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European Union, China and 15 other members agree to find solutions to WTO crisis

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The EU, China and 15 other countries agree to find a temporary solution to the World Trade Organization crisis

The European Union, China, and 15 other World Trade Organization members agreed to establish a temporary mechanism to resolve trade disputes after the United States neutralized WTO in the mediation of global trade last month.

The European Commission said that the WTO members participating agreed to maintain the two-stage dispute system until the WTO’s own Appeals Board is operational again.

Washington has frozen the Appeals Body, which acts as the high court for international trade, by blocking appointments for more than two years. Two of the three members of the body came to an end in December and were unable to make a decision.

The Trump administration’s approach has been to seize the WTO’s dispute resolution system by blocking all appointments to the appeals body that cannot fully resolve global trade conflicts.

Members can still advise on trade disputes, but such matters remain in doubt without an appeal mechanism.

The EU has previously collaborated with Norway and Canada to create a separate appeal body that can resolve disputes.

Other countries on Friday including Australia, Brazil, Chile, China, Colombia, Costa Rica, Guatemala, South Korea, Mexico, New Zealand, Panama, Singapore, Switzerland and Uruguay also signed up for the group.

Speaking at Davos on Wednesday, while the U.S. is outside the group, U.S. President Donald Trump commented as a “dramatic” action for the Geneva-based WTO.

“The reform is dramatic,” he told reporters. “Because, by definition, reform means that you have changed some things. And changes in the multilateral trading system are not easy.”

WTO General Manager Roberto Azevedo did not address the temporary appeal system at a press conference in Davos on Friday, but WTO members meeting there said they were discussing what to do, including dispute resolution at the WTO. He said that many articles and ideas have emerged, that there are options, they are trying to fix them, but he said that there is no result yet. He added that he was confident that more progress would be possible in the short term.

The World Trade Organization’s top official received an unplanned invitation to meet with President Donald Trump on Wednesday. Azevedo said Trump wanted to see the WTO’s decision and change and was invited to Washington to discuss how deep such reform would be.

“We’re talking about an entirely new structure for the deal, or we’ll have to do something,” Trump said.

Trump is trying to lead reform efforts that the WTO needs.  But tactics are more important when the fights are not exactly one to one, and it is important to consider the revision of the WTO with realistics. Unfortunately, the history of multilateral trade talks is wrong, full of deviations, dead ends and breakdowns. Azevedo is a respected diplomat, but his mission requires magic.

An EU source said that most of the members of the bloc believed reform needed to reflect changes in the global economy, including the rise of China, and they welcome the WTO and Trump administration to interact.

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