Deputy Director General of WTO Says Dispute Settlement System Showing Strains

World Trade Organization Deputy Director-General Alan Wolff hailed countries' willingness to say reform is needed at the WTO as "a sea change," but said he's not sure when things will be resolved to the satisfaction of the U.S. "The U.S. has not said what it takes to resolve the appellate body impasse," he said. The U.S. refuses to allow any appointments to the appellate panels in the dispute settlement system, and if that continues, the possibility of appeal will end in December 2019, maybe sooner, if a panelist has a conflict of interest on a particular case. "It will be solved," he said. "Will we go over a cliff first?"

He said if there is no appellate panel, then it's likely that two countries will retaliate against each other after a panel decision, because the loser will be angry there is no way to appeal. Wolff, who was speaking Dec. 17 at the Peterson Institute for International Economics, identified the issues of state-owned enterprises, industrial and agricultural subsidies, and self-designation as developing countries as all problems in Geneva. He noted that Singapore and several rich Middle Eastern countries call themselves developing countries.

Even as he noted that there is a June deadline for friends of the system to come up with reform proposals, he said all the previous negotiating rounds took "eight to 12 years of percolating through to get a solution."

But even beyond the question of whether the WTO is equipped to handle the state-entwined market in China, or the authority of the appellate body, Wolff suggested there's a problem when a dispute over Airbus subsidies took 15 years to adjudicate, and it's still not even resolved. In response to a question from International Trade Today, he said that when a dispute takes 10 years to settle through panel, appeal, compliance panel, compliance panel appeal, "that's not dispute settlement. That's just disputation."

"Could the system do something better with respect to resolving disputes? I'm sure it can. I would hope in this process of thinking about reform, that would be one aspect."