How to Revive the WTO
The World Trade Organization’s appellate body is under threat not from China, but from the United States, which is blocking the appointment of new judges to the panel. Reviving the WTO will require changes to the organization's rules – but killing its dispute-settlement system is not the solution.
NEW YORK – December 11, 2019, is the 18th anniversary of China’s accession to the World Trade Organization. It also marks the start of an era in which the WTO no longer has a functioning appellate body to adjudicate trade disputes among member countries. Why is the WTO imploding, and can it be resuscitated before it’s too late?
Before China joined the WTO in 2001, many feared that its membership could doom the organization in one of three ways. First, Chinese rule breaking might be so common, skeptics claimed, that it would trigger an explosion of cases against the country that would overwhelm the appellate body of seven judges. Second, China might express its grievances by bringing countless potentially frivolous cases against other countries, which would also exceed the organization’s capacity constraint. And, finally, China might ignore any WTO ruling against it, undermining the system’s credibility and usefulness.
None of that happened. Of the 349 trade disputes brought to the WTO for adjudication since the end of 2001, China has been a defendant in 44, or 12.6% of the total – in line with the country’s 12.8% share of global exports in 2018. Interestingly, this number is fewer than the 99 brought against the United States and the 52 brought against the European Union during the same period. Part of the reason is that China has continued to reduce tariff and non-tariff trade barriers, and ease investment restrictions, in accordance with – and sometimes going beyond – the terms of its WTO accession agreement. In fact, few countries have reduced such barriers more than China has during this period.
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