End of the global trade order?

One of the pillars of the global trade order, the World Trade Organisation’s (WTO) dispute settlement system is set to collapse quietly this week. Though its demise may not make headlines akin to the US-China trade war, but its demise entails moving further away from multilateral rules, designed to promote global free trade and towards a law of the jungle where the mighty wins.
 
The collapse has been in the making for over two years, driven by a US blockade on appointments to the WTO’s highest court, the Appellate Body. In fact, U.S President Donald Trump has rallied against the WTO, calling it a catastrophe and a disaster, based on the assertion that the United States loses cases due to a skewed proportion and representation of Americans in the court. It is not unknown that Trump faces a barrage of disputes, at the WTO against his trade policies, including global tariffs on steel, and a tariff war with China with no end in sight.
 
Since he came to power, Washington has blocked all appointments to the appeals’ chamber as existing judges’ terms end. Such absence of new appointments, which can only occur by consensus of all WTO members in December, the appellate body will shrink to only one member out of its standard of seven, two less to form a quorum of three necessary to hear appeals and settle trade disputes. In a matter of months, their rotation will become meaningless, placing an impossible workload on the remaining members. The next vacancies for the US and Indian members occur in December 2019, at which point the appeals process would be crippled.
 
Essentially, what is at stake is a unique system that has on balance safeguarded the interests of all WTO members, regardless of their economic size or diplomatic influence. Governments must settle trade disputes through the dispute settlement system, if other diplomatic means are exhausted. The dispute settlement mechanism often referred to as the “crown jewel” of the WTO provides governments the right to appeal decisions and the right to withdraw trade concessions and raise tariffs in the event of an adverse funding. The international legitimacy of the WTO dispute settlement system makes it an indispensable tool that governments can use to hold trading partners accountable and without entering a retaliatory mechanism in tariff escalation in a bid to change behaviour.
 
Without a multilateral architecture to hold rule-breakers accountable, international economic relations would revert to the law of the jungle where countries with economic heft would rule the ground. That reversion definitely sits ill with multinational businesses, the global economic framework and the rule of law, thereby potentially jeopardizing international economic stability.
 
India Outbound
Nov 22, 2019
 
 

source https://indiaoutbound.org/end-of-the-global-trade-order/