As Morrison sees it, and as the leaders of all countries that are WTO members should see it, the only way to restore the effectiveness of the WTO as an upholder of the agreed trade rules in the WTO treaty and “the most practical way to address economic coercion is the restoration of the global trading body’s binding dispute settlement system. Where there are no consequences for coercive behavior, there is little incentive for restraint.”
If the G7 countries do not act together in the WTO to reconstitute the appellate body, and if nothing changes, China and other large trading countries will simply employ the heft of their economic leverage to do as they wish in their trade dealings with other countries — and especially those that are smaller and less powerful. We will be back to where we were before we created the WTO, which was designed to end trade lawlessness by upholding the international rule of law through the enforcement of binding rules for trade.
Of course, this dire situation in WTO dispute settlement is not the fault of either China or Australia. It is almost entirely the fault of the United States of America. Little is accomplished nowadays in the United States on a bipartisan basis. Yet a bipartisan effort — one that began in the second Bush administration, intensified throughout the Obama and Trump administrations, and persists, at least for now, under President Joe Biden — has gradually succeeded in undermining what has been until now the most successful international system for settling disputes in the history of the world.
The sad historical irony is that it was the United States that most insisted on creating a binding dispute settlement system when the WTO was established. We Americans knew then — on a bipartisan basis — that, as the leading trading nation in the world, we benefit more than any other single country from having a global underpinning of agreed and binding rules of trade to ease and enhance the flow of trade worldwide. Somehow, we have forgotten this.
Successive administrations have refused to agree to appoint new WTO appellate jurists when sitting jurists completed their terms and departed. They have done so based on excuses that are mostly bogus and that are merely smoke screens for the real reason there is such bipartisan support for this myopic intransigence — the appellate body has consistently upheld the WTO rules on anti‐dumping and other trade restrictions, which constrain the ability of the United States government to apply such trade remedies when and as it chooses. And both American political parties have their reasons for wanting as much legal latitude as possible to apply such remedies, which are of special importance to the voters and trade‐challenged smokestack industries in the pivotal “swing states” in the industrial Midwest.
The United States has repeatedly accused the judges on the appellate body of “overreaching” when clarifying WTO rules on trade remedies. In fact, the judges have simply been upholding the rules. What is really motivating the United States is that it does not want to have to comply with those rules. Yet, not having the time or the inclination to read all the voluminous WTO rules and rulings — replete with esoteric footnotes — politicians and journalists in the United States have largely believed this “big lie.” It is now widely considered conventional wisdom within the Washington Beltway.
The real issue is not “overreaching” by WTO judges. The real issue is “underreaching” by the United States and many other members of the WTO who are hesitating to build on the core legal foundation of all they have created through the WTO. As Morrison implied, all the members of the WTO must remember why they created a binding trade dispute settlement system in the first place, and after remembering, they must restore it, starting with the appellate body. If they do not, the security of the rule of law in international trade will give way once more to the chaos of the rule of power.
