How to restore WTO’s authority

The Appellate Body (AB) Standstill

• WTO’s DSM, comprises a binding two-tiered process with a panel and an appellate body (AB).
• The DSM, a key element of the WTO, has faced challenges since the US blocked the appointment of new members to the appellate body in 2019.
• This leads to a situation where countries can easily avoid complying with panel rulings, making the WTO toothless.

Past Resolutions

• During the 12th WTO ministerial meeting, countries aimed to restore a fully functioning DSM by 2024.
• Developing countries, including India, advocate for the restoration of the AB to its pre-2019 status with the checks and balances.
• The US's reluctance, driven by its desire to de-judicialize international trade relations, poses a significant hurdle to the DSM's full functionality.

Options for Developing Countries

1. Joining the Multi-Party Interim Appeal Arbitration Arrangement (MPIA)

• Developing countries have the option to join the European Union-led MPIA, offering a voluntary mechanism similar to the AB.
• However, though binding on the parties, it lacks the mandatory adoption of rulings by all WTO members.
  • This affects the certainty and predictability of dispute resolution.
• Also, its voluntary nature means that each MPIA tribunal would be an ad hoc one.

2. Diluted Appellate Body (AB)

• Despite US opposition, a compromised option involves a diluted AB with limited powers.
• This approach, however, contradicts the role the DSM should play in providing security and predictability to the multilateral trading regime.
• It will also be inimical to the interests of countries like India.

3. Resurrecting AB with Opt-Out Option

• Scholars propose resurrecting the AB in its original form but with an opt-out provision for countries.
• This allows countries, like the US, to opt out of the AB's compulsory jurisdiction while maintaining a functional AB for other disputes.
  • A country opting out cannot participate in an appellate process either as a complainant or as a respondent.
• Critics argue that the opt-out provision may alter the nature of the two-tier binding DSM.
• However, it may be a necessary compromise to safeguard the AB's existence in its current form, even if the US chooses not to participate.

Conclusion

• India and other developing countries should continue striving for the ideal solution - the restoration of the AB.
• While advocating for the restoration of the AB in its pre-2019 form, developing countries, including India, may need to consider other interim solutions to ensure a functional DSM.