WTO Dispute Settlement Reform Talks Fail

By David Lawder

WASHINGTON (Reuters) – World Trade Organization (WTO) members were unable to reach an agreement on reforms for a dysfunctional trade dispute settlement system during the last General Council meeting prior to U.S. President-elect Donald Trump’s inauguration in January, according to outgoing U.S. WTO ambassador Maria Pagan.

Pagan informed reporters during a briefing that the discussions held on Monday and Tuesday in Geneva also did not yield any agreements concerning fisheries issues related to excessive fishing capacities and overfishing.

The WTO has been endeavoring to rectify its dispute settlement system, which became non-operational in 2019 following U.S. obstruction of Appellate Body judge appointments over allegations of judicial overreach within trade disputes. These discussions, which were revived earlier this year, aimed at reforming and replacing the appellate body.

Pagan, who led WTO negotiations for the U.S. Trade Representative's Office under the Biden administration, noted some progress had been made in discussions, but highlighted persistent divisions concerning the appropriate nature of appeals.

Throughout three U.S. administrations, beginning with President Barack Obama, Washington has accused the WTO Appellate Body of exceeding its authority by creating new trade regulations that were not agreed upon by the 166 member economies of the WTO.

"I do think that some members were still just hoping that we would just change our minds, which, you know, we have not," Pagan stated. She emphasized that the U.S. is open to exploring several constructive ideas but will continue advocating for its principles.

"I do hope that people take it seriously," she added. "If they want us to be part of the system, then, you know, take us seriously."

NO CONTACT WITH TRUMP TEAM
Pagan, a veteran lawyer at USTR and the Commerce Department, mentioned that she has had no interactions with the Trump transition team and refrained from providing advice to Trump's nominee for USTR, Jamieson Greer, who previously served as USTR chief of staff in Trump's initial term. Greer was instrumental in implementing significant tariffs on Chinese products and global steel and aluminum imports in 2018 and 2019.

WTO dispute panels concluded that the China tariffs and metals tariffs violated WTO regulations, but the impact of these rulings has been nullified due to the failing appellate mechanism. A WTO panel also ruled last year against China's retaliatory tariffs on U.S. imports.

Trump has pledged to impose tariffs of 60% on Chinese goods and at least 10% on all other global imports upon taking office on January 20, a move that could disrupt trade patterns, increase expenses for U.S. businesses and consumers, and provoke extensive retaliatory actions against American exports.

The next WTO General Council meeting is scheduled for February 18-19. However, Pagan noted the need to find a successor for the WTO’s facilitator of dispute settlement negotiations, Ambassador Usha Dwarka-Canabady of Mauritius, who has vacated her position, before progress can be made in discussions.