The European Union and 16 WTO membersincluding China and Australia on 24 January 2020 signed a pact to develop a multi-party interim appeal arrangement. The arrangement, signed on the sidelines of the World Economic Forum (WEF) annual meeting, will allow the participating WTO members to preserve a functioning and two-step dispute settlement system at the World Trade Organization (WTO). This initiative was launched in mid-December 2019 by the EU and a number of other WTO members following the effective paralysis of the WTO Appellate Body due to the blockage of new appointments since 2017.
What
  1. EU Commissioner for Trade Phil Hogan said: This statement testifies to the high importance that the EU and the participating WTO members attach to retaining a two-step dispute settlement process in WTO trade matters
  2. The multiparty appeal arbitration arrangement will guarantee that the participating WTO members continue to have access to a binding, impartial and high-quality dispute settlement system among them.
  3. The multi-party interim arrangement will be based on Article 25 of the WTO Dispute Settlement Understanding (DSU).
  4. It will secure the participating WTO members (Australia, Brazil, Canada, China, Chile, Colombia, Costa Rica, the European Union, Guatemala, Republic of Korea, Mexico, New Zealand, Norway, Panama, Singapore, Switzerland, and Uruguay) an effective and binding dispute settlement process for potential trade disputes among them.
  5. The arrangement is a contingency measure and it will only apply until the WTO Appellate Body becomes operational again
  6. The EU believes that an independent and impartial appeal stage, giving the necessary guarantees of rulings of the highest quality, must continue to be one of the essential features of the WTO dispute settlement system.
  7. The joined statement by the 17 signatories said, "We, the Ministers of Australia, Brazil, Canada, China, Chile, Colombia, Costa Rica, European Union, Guatemala, Republic of Korea, Mexico, New Zealand, Norway, Panama, Singapore, Switzerland, Uruguay, remain committed to work with the whole WTO membership to find a lasting improvement to the situation relating to the WTO Appellate Body.
  8. The signatories said they will work towards putting in place contingency measures that would allow for appeals of WTO panel reports in disputes among themselves, in the form of a multi-party interim appeal arrangement based on Article 25 of the WTO Dispute Settlement Understanding
  9. This would be in place only and until a reformed WTO Appellate Body becomes fully operational. The arrangement will be open to any WTO Member willing to join it.
The Dispute Settlement Understanding
  1. The current dispute settlement system was created as part of the WTO Agreement during the Uruguay Round
  2. It is embodied in the Understanding on Rules and Procedures Governing the Settlement of Disputes, commonly referred to as the Dispute Settlement Understanding and abbreviated “DSU” (referred to as such in this guide). 
  3. The DSU, which constitutes Annex 2 of the WTO Agreement, sets out the procedures and rules that define today’s dispute settlement system. 
  4. It should however be noted that, to a large degree, the current dispute settlement system is the result of the evolution of rules, procedures and practices developed over almost half a century under the GATT 1947.