WTO. The fine print says the WTO can switch to majority voting if necessary, but diplomats are reluctant to do that for fear of unravelling a system that relies on consensus as a bulwark to protectionism.

Mr Azevedo said the Trump administration had made clear it had misgivings about the way the world trade system has functioned, although it had not linked any specific demands for reform with the decision to halt appointments to the appeals panel.

The Trump administration has not publicly explained why it is blocking the appointment of judges to the trade panel. The US mission to the WTO in Geneva declined to comment.

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