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The global trade turmoil incited by President Donald Trump's tariffs against US friends and foes alike presents an opportunity as well as another crisis for the world's trade ministers. The next occasion for them to grapple with the future of the much-battered global trade organization will occur in March, at the 14th Ministerial Conference (MC14) of the World Trade Organization (WTO), in Yaoundé, the capital of Cameroon. The subject of WTO reform, a hardy perennial, will be on the agenda, although getting something concrete accomplished may as usual prove to be impossible, as there is no consensus on what reform entails. The first challenge for the ministers will be to restore the WTO's deliberative function. They may not resolve major issues, but they can provide for the beginning of member engagement that can result in serious progress.
A previous effort of this sort took place at MC 11 held in Buenos Aires in 2017. Those who wished to meet and negotiate on a subject declared that they were going to do so and proceeded to negotiate agreements among themselves, open to all who choose to participate. Four agreements emerged, which are supported by large groups of members. The initiatives came from mid-sized countries. None of the largest members were founders of these Joint Statement Initiatives (JSIs).
It is time to begin the process again. Interested members should establish working parties or JSIs to address major unresolved issues. One of the most contentious issues is the role of binding dispute settlement within the framework of the WTO. Enforcement of members' obligations was heralded as one of the most important achievements of the last great multilateral trade negotiations of decades ago, the Uruguay Round in the 1990s that created the WTO itself. The means chosen to provide for enforcing obligations was an adjudicatory process at the end of which the parties would accept the outcomes and conform their behavior to the findings or else restore the balance of benefits previously enjoyed by the complainant who had prevailed in a fair dispute settlement process.
During the first Trump administration, the United States cancelled the appellate level of WTO dispute settlement by refusing to allow the appointment of new Appellate Body (AB) members when prior members' terms expired. The AB ceased to exist other than on paper on December 11, 2019. Appeals by WTO members from existing panel outcomes were thereafter dealt with in one of two ways: Some members, most notably the United States and India, pretended that the AB was still in existence and filed their appeals with the WTO Secretariat, which no one expected would be acted upon. This stratagem was known to all informally, with all the cynicism it was due, as "an appeal into the void." It was simply a means to avoid any consequences from an adverse finding by a panel.
Other WTO members, seeing value in having an appellate level, constructed a workaround, embodied in the Multi-Party Interim Arbitration Arrangement (MPIA), which became effective on April 30, 2020. The MPIA sought to replicate in major respects the old AB, using the arbitration provisions of the WTO's Dispute Settlement Understanding as a basis. Fifty-eight WTO members accounting for 60 percent of world trade joined this substitute system.
Why should members gather to review binding dispute settlement now after years of the issue remaining unresolved? A majority of members want the old AB back, and 130 members continue to press for nominations to the AB to proceed as if nothing had happened. This approach holds no promise of success while the United States has the means to block appointments. As for the MPIA, the United States regarded it as a provocation rather than a solution, because major issues that the United States cited as defects in the AB process were not addressed. Why is there any reason to believe that it would be productive to address this impasse in a structured discussion?
There is now sufficient history of both the AB and the MPIA to compare the MPIA experience with that of the original AB.
Litigation was a prominent feature of the WTO during the 25-year period that the AB was in existence. From 1995 to the end of 2020, the AB issued an estimated 150 reports determining the outcome of WTO litigation. These reports represented over half of the 277 panel reports (the outcomes from the initial stage of adjudication) issued. The experience during the last six years, with no AB in place and the MPIA in effect, has been starkly different. Only two cases have been fully adjudicated through use of the MPIA between its founding on April 30, 2020, and the end of 2025 (although the MPIA was used as a model for arbitration in at least two cases involving a non-MPIA member) This dramatic underutilization of the MPIA was not due to a lack of panel reports that could be reviewed at an appellate stage. At least 22 WTO dispute settlement panel reports were circulated during this time.
There are many plausible explanations for the sharp fall-off of appeals. For one thing, several of the WTO members most often parties to WTO litigation are not among the MPIA's parties. Among this nonparticipant group are the United States and India. However, their absence does not explain the discrepancy in usage of the prior system as compared with its successor.
Is the general absence of appeals under the MPIA an indication of its success, or does it reflect some shortcoming in its design? An argument for the proposition that the MPIA is an acceptable substitute for the AB is that the MPIA most closely delivers what its founders envisaged—that appeals would be relatively rare. As panels would not be highly error prone, AB members were not envisioned as residing in Geneva but as commuting there as needed to serve on a case.
Why did filing an appeal become routine? Perhaps it was to demonstrate that governments were willing to defend the interests of constituents against all odds, and was relatively easy. An appeal was free of charge to the appellant and supported by a large permanent appellate staff at the WTO. Moreover, the AB could be relied upon to substantially exceed the time frames it was given for decision. This allowed a member found in noncompliance with its obligations more time to bring an inconsistent measures into compliance with WTO rules while continuing to apply its nonconforming measure for a longer time. This the MPIA did not allow. The two cases heard under the MPIA reached conclusions within 75 and 90 days, as compared with the AB taking on average 10 to 12 months and as long as 12 to 18 months to issue a report.
Was the United States correct that litigation at the AB offered an opportunity to expand the ambit of the rules? The MPIA explicitly excludes treatment of its findings as precedent for other cases, while the AB insisted that its ruling be followed in later cases "absent cogent reasons." A principal complaint the United States had about the AB process was that members used litigation to avoid negotiation. Was a focus on settling the dispute at hand through the MPIA versus establishing WTO law through the AB a factor in the paucity of use of the MPIA?
Getting to an agreed form of binding dispute settlement applicable to all will not be easy. One of the reasons why USA detests the MPIA is because the text refers explicitly to "consistency" of the interpretation by case law. "Re-affirming that consistency and predictability in the interpretation of rights and obligations under the covered agreements is of significant value to Members despite acknowledging] that arbitration awards cannot add to or diminish the rights and obligations provided in the covered agreements". This is stronger in favour of some "jurisprudence" than article 3.2 of the DSU wording "providing security and predictability". Indeed, the US believed the most serious defects of the DSU were not addressed but on the contrary "bindingness" of what the US considered bad case law was reinforced.
Current preparations for Yaoundé have not treated dispute settlement as one of the "core issues" for which member views are being surveyed, perhaps because it appears to be intractable. The members should address the issue of dispute settlement, however. Enforceability of obligations, applicable to all members, may seem extremely remote in the Trump era, but it was once an attainable goal.
There are many thorny issues to address to regain a trading system in which members' adherence to their obligations can be relied upon. There is a question whether claiming national security should be non-reviewable, even as a flimsy pretext for restricting trade. And should pretexts for trade coercion go unchallenged? Should state involvement substitute for market forces to determine competitive outcomes? How can dispute settlement be more effective for smaller developing countries? These are some of the serious issues upon which members should engage.
If the MPIA cannot be improved at present, members (other than the United States, which will balk) should nevertheless join it. Having a widely agreed system in place should go hand-in-hand with engaging in a constructive dialogue. Simply preserving the current impasse, without any work being done on how to improve what exists or existed, is not a useful option.
At Yaoundé, a WTO working party or JSI should be established to consider how to achieve an enforceable system of global trade rules. To provide needed technical expertise, participating members should be aided by an advisory group consisting of a select group of current and past directors of the WTO's Legal Affairs and Rules divisions. The WTO's most important institutional issues deserve to be addressed.
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