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Canada, EU, China, others agree on temporary fix to WTO crisis

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File photo of a pedestrian crossing in front of the World Trade Organization headquarters in Geneva, Switzerland on Dec. 9, 2019. (Photo: Reuters/Denis Balibouse)

Brussels/Davos | Reuters — Canada, the European Union, China and 14 other World Trade Organization members agreed on Friday to create a temporary mechanism to settle trade disputes after U.S. action rendered the WTO incapable last month of acting as the umpire of global trade.

The Canadian government and the European Commission said separately that the WTO members involved had agreed to preserve the WTO’s two-step dispute system until the WTO’s own Appellate Body became operational again.

“Finding a long-term solution for appointments to the WTO Appellate Body remains a key priority for Canada,” the federal government said in a statement Friday. “The multi-party interim arrangement will remain in place only until the WTO Appellate Body is able to resume its work.”

Washington froze the Appellate Body, which acts as a supreme court for international trade, by blocking appointments for over two years. Two of the body’s three members came to the end of their terms in December, leaving it unable to issue rulings.

Lower-level three-person WTO “panels” will still advise on trade disputes, but such cases could be left in limbo without an appeals mechanism.

The EU had previously teamed up with Norway and Canada to form a separate appeals body that could resolve disputes.

The other countries that signed up on Friday are Australia, Brazil, Chile, China, Colombia, Costa Rica, Guatemala, South Korea, Mexico, New Zealand, Panama, Singapore, Switzerland and Uruguay.

While the United States is outside the group, U.S. President Donald Trump, speaking in Davos on Wednesday, vowed “very dramatic” action for the Geneva-based WTO.

WTO director general Roberto Azevedo did not address the temporary appeals system in a news conference in Davos on Friday, but said WTO members meeting there had discussed the tasks ahead, including fixing dispute settlement at the WTO.

“There are options out there, we are trying to fix it, but we’re not there yet,” he said, adding that many papers and ideas had come forward.

“I would say that I would be confident that more progress will be possible in the short term.”

The Canadian government said Friday it’s “committed to finalizing this interim arrangement with its partners as quickly as possible and will work to secure broad support and participation from the WTO membership.”

Azevedo said Trump had made it clear he wanted to see the WTO change and that he had been invited to Washington to discuss how deep such reform would be.

An EU source said the bloc welcomed the fact that the Trump administration was engaging with the WTO, which many of its members believe needs to reform to reflect changes in the global economy, including the rise of China.

— Reporting for Reuters by Philip Blenkinsop and Luke Baker with files by Glacier FarmMedia Network staff.

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