PARIS (Reuters) - The World Trade Organization’s appeals court, which seeks to resolve disputes between members, faces temporary collapse this year in the face of U.S. opposition to the nomination of judges, the EU’s trade chief said Tuesday.
U.S. President Donald Trump has blocked new appointments to the seven-member appellate body, accusing judges of overstepping their mandates and ignoring instructions.
With no sign that the block will be lifted anytime soon, the Geneva-based trade tribunal could be reduced to only one judge by Dec. 11, which means it would not be able to hear new cases.
“The organization is in deep crisis. We have to recognize this,” European Union Trade Commissioner Cecilia Malmstrom told a conference at France’s central bank.
“If the appellate body collapses, which probably it will in December - at least temporarily - we will have no enforcement. And if you have no rules everybody can do whatever they want.”
The EU has proposed using the WTO’s arbitration rules to set up a shadow version of the body and keep the appeals process moving, but there is uncertainty about how such a structure would work.
In the absence of a solution, deputy WTO director general Alan Wolff, the highest-ranking American in the organization, said countries could be tempted to escalate trade disputes rather than seek resolution. At a time of increased trade tensions globally, that could have repercussions for growth.
“You get into a possible scenario where a country that lost (a case) says we appeal but there is no appeal which means the panel is not final,” Wolff told the conference.
“You could go to retaliation and counter-retaliation, which is what has happened between the U.S and China, which is certainly not good for the world.”
Reporting by Leigh Thomas; Editing by Luke Baker and John Stonestreet