Living without the Appellate Body: Multilateral, Bilateral and Plurilateral Solutions to the WTO Dispute Settlement Crisis

Abstract

The World Trade Organization (WTO) is in crisis. Once the Appellate Body has fewer than three members in office, it will become non-operational, compromising the WTO's compulsory and binding dispute settlement system. Attempts to overcome the opposition of the United States to Appellate Body appointments through majority rule appear legally fragile and politically unwarranted, while purely ad hoc bilateral solutions fall short of reproducing the security provided by compulsory and binding dispute settlement. This article explores and discusses bilateral and 'plurilateral' agreements that willing Members may sign to re-establish compulsory dispute resolution, arguing that the one that best fits the letter and spirit of the Dispute Settlement Understanding is an ex ante agreement to establish an 'appeal Arbitrator' in case of a non-operational Appellate Body. If appropriately designed, such an agreement not only allows willing Members to restore a high degree of security and predictability in their mutual trade relations but also increases the incentives for multilateral negotiations leading to a permanent resolution of the crisis.