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TWN
Info Service on WTO and Trade Issues (May25/28) Yerevan, 26 May (D. Ravi Kanth) — For the 87th time, the United States on 23 May blocked a joint proposal from 130 countries for filling the seven vacancies at the Appellate Body that has been made dysfunctional by the United States since December 2019, with members like Malaysia joining the Multi-Party Interim Appeal Arbitration Arrangement (MPIA) for resolving global trade disputes expeditiously, said people familiar with the development. At a meeting of the WTO’s Dispute Settlement Body (DSB) on 23 May, Malaysia’s trade envoy, Ambassador Syahril S Ghazali, said that “it is a monumental step for Malaysia, as this step is not merely a procedural commitment, but as a strategic and timely decision in ensuring that the wheels of global trade justice continue to turn during this challenging period.” The MPIA, said Ambassador Ghazali, “offers a vital, pragmatic, and WTO-consistent pathway to address this challenge” and “it provides a credible binding mechanism for resolving disputes, ensuring that Members have access to a two-tier adjudication process when needed.” So far, 29 countries have joined the MPIA, which was initiated by the European Union several years ago. China as well as several industrialized countries are members of the MPIA, with Paraguay also recently notifying its decision to join the initiative. Other members of the MPIA include Australia, Canada, the EU (27 members), Hong Kong-China, Japan, Mexico, New Zealand, Norway, Peru, the Philippines, Singapore, and Switzerland. The US and India are not members of the MPIA. Malaysia called for “restoring a fully and well-functioning Dispute Settlement System.” However, the prospects of restoring a binding two-tier dispute settlement system remain bleak, as the US continues to block repeated requests for filling the vacancies at the Appellate Body, said people familiar with the development. At the DSB meeting, on behalf of the 130 countries, Colombia is understood to have said that the extensive number of members submitting the proposal reflects a common interest in the functioning of the Appellate Body and, more generally, in the functioning of the WTO’s dispute settlement system. The US again maintained that it has long-standing concerns with WTO dispute settlement that has persisted across US administrations. The US appears to have argued that the Appellate Body chose to adopt interpretations that depart from the text of WTO agreements while creating precedents. According to the US, the dispute settlement system was never intended to create new rules for WTO members, which would add to or diminish the rights and obligations provided in the covered agreements. The US, which created the binding dispute settlement system, with the Appellate Body as the final adjudicating arm, has seemingly undermined the WTO’s enforcement function, while not implementing several decisions of the DSB for more than two decades, said a legal analyst who asked not to be quoted. More so, at a time when the Trump administration has seemingly imposed unilateral tariffs against countries in alleged violation of the WTO rules, there is no guarantee that even a reformed dispute settlement system would be able to stop the unilateral actions taken by Washington, said several people familiar with the development. At the DSB meeting, around two dozen countries took the floor, reiterating their support for the joint proposal tabled by Colombia. They called for the urgent need to restore the two-tiered fully functioning dispute settlement system, with some members like China noting that the heightened trade turbulence has made it important to restore the stability provided by the dispute settlement system. Colombia, on behalf of the 130 countries, regretted that for the 87th time, members have not been able to launch the selection process for filling the vacancies on the Appellate Body. Bogota said that ongoing discussions for reforming the dispute settlement system should not prevent the Appellate Body from continuing to operate fully, adding that members shall comply with their obligations under the Dispute Settlement Understanding (DSU) to fill vacancies as they arise, said people familiar with the discussions. CANADA-CHINA DISPUTES Meanwhile, in two separate trade disputes involving Canada and China, Canada blocked a first-time request from China for establishing a dispute panel (DS627) to adjudicate on Ottawa’s surtax measures on certain products of Chinese origin, including electric vehicles and steel and aluminum products, as well as Canada’s measures on certain solar products, critical minerals, semiconductors, permanent magnets and natural graphite from China. However, in a rather unusual development, Canada withdrew its request for establishing a dispute panel (DS636) against China over additional import duties imposed by China on certain agricultural and fishery products from Canada pursuant to a domestic “antidiscrimination investigation” by the Chinese authorities. However, Canada opposed China’s first-time panel request over Canada’s surtax measures on grounds that its actions against Chinese products are justified under several provisions of the GATT 1994, said people familiar with the development. Pursuant to the DSU, the establishment of a panel will be automatic, if China’s panel request comes up again at the next meeting of the DSB. At the DSB meeting on 23 May, the two countries were engaged in “tit-for-tat” trade disputes, seemingly seeking different decisions. Right at the start of the meeting, the chair of the DSB, Ambassador Clare Kelly of New Zealand, informed members that Canada chose to withdraw its request for establishing a dispute panel against China, even though Canada and China seemingly disagreed on whether the dispute qualified to be on a fast-track. Canada maintained that Article 4.8 of the DSU (dealing with perishable goods) allows for a complaining party to request the establishment of a panel within 20 days, if the two sides failed to reach an amicable agreement (as opposed to 60 days in a regular process). As Canada requested consultations with China on 20 March 2025, it has been in a position to make its first request for a panel since 9 April 2025, it said, noting also that the 60-day period has since expired. Canada said it has nevertheless taken note of China’s communication disagreeing that this case is one of urgency. Ottawa maintained that as a gesture of good faith, it has decided to withdraw this item from the DSB agenda. Canada said it will request a special meeting of the DSB to again make its request for panel establishment, said people familiar with the dispute. However, China argued that the Canadian measures are in direct breach of Canada’s WTO obligations and nullify the benefits accruing to China under the GATT. China assured Canada that it remains open to working with Ottawa to resolve the dispute amicably in accordance with the WTO rules. Canada regretted that China included in its panel request claims concerning surtax on certain solar products, critical minerals, semiconductors, permanent magnets, and natural graphite imported from China, noting that there are no Canadian surtax measures on these products. Canada maintained that its surtax measures on electric vehicles, and steel and aluminum products are justified under the GATT provisions, saying that it is fully prepared to defend these measures. In light of this, Canada said it is not ready to accept the establishment of a panel. Canada remains committed to maintaining constructive dialogue with China and to the rules-based multilateral trading system, it added. China’s request for a dispute panel against Canada (DS627) concerns the 100% surtax imposed by Canada on Chinese-made electric vehicles, a 25% surtax on steel and aluminum products from China, as well as the imposition of surtaxes/tariffs on certain solar products, critical minerals, semiconductors, permanent magnets, and natural graphite. In turn, Canada’s request for a dispute panel against China (DS636) concerns additional import duties imposed by China on certain Canadian products pursuant to a domestic “antidiscrimination investigation” by the Chinese authorities. In their separate panel requests, the two countries informed that they failed to amicably resolve their specific concerns through consultations under Article 4 of the DSU. On China’s panel request against Canada, it is common knowledge that Canada’s surtaxes/tariffs on Chinese- made electric vehicles, and steel and aluminum products, as well as on solar panels and critical minerals among others had much to do with similar measures and duties imposed by the former Biden administration, said people familiar with the development. As a close partner of the United States, Ottawa sought to show its solidarity with Washington by imposing the same level of duties as the US did on the Chinese products, said people, who asked not to be identified. +
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