One man down: How a US lawyer could cripple the WTO

The World Trade Organization’s appellate body could be disabled by the resignation of one of its last remaining members.

US-China trade war
The US has refused to consider nominees for the World Trade Organization's appellate body, the world's highest adjudicating body for trade disputes [File: Third party via Reuters]

A U.S. lawyer who is one of the last remaining members of an international panel that rules on trade disputes may resign in December, a move that would cripple the global conflict settlement system.

The voluntary departure of Thomas Graham, who has served on the World Trade Organization panel since 2011, would accelerate the appellate body’s looming demise and force countries to fundamentally rethink their reliance on the WTO to settle the surging number of trade disputes.

While Graham’s term ends on Dec. 10, panel members in the past have stayed on to finish WTO cases they’re involved in. If he resigns, the seven-member body would no longer have a quorum to rule on pending WTO appeal cases.

“I have not yet decided, and I am watching developments closely,” Graham said in an interview at WTO headquarters in Geneva.

Legal Limbo

President Donald Trump, U.S. Trade Representative Robert Lighthizer and other U.S. critics argue that the WTO dispute settlement system threatens America’s sovereign rights. In response, the European Union, Canada and other member countries are discussing ways to reform the appellate body to address U.S. criticism that it has strayed from its mandate.

The Trump administration, which has threatened to leave the WTO, has refused to consider nominees to replace the four vacancies on the panel. The U.S. says panel members have overstepped their mandate by failing to meet its 90-day deadline to decide on appeals; permitting panel members to serve beyond their terms; and by issuing opinions on matters not necessary to resolve a dispute.

Graham’s departure would throw all pending and future appeals into legal limbo since there wouldn’t be enough appellate members to resolve disputes. That would essentially allow for any member to veto a claim against them.

“I can’t see the U.S. objecting to his resignation,” Scott Miller, a senior adviser at the Washington, D.C.-based Center for Strategic and International Studies, said in an interview. “Tactically, the U.S. is getting what it wanted by disabling the appellate body.”

About a dozen appeal cases are pending, including a dispute over EU restrictions on Russian natural-gas imports and a pair of U.S.-Canadian disputes over paper and softwood lumber.

It’s possible that the appellate body may issue a final ruling on any of these cases before the Dec. 10 deadline. It is also likely that WTO members will ask the appellate body to include a tranche of new appeals to their portfolio between now and Dec. 10.

Source: Bloomberg