WTO Dispute Settlement and the Appellate Body Crisis – What Insiders Think

On December 10, the Appellate Body of the WTO’s Dispute Settlement Mechanism will lose its functionality. After that, trade disputes between WTO Members cannot be finally and bindingly resolved – which is worrying news in a world of trade wars. Our newest publication asks the users of the dispute settlement system how they view the work of the dispute settlement mechanism of the WTO and where they have concerns.

• The analysis of the Appellate Body survey can be found here.
• The detailed answers to all questions are here.

Why the Appellate Body is in Crisis

The US government has been blocking the appointment of Appellate Body (AB) members since 2017 because in their view, the Appellate Body is overstepped its mandate and engaged in judicial overreach. As a consequence, instead of having its usual seven members, the AB currently has only three – the absolute minimum number in order to be able to make decisions. On December 10, the terms of two members end, after which the AB cannot decide any further appeals that are brought before it.

Often, this is framed as a conflict between the US and the rest of the WTO membership. However, our survey shows a much more nuanced picture.

Three essential findings

The survey produces three main insights, some of which are novel, some of which were widely known:

• What crisis? The crisis actually concerns a small subset of the membership. A large share of the membership has not made use of dispute settlement in the past – but those who have, are particularly large trading powers. This is also reflected in our survey – the respondents cover only a relatively small number of member states.
• Consensus on two-stage adjudication. Among the respondents, there is a widely shared sense that the two stage adjudication is important in safeguarding the integrity of WTO rules. There is also a large agreement that decisions of the AB should constitute precedents, a point that the US strongly disputes.
• Doubts on the quality of outcomes: The quality of the decisions AB is questioned by the majority of the respondents of the survey – they accuse the AB of being sometimes biased and going beyond their mandate. There is also a feeling that the influence of the WTO Secretariat is too large.