The appellate body is set to become dysfunctional by 10 Dec as the US is not allowing appointment of judges to the panel. AFP (Photo: Alamy)
The appellate body is set to become dysfunctional by 10 Dec as the US is not allowing appointment of judges to the panel. AFP (Photo: Alamy)

New Delhi may not join interim arrangement to replace appellate body at WTO

  • Canada and the EU announced a deal under which both sides will opt for an arbitration procedure and respect its ruling
  • The Appellate Body—considered the supreme court of the WTO —is set to become dysfunctional by 10 December as the US is not allowing appointment of judges to the panel

India is unlikely to strike bilateral deals with World Trade Organization (WTO) members such as the European Union (EU) and Canada who have worked out an interim arrangement to preserve the dispute settlement function of the multilateral body by agreeing to set up arbitration panels to resolve disputes.

The Appellate Body—considered the supreme court of the WTO —is set to become dysfunctional by 10 December as the US is not allowing appointment of judges to the panel.

“Why should we give up our right to appeal in the Appellate Body against any adverse judgment by a dispute settlement panel? We are not going to bind ourselves to a bilateral arbitration with other countries. The EU and Canada seem to have given up hope on the survival of the Appellate Body after December," a senior Indian trade official said on under condition of anonymity.

The seven-member appellate panel currently has only three members, the minimum required for giving a judgment. However, two are set to retire in December, making the body defunct.

Canada and the European Union on Thursday had announced a deal under which both sides will opt for an arbitration procedure and respect its ruling as final if the Appellate Body is not able to hear appeals of panel reports in any future dispute between Canada and the European Union due to an insufficient number of its members.

Reuters had reported on 26 July that the EU and Canada are expected to try to set up similar workaround arrangements with other WTO members such as China, India and Brazil, to ensure they can continue to rely on binding dispute settlement in future.

While the US has been trying to use the opportunity of a dysfunctional Appellate Body to push through wide-ranging reform in the WTO rules including amendment of the developing country criteria, India is of the view that crisis in the Appellate Body should not be used as a leverage to extract concessions in other areas of the WTO’s functioning.

“We now have 12 proposals on the table to address the concerns raised by the member (the US) blocking the appointments. In the last six months, we have had four open-ended and nine small group meetings under the informal process on Appellate Body matters, with an issue-by-issue discussion of all proposals on the table. And yet, we are no closer to a solution than we were at the beginning of the year. This is a very dire situation," India told the WTO General Council meeting on 23 July.

India proposed that the focus should remain on solution-oriented approaches that explore ways in which the concerns with the functioning of the appellate body can be addressed in a manner that accommodates the interests of the entire membership and preserves the essential features of the system.

“Most WTO members do not want international trade without rules, or to be more precise, international trade where the rules are whatever the strongest party to a dispute says the rules are. Most members have a strong interest in an effective rules-based dispute settlement system, evidenced in the serious efforts by several members to address the concerns raised. Such an overwhelming show of good faith and willingness to engage should not be squandered away. With less than five months to go before the impending paralysis of the Appellate Body, we hope to see real engagement from the United States," India said.

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