Why WTO’s on the verge of collapse
Will WTO shut down in 2020?
WTO governs $23 billion in trade
* While GATT mainly dealt with trade in goods, WTO also covers trade in services and intellectual property, and introduced procedures for dispute settlement.
* WTO rules govern nearly $23 billion in global trade.
* It’s based out of Geneva.
Dispute settlement mechanism central to WTO
* Dispute settlement begins with consultations to give the involved parties the opportunity to resolve the dispute themselves.
* If consultations fail, the complainant can seek the establishment of a panel, which will receive submissions from both parties and submit a report of its findings.
* Here’s where the appellate body (AB) comes into play. If a panel report is appealed by any involved party, AB hears appeals and then makes the final and binding decision in disputes. The body has a sanctioned strength of seven, but judge retirements left vacancies that were not filled, leading to the current situation.
But US, citing unfair treatment, has scuttled WTO
* Since 2018, US has refused to approve appointments to fill vacancies on the appellate body. All appointments require unanimous agreement among WTO members.
* The terms of two judges — US’ Thomas Graham and India’s Ujal Singh Bhatia — will end on December 10, leaving China’s Hong Zhao as the only remaining member.
* The US move has effectively defanged the WTO’s dispute settlement procedure — if any party in a dispute appeals the initial decision, without enough judges in AB, the dispute will remain indefinitely unresolved.
* Not only has the US blocked appointments, it has also threatened to block the WTO’s budget, which could force the body to shut operations entirely on January 1, 2020
A crippled WTO could hurt Indian interests
* Ongoing disputes include US and Japan complaining of excessive import duties and India pulling up the US for its steel and aluminium tariffs, and fee hikes for non-immigrant visas, including the H-1B. Source: WTO, media reports