Photo:Reuters
Photo:Reuters

Nations mull rules governing ‘arbitration’ as an option for resolving trade wars at WTO

The arbitration route would go back to the pre-WTO phase of panels, which allowed powerful countries to block rulings in a dispute raised by small members

Geneva: As the US escalates its trade war with China and simultaneously prepares the ground to terminate the highest global court for trade disputes next year, several industrialized countries are considering rules governing “arbitration" as a possible option for resolving trade frictions at the World Trade Organization (WTO), say people familiar with the development.

The arbitration route would go back to the pre-WTO phase of panels, which allowed powerful countries to block rulings in a dispute raised by small members, said a trade envoy, who asked not to be quoted. “Such a system based on arbitration will take the WTO back to the pre-1995 phase when trade disputes were seldom resolved by the powerful countries who could block rulings issued by panels," the envoy admitted.

On Friday, a senior US trade official ratcheted up pressure on China threatening Beijing that the Trump administration will take extreme measures against China for dismantling the economic policy regime that is being followed by the Chinese administration.

Despite the US and China having agreed to address their bilateral trade frictions in the next 90 days ending 1 March 2019, Peter Navarro, a senior trade official in the White House, told the Japanese financial daily Nikkei on Friday that the US administration will escalate the trade war if Beijing fails to satisfy Washington’s core demands to do away with major economic policies being pursued by Beijing, including the forced transfer of technology and industrial subsidies.

On a separate track, the US mercilessly attacked China at its 14th trade policy meeting that ended on 19 December accusing China of being the “epicentre" for global trade disputes. A large majority of countries, including the European Union and India, held the US responsible for global trade frictions and sought assurances from the US to resolve the blockages it had created at the WTO during the American trade policy review meeting.

However, the US trade envoy Dennis Shea, solely focused his replies on accusing China for all the problems on the multilateral trade front, said several trade envoys, preferring not to be quoted.

Against this backdrop, several major industrialized countries are now reconciling to the prospect of the disappearance of the appellate body because of intransigent positions adopted by the US by the end of new year. Consequently, they are preparing the ground for considering rules governing “arbitration" in the Dispute Settlement Understanding as a possible option in case the appellate body is terminated next year.

Close