EU, 16 WTO members sign pact to develop interim appeal arrangement

The European Union and 16 WTO members including China and Australia on Friday signed a pact to develop a multi-party interim appeal arrangement.

The arrangement, signed on the sidelines of the World Economic Forum (WEF) annual meeting, will allow the participating WTO members to preserve a functioning and two-step dispute settlement system at the World Trade Organization (WTO).

This initiative was launched in mid-December 2019 by the EU and a number of other WTO members following the effective paralysis of the WTO Appellate Body due to the blockage of new appointments since 2017.

EU Commissioner for Trade Phil Hogan said: "This statement testifies to the high importance that the EU and the participating WTO members attach to retaining a two-step dispute settlement process in WTO trade matters. The multiparty appeal arbitration arrangement will guarantee that the participating WTO members continue to have access to a binding, impartial and high-quality dispute settlement system among them."

"Let me underline again that this remains a contingency measure needed because of the paralysis of the WTO Appellate Body. We will continue our efforts to seek a lasting solution to the Appellate Body impasse, including through necessary reforms and improvements," he added.

The multi-party interim arrangement will be based on Article 25 of the WTO Dispute Settlement Understanding (DSU).

It will secure the participating WTO members (Australia, Brazil, Canada, China, Chile, Colombia, Costa Rica, the European Union, Guatemala, Republic of Korea, Mexico, New Zealand, Norway, Panama, Singapore, Switzerland, and Uruguay) an effective and binding dispute settlement process for potential trade disputes among them.

The arrangement is a contingency measure and it will only apply until the WTO Appellate Body becomes operational again. The EU believes that an independent and impartial appeal stage, giving the necessary guarantees of rulings of the highest quality, must continue to be one of the essential features of the WTO dispute settlement system.

The joined statement by the 17 signatories said, "We, the Ministers of Australia, Brazil, Canada, China, Chile, Colombia, Costa Rica, European Union, Guatemala, Republic of Korea, Mexico, New Zealand, Norway, Panama, Singapore, Switzerland, Uruguay, remain committed to work with the whole WTO membership to find a lasting improvement to the situation relating to the WTO Appellate Body.

"We believe that a functioning dispute settlement system of the WTO is of the utmost importance for a rules-based trading system, and that an independent and impartial appeal stage must continue to be one of its essential features."

The signatories said they will work towards putting in place contingency measures that would allow for appeals of WTO panel reports in disputes among themselves, in the form of a multi-party interim appeal arrangement based on Article 25 of the WTO Dispute Settlement Understanding. This would be in place only and until a reformed WTO Appellate Body becomes fully operational.

The arrangement will be open to any WTO Member willing to join it.

"We have instructed our officials to expeditiously finalise work on such an arrangement. We have also taken proper note of the recent engagement of President Trump on WTO reform," the statement added.