U.S. has been blocking appointment of arbitrators of Appellate Body

09/22/2022

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Sarquis J. B. Sarquis — Foto: Divulgação/Gustavo Magalhães/MRE

Brazil signaled this week that one of its priorities in the trade area is to make the World Trade Organization (WTO) Dispute Settlement Body operational again by 2024. The country has pending disputes involving exports worth more than $4 billion.

This WTO mechanism has been paralyzed since the middle of the Trump administration. The U.S. has been blocking the appointment of the seven arbitrators of the Appellate Body, a kind of supreme court of international trade. It claims that the judges have made decisions instead of the countries and that a change in the mechanism is needed.

However, the U.S. says it is now open to resolving the issue by the WTO ministerial conference in two years. The fact is that in an environment of the growing rivalry between the U.S. and China and persistent tensions among developed and emerging nations, reactivating the dispute settlement system at the WTO is one of the strong challenges.

This week in Bali, Indonesia, the chief U.S. trade representative, Katherine Tai, set up a meeting with representatives from Brazil, Argentina, India, Indonesia, South Africa, and Cambodia to accelerate negotiations on the issue. In Washington’s view, the system at the WTO has become a venue for litigation rather than a forum for resolving disputes. And now it says it wants a system that “better helps members resolve a dispute efficiently and cost-effectively.”

Brazil’s representative at the Bali meeting, Ambassador Sarquis J. B. Sarquis, who is also secretary for Foreign Trade and Economic Affairs, said the country has been working with the U.S. and other WTO members “in a spirit of cooperation and flexibility” and “with a sense of priority” to reactivate the dispute settlement body.

“The dispute settlement system is a central pillar of the WTO,” he added. “It can be reformed based on lessons learned and new challenges.”

For Mr. Sarquis, there is a growing consensus that a reform tends, on the one hand, to make the system more streamlined, more inclusive, and less costly. On the other hand, the overhaul tends to maintain the legal nature of the decisions, their binding effect, and their consistency over time in different cases, so that they reflect fundamental principles, including economic reform, to which all members have committed themselves in WTO agreements.

“For a large majority of members, this reform would continue to include the current structure, based on two levels — as a panel and as an appellate body,” said the Brazilian representative.

In an example of the priority for Brazil, a study by the National Confederation of Industry (CNI) calculated that the country has pending disputes in the WTO involving sectors such as sugar, beef, and steel products that impact at least $4.4 billion in exports.

Brazil has two pending cases at the WTO against Indonesia (chicken) and India (sugar). In both, the country won in the panel (investigation committee), which is the first instance. But those countries have put the disputes in limbo by formally appealing the decisions at a stalled Appellate Body.

In the cases of tariff barriers on beef against Indonesia and steel products against the U.S., Brazil did not request a panel. But it is a fact that, if Brasília decided to trigger the WTO dispute mechanism, the two cases would have little chance of having an effective outcome, since Indonesia and the U.S. would probably appeal in case Brazil wins.

A Provisional Measure signed by President Jair Bolsonaro gave the country an arsenal to apply unilateral retaliation against countries that have been found guilty of illegal measures on Brazilian exports but use tricks to maintain restrictions. But he has not yet used this retaliation, which could begin precisely against India and Indonesia.

There are other complaints from Brazil in the WTO, or “potential” panels on the radar. One, against Thailand, involves barriers to sugar. For the moment, negotiators say the case is being well handled without the need for a panel. The other dispute, against the European Union, involves barriers to chicken.

*By Assis Moreira — Geneva

Source: Valor International

https://valorinternational.globo.com/