EU member states reached an agreement on the sidelines of the World Economic Forum with 16 World Trade Organisation members, including China, to establish an ad-hoc appeal body and overcome the US blockage of the global trade-dispute settlement system.

“The multiparty appeal arbitration arrangement will guarantee that the participating WTO members continue to have access to a binding, impartial and high-quality dispute settlement system among them,” EU’s Trade Commission Phil Hogan said in a statement following the announcement in Davos on Friday (24 January).

The deal was stamped by ministers of Australia, Brazil, Canada, Chile, China, Colombia, Costa Rica, European Union, Guatemala, Republic of Korea, Mexico, New Zealand, Norway, Panama, Singapore, Switzerland and Uruguay, plus the European Union countries.

The WTO appellate body has been crippled ever since December last year. The US has been blocking for months appointments of the seven members to the settlement framework, who ultimately make decisions over disputes between countries, amid allegations that it systematically exceeded its authority.

The EU set in motion a plan to establish an ad-hoc solution to ensure a dispute settlement is in place while the appellate body is unfunctional. Canada followed suit and the alternative arrangement has been gaining support ever since.

China’s decision to join is an important landmark given that Beijing is one of the countries with more open disputes.

EU, Canada agree first workaround to avoid US block on WTO judges Canada and the European Union announced a deal on Thursday (25 July) to stop their trade disputes falling into limbo at the World Trade Organization, where a US block on appointments of judges will paralyse the world’s top trade court from December.

Temporary solution