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04.10.2019 00:00

In response to rising protectionism worldwide, several countries, spearheaded by Germany and France, have recently launched the ‘Alliance for Multilateralism’ at the UN General Assembly. This is the latest signal showing that European countries continue to be committed to the global multilateral system and in particular the global trading system as represented by the World Trade Organization (WTO). But what more can Europe do to translate this commitment into concrete action? It is time for the European Union (EU) to switch into ’Brexit mode’ and throw its united weight behind its professed intention to save the rules-based global order.

The challenge is formidable and urgent. While WTO reform has been on the agenda for a number of years, a crucial element of the system – the Appellate Body of the WTO – might well cease to function by 11 December. This body is responsible for arbitrating appeals in trade disputes, relying on appointed judges to decide in an objective and transparent manner. In trade disputes both sides typically have a justification for their actions, so without such independent arbitration, the ability to resolve these kinds of disagreements will diminish substantively.

This mechanism is under threat as the Trump administration has been blocking new appointments to the Appellate Body since 2017, claiming that its judges have been overstepping their authority and interfering in US laws. Usually, there are seven judges, but now only three are left – the minimum required for hearing an appeal. The already weakened institution is expected to become completely dysfunctional on 11 December 2019, when the terms of two of the remaining judges are ending. This will paralyse the WTO’s dispute settlement system, and effectively leave the multilateral system without a proper enforcement mechanism.

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