The United States Trade Representative has issued a report cataloguing several familiar complaints about the highest court of the World Trade Organization. It follows actions by the administration two months ago to starve the Appellate Body of members, leaving it without the necessary quorum to decide cases. The absence of an umpire on the field will risk pushing the trade system into a law of the jungle approach to disputes.
Yet missing from the critique is any recognition of the nearly one hundred disputes won by the United States, much less any ideas for how to fix the problems the administration sees. In hamstringing the ability of the World Trade Organization to resolve disputes and failing to offer solutions, the United States has called into question the survival of the trade system based on rules and possibly even the World Trade Organization itself.
But it is not too late to save the system. Both members of Congress and the business community are waking up to the fact that the United States has far more to gain than it loses from a vibrant World Trade Organization with a much stronger dispute settlement system. As Thomas Donohue of the Chamber of Commerce put it, shuttering the Appellate Body does not serve American interests. Representative Stephanie Murphy, a Democrat on the House Ways and Means Committee, describes the situation as a “crisis moment” that could prove dangerous for American businesses.
The question is whether the administration is listening. No one knows whether killing the Appellate Body was the goal, in which case mission accomplished, or whether the administration is again raising its concerns in order to force World Trade Organization members to address them. If it is the latter, then there is a deal to be had involving three reforms to get the Appellate Body back on track in exchange for acceptance of a key administration demand that countries such as China, Korea, Singapore, and numerous others forgo special treatment as developing countries.
The three reforms to the Appellate Body involve adopting new principles to make it more efficient by shortening its time frames and limiting its role to deciding only those legal questions necessary to resolve a given trade dispute, establishing an audit process to ensure compliance with those operating principles, and limiting the terms of service for employees to bring fresh perspectives to appeals and restore an appropriate balance of power between the Appellate Body members and its staffers. Collectively, these changes would restore the Appellate Body to the role envisioned for it when it was created in 1995, thereby addressing American concerns.
But it is not just the Appellate Body that the administration is eyeing. As President TrumpDonald TrumpTrump announces new social media network called 'TRUTH Social' Virginia State Police investigating death threat against McAuliffe Meadows hires former deputy AG to represent him in Jan. 6 probe: report MORE said, the World Trade Organization is “broken” when the “richest” countries get special treatment. He directed the United States Trade Representative to get a fix last fall, but no deal has been reached. That failure opens the door to a deal where the United States agrees to unblock appointments to a reformed Appellate Body while World Trade Organization members accept clear criteria defining which countries could be considered developing for purposes of the special treatment.
The deal would give everyone something they want. The administration gets both reforms to the Appellate Body and a guarantee that countries large or rich enough to be in the Organization for Economic Cooperation and Development or the Group of 20 cannot claim special privileges as developing countries, while the rest of the world gets a binding dispute system that leaves in place special privileges for countries that need it.
By paralyzing the Appellate Body, the United States has garnered the attention of the world. If this was done as a genuine effort to reform the Appellate Body, then now is the time for the United States to outline the precise steps it wants taken by the World Trade Organization to allow for a revised Appellate Body to function, potentially as part of a broader deal to amend the treatment of developing countries. A failure to do so will risk squandering the leverage created through its strong arm tactics, thereby branding American concerns as illegitimate and an attempt to destroy not simply the Appellate Body, but the World Trade Organization itself as well.
If the United States is serious about its concerns, it must have a concrete package of key reforms on the table before the World Trade Organization ministers will gather this summer. Congress, businesses, farmers, and all those with a stake in protecting the trade system must now insist it does.
Jennifer Hillman is a senior fellow for trade and economy at the Council on Foreign Relations and a professor with Georgetown University Law Center.