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United States shuts down World Trade Organisation appeal court

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On December 9, 2019, The United States(US) decided to shut down the appeal court of WTO (World Trade Organisation) in response to WTOs decisions against the federal trade rules imposed by the US administration. WTO’s appeal court acts as a trade dispute settlement body for its member countries.WTOKey Points:

i.Reason for shut down: The appeal court which consisted of 7-member body was then cut down to a 3-member body in 2018. Recently, the terms of two of the last three judges on the WTO’s appellate body ended on December 10,2019.

  • Without the WTO’s appellate body, the dispute settlement will return to pre-1995 GATT (General Agreement on Tariffs and Trade) status quo. As a result, the WTO’s appeal court cannot function and will be unable to issue rulings.
  • Trade rules imposed by the US administration: The US has blocked new appointments to protest the way the WTO does business. Among various settlement disputes left in the court, there are seven cases that have been brought against US president Donald Trump’s decision to declare foreign steel and aluminum a threat to U.S. national security and to levy them with import taxes.

ii.Future case hearings: The lower court of WTO can hear dispute cases but it cannot move to the higher court hereafter due to the shutdown by US.

iii.Temporary appellate body: Meanwhile the EU (European Union) and other countries have been working to set up a temporary appellate body to arbitrate future trade disputes.

iv.Dispute settlement by WTO: WTO’s Dispute Settlement Body(DSB) was created to end trade disputes between the countries. The DSB has the authority to establish dispute settlement panels, refer matters to arbitration, adopt panel, Appellate Body and arbitration reports, maintain surveillance etc.

About World Trade Organisation(WTO):
Fact- The WTO officially commenced on 1 January 1995 under the Marrakesh Agreement, signed by 123 nations on 15 April 1994, replacing the General Agreement on Tariffs and Trade (GATT), which commenced in 1948. It is the largest international economic organization in the world
Founded- 1 January 1995
Headquarters- Geneva, Switzerland
Membership- 164 member countries.