Calls to the bottomless pit frees China from trade crimes
Australian Prime Minister Scott Morrison got right to the heart of the matter by urging the G7 to lead the way in re-establishing the World Trade Organization appeals tribunal – the WTO cannot be effective without the application of trade rules through its binding dispute settlement system, and this system cannot be effective without the appointment of seven new judges to sit now vacant seat of the WTO Appellate Body.
Looking ahead to this weekend’s G7 summit in Cornwall, Morrison did not mention China by name. His remarks, however, were clearly focused on China, with which Australia is engaged in a growing number of trade disputes. He denounced the “economic coercion”, which Australians see in the recent Chinese impositions of restrictions on billions of dollars in Australian barley and wine imports following Australia’s denunciations of Chinese actions that undermine democracy and violate human rights.
Australia has already filed a case before the WTO against China challenging Chinese duties on Australian barley, which China says is undervalued in the Chinese market. Australia is also about to file a complaint with the WTO to challenge Chinese tariffs of up to 220% on Australian wine, which China says is heavily subsidized by Australia and then dumped on the Chinese market. These cases may well have legal standing, but even if Australia wins in the panels that serve as first instance courts in the WTO, it will not be able to enforce these judgments.
WTO members have a automatic right under the WTO treaty to appeal panel verdicts to the Appellate Body before they are implemented. Although there are no judges in the appeal body, this right will be denied. Thus, if Australia wins in the panels, China will be able to appeal into the abyss and, with the cases pending without a final judgment, WTO members will be unable to adopt and implement the decisions of panels.
Of course, this is not only the case in trade disputes between Australia and China. This is the case in trade disputes between the 164 members of the WTO. A binding trade dispute settlement system put in place over a quarter of a century by the accumulation of hundreds of cases and thousands of court decisions is now largely undone; because any country that loses a case can – by appealing to a court that no longer exists – block the execution of the decision in this case.
As Morrison sees it, and as the leaders of all WTO member countries should see, the only way to restore the effectiveness of the WTO as a defender of the trade rules agreed in the WTO treaty and “the only way more practical to combat economic coercion is the reestablishment of the binding dispute settlement system of the world trade body. Where there are no consequences for coercive behavior, there is little incentive for restraint. ”
If the G7 countries do not act together in the WTO to reconstitute the appellate body, and if nothing changes, China and other major trading nations will simply use most of their economic influence to do whatever they want in their trade relations with other countries – especially those that are smaller and less powerful. We will return to where we were before creating the WTO, which was designed to end trade anarchy by upholding the rule of international law through the application of binding rules for trade.
Of course, this dire situation in WTO dispute settlement is neither China nor Australia’s fault. It is almost entirely fault of the United States of America. Little is accomplished in the United States today on a bipartisan basis. Yet a bipartisan effort – an effort that began under the second Bush administration, has intensified throughout the Obama and Trump administrations, and persists, at least for now, under the president. Joe bidenJoe Biden Former representative Rohrabacher says he participated in the Jan.6 march to Capitol Hill but did not storm building Saudis picked up drugs in Cairo used to kill Khashoggi: Biden report seeks to create momentum for Putin PLUS reunion – has gradually succeeded in undermining what has so far been the most effective international dispute settlement system in the history of the world.
The sad historical irony is that it was the United States that insisted the most on creating a binding dispute settlement system when the WTO was created. We Americans knew then – on a bipartisan basis – that as the world’s leading trading nation, we benefit more than any other country from a global foundation of agreed and binding trade rules to facilitate and improve trade flows in the world. the whole world. . In a way, we have forgotten this.
Successive administrations having refused to agree to appoint new WTO appeal lawyers when the practicing lawyers have finished their mandate and left. They did it on the basis of an apology that is mostly bogus and is nothing but smokescreens for the real reason that there is such bipartisan support for this myopic intransigence – the appellate body. has always upheld the WTO rules on anti-dumping and other trade restrictions, which limit the ability of the United States government to enforce these trade remedies when and as it wishes. And both American political parties have their reasons for wanting as much legal leeway as possible to apply such remedies, which are of particular importance to voters and the struggling chimney industries in the “hub states” of the industrial Midwest. .
The United States has repeatedly accused appeals body judges to “go too far” when clarifying WTO rules on trade remedies. In fact, the judges simply enforced the rules. What really motivates the United States is that it does not want to have to comply with these rules. Yet, not having the time or inclination to read all the voluminous rules and rulings of the WTO – filled with esoteric footnotes – politicians and journalists in the United States largely believed in this “fat lie “. It is now widely regarded as conventional wisdom in the Washington Beltway.
The real problem is not the “excess” of WTO judges. The real problem is the “lack of scope” of the United States and many other WTO members who are reluctant to build on the legal foundation of everything they have created in the WTO. As Morrison suggested, all WTO members need to remember why they created a binding trade dispute settlement system in the first place, and after remembering it, they need to restore it, starting with the appeal body. If they don’t, the security of the rule of law in international trade will once again give way to the chaos of the rule of power.
James Bacchus is Adjunct Research Fellow at the Cato Institute and Emeritus Professor of Global Affairs at the University of Central Florida. He was a founding judge and was twice President – Chief Justice – of the WTO Appellate Body. His latest book, “Trade Links: New Rules for a New World”, is forthcoming from Cambridge University Press.