In News, why?
At the recently finished 12th ministerial meeting, there was no debate about bringing back the World Trade Organization’s (WTO) Appellate Body (AB), which has been unnecessary since 2019.
The WTO Appellate Body is what?
- The WTO was created to serve as a forum for discussions about regulating trade, facilitating trade, and monitoring and managing multilateral commerce.
- The resolution of disputes amongst its members by serving as a court for international trade was another important goal.
- The Appellate Body was established in 1995 and presides over appeals against rulings in trade-related disputes brought by WTO members. It consists of seven permanent members and has a short four-year term.
- When one member country notices that another member government is violating a WTO commitment or trade agreement, a dispute will result.
- Members are not allowed to raise their tariffs above a specific margin under the WTO’s trade remedy rules. However, it includes a clause that allows governments to flout these regulations in order to impose trade remedies, such as anti-dumping taxes, in cases where the manufacturing nation has distorted the market by exporting its products at a lower price than the market.
- Countries are free to take action to defend their affordable imports and other compensating charges in order to safeguard tariffs that counteract import price increases.
What Problems Exist?
The appointment of judges is terminated:
- After the judges’ terms expired in 2017, the United States ceased the practise of reappointing judges. The court’s judge count fell below the necessary minimum of three in December 2019.
- It has criticised the WTO for being “unfair” and feels that it is prejudiced against it.
- If new members are not selected to replace the two departing ones, the body will no longer be relevant because an appeal must be presided over by at least three people.
Very Inefficient at Making Decisions:
- Since the body’s founding in 1995, more than 600 cases have been submitted, and decisions have been made in about 350 of them.
- It has even accused the AB of not rendering decisions by the required 90 days.
- Some Rules are Inconsistent: It has been determined that several U.S. provisions for enforcing countervailing and anti-dumping actions are incompatible with fundamental WTO accords.
What repercussions result?
- The WTO’s dispute resolution procedure is already fraught with uncertainty because the Appellate Body is unable to evaluate fresh applications.
- Countries may be forced to adopt panel decisions even if they believe serious errors have been made if the body is ruled non-functional.
- Countries may choose not to abide by the panel’s decision on the grounds that there is no legal way to challenge it. It will run the danger of being subject to arbitration actions brought by the opposing side.
- This is also not good news for India, which is dealing with an increase in dispute cases, particularly those involving agricultural products.
What disputes do India and the WTO have?
- The US’s countervailing duty on Indian steel products, its policies for non-immigrant visas, its renewable energy initiatives, and its import duties on steel and aluminium products are the disputes in which India is a complaining party.
- India is a responding party in WTO disputes including import restrictions on chicken and poultry products brought forth by the US as well as import taxes brought forth by the EU, Japan, and Taiwan on specific information and communication technology items.
- India filed an appeal in January 2022 against a WTO trade dispute panel’s decision that the nation’s domestic support policies for sugar and sugarcane were in violation of international trade standards.
How to Support the Proposal to Recruit New Members:
- There is a provision for voting in cases where a consensus of WTO members cannot be reached for choosing new members of the Appellate Body.
- In order to break the deadlock at the Appellate Body, the group of 17 least developed and developing nations, including India, have agreed to cooperate. They can present or support a proposal to this effect, and aim to get additional members on the Appellate Body by a majority vote.
- But given that other nations worry about the US taking unilateral action as a result of them directly rejecting its veto, this may be the last resort.
Suitable Punishment for Law Violations:
- If a nation has committed a mistake, it should immediately make amends. Additionally, if it persists in breaking an agreement, it should make amends or face a suitable, bite-sized response. However, this is not a punishment; rather, it is a “remedy,” with the ultimate objective being for the nation to abide by the decision.
- Reformative Approach: The long-term, permanent solutions based on the reformative approach include a transitional rule for the departing members, allowing them to finish adjudicating any appeals that remain unresolved even after the end of their terms, and limiting the appellate body’s interpretation to the intent of agreed-upon national laws without straying into uncharted territory in order to protect national sovereignty.
Regular Meetings of the Members:
- To maintain effective communication and a quick remedy mechanism, regular meetings of the WTO members with the appellate body are one of the other long-term solutions.
- In order to avoid the worst-case situation, all of the nations must work together to find a solution to the crisis.