WTO Appellate Body reform to be relevant

Editor's note: John Gong, a special commentator on current affairs for CGTN, is a professor at the University of International Business and Economics. The article reflects the author's views and not necessarily those of CGTN.

Amid a world of uncertainties at a troubled time for global trade, the future role of the World Trade Organization (WTO) is being questioned by politicians in many countries. Global trade overall dropped by 0.5 percent in the first half of 2023, and China's total trade dropped by 0.2 percent in the first three quarters. The WTO did show some signs of stabilizing after U.S. President Donald Trump left office.

Nevertheless, how the WTO will move forward with its reform agenda is becoming an existential issue for the organization, given the looming prospect of Trump, whose determination to tear apart the WTO is well known, coming back to the White House for a second term.

China holds a particularly strong interest in the WTO reform, being the world's largest trading organization. For many years, China has been the largest exporter and the second-largest importer in the world. It goes without saying that the WTO's existence is built upon the sacrosanct tenet of free trade, but as the United States, and increasingly the European Union as well, are starting to adulterate this tenet with self-serving heretical concepts like secure trade, reliable trade, and even ideologically-correct trade.

To stay relevant as part of the international rules-based order, the WTO decidedly needs to move forward with its reform agenda. In the last five years, there have been many ideas proposed for WTO reform, but based on the WTO charter regarding unanimity, meaning that all 164 members need to vote yes for anything to be passed, the target of realistic reforms in the near term will have to be somewhat restricted.

In this context, the upcoming 13th WTO Ministerial Conference (MC13), scheduled in Abu Dhabi from February 26 to 29 next year, is a real opportunity to pass at least a small set of reforms. Back in August, WTO Director-General Ngozi Okonjo-Iweala's speech at a meeting of G20 trade and investment ministers already suggested a set of MC13 objectives that include dispute settlement reform, talks on agriculture, negotiations on e-commerce, and the second round of fisheries subsidies negotiations.

Of particular importance, at least to China, is the dispute settlement reform. Dispute settlement is one of the most important pillars of the WTO because without it member states' trade disputes would have no recourse to settle based on rules and laws.

Since the Trump era, the dispute settlement process has essentially been hijacked by the U.S., which is able to do so by blocking, as older judges retire, the appointment of new judges for the Appellate Body, which makes rulings for trade disputes brought to the WTO court.

Reuters reported two weeks ago that there is a draft document dated October 2 regarding the dispute settlement reform containing specific proposals for the MC13. These proposals reportedly address Washington's biggest grudges against the Appellate Body, such as allegations of judicial overreach and inefficiency. According to the news report, the proposal document "envisages a new mechanism allowing countries to review and give feedback on legal interpretations of trade rulings to inform future judgments. It also seeks to encourage and simplify informal resolution of disputes…"

China clearly stands to benefit from the resumption of the Appellate Body and would love to see it work again. The Joe Biden administration also appears to endorse the effort, as Deputy United States Trade Representative Maria Pagan said recently that Washington fully supported the negotiations preceding the MC13 next February. WTO Director-General Ngozi Okonjo-Iweala was reportedly also optimistic, saying there was "a lot of political will" for dispute settlement reform. 

The WTO has many issues that need to be fixed. But fixing the 28-year Appellate Body appears to be an achievable goal in the near term. I bet that the WTO can count on full support from China in this regard, and I would still bet that Washington would not be standing in the way.

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