Canada among countries putting a band-aid on trade dispute settlement

With the World Trade Organization’s dispute settlement process in tatters, Canada is among a group of 23 WTO members that are trying to apply a band-aid solution for settling trade disputes amongst themselves.

The group, which also includes Australia, China, the European Union, and Mexico, announced on Monday (August 3) that its temporary arrangement is officially operational.

On Friday, the participating countries appointed 10 arbitrators, including one Canadian, who will hear appeals of WTO panel reports involving the countries in the agreement.

“With the agreed pool of arbitrators, the interim appeal arrangement for the WTO disputes is now up and running,” notes EU Commissioner for Trade Phil Hogan. “It shows that participating WTO members are willing to take concrete action to preserve an independent dispute settlement system with an appeal function. We can now turn our attention to finding a solution to the underlying problems through reform of the WTO Appellate Body and other aspects of the WTO system that need improvement.”

The U.S. and the UK are notably absent from the group.

The WTO’s dispute settlement process has been paralyzed since late last year, as the U.S. government has refused to appoint new members to the WTO’s Appellate Body, which hands down rulings when there’s an appeal following a WTO ruling.

The absence of a functioning WTO dispute settlement process is significant for Canadian agricultural exports, as it serves as the last-ditch mechanism for enforcing market access that’s been agreed to between WTO members.

For example, the WTO’s Appellate Body ruled in favour of Canada and Mexico when both countries challenged U.S. mandatory country-of-origin labelling (COOL) rules for pork and beef  in 2015. If a similar dispute were to arise today, there would be no functioning WTO body to hand down a binding decision.

The new temporary arrangement between the 23 WTO members is retroactive to April 30, 2020.

“This arrangement will be in place on an interim basis until the WTO Appellate Body is fully operational. It will be open to all WTO members wishing to join,” said Canada’s Minister of International Trade, Mary Ng, in a statement this past spring.

So if there’s a dispute between participants in this temporary arrangement that results in an appeal, three members of the arbitrator pool of 10 will be selected randomly to hear the case. Canada’s appointee is Valerie Hughes, who has previously worked in high level international trade law roles for the Canadian government and at the WTO.

As noted by Minister Ng, the interim arrangement is open to all WTO members. The initial group consists of: Australia; Benin; Brazil; Canada; China; Chile; Colombia; Costa Rica; Ecuador; the European Union; Guatemala; Hong Kong, China; Iceland; Mexico; Montenegro; New Zealand; Nicaragua; Norway; Pakistan; Singapore; Switzerland; Ukraine; and Uruguay.

The WTO is currently in election-mode, as several candidates are running to replace Director-General Roberto Azevêdo, who is stepping down at the end of August. Most of the candidates say resolving the dispute settlement process is one of their top priorities.

Related: Is the WTO broken?

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