THE GIST of Editorial for UPSC Exams : 16 December 2019 (Why the US has chosen to paralyse WTO (The Hindu))

Why the US has chosen to paralyse WTO (The Hindu)

Mains Paper 2: International Organisation
Prelims level: Appellate Body of WTO
Mains level: Role of Appellate body

Context:

• The Chinese envoy said he “foresaw the result” that is coming at the WTO.
• The envoy was referring to the result centring on a decision taken by the US to block the selection process for filling vacancies at the highest adjudicating body of the WTO.

Role of Appellate Body:

• The Appellate Body has served the WTO members well for the past 25 years.
• Its binding rulings since 1995 were never easy.
• They dealt with complex trade issues and tensions arising from mennu ki faida (what benefits me most) trade policies/measures for maximising dollar-and-cent gains in the international trade.
• The AB was one of the final pieces of the jigsaw puzzle called the Uruguay Round of trade negotiations, that established the WTO in 1995.
• The US played a major part in creating the two-stage dispute settlement system. In the first stage of a dispute, countries would invoke panel proceedings which would take place almost for more than a year.
• The panel’s verdicts if not acceptable to either of the parties — can be contested before the Appellate Body, which is the second and final stage.
• However, rulings by the AB members seldom satisfied the two sides — complainants and defendants — in equal measure.

Rigid rulings

• The US has increasingly regarded the AB as a threat to its unilateral decisions and ‘America First’ trade policies, including billions of dollars of revenue collected from anti-dumping and counter-vailing (anti-subsidy) duties.
• Earlier, the US was able to turn its back to the GATT (General Agreement on Tariffs and Trade) panel rulings because they were not binding.
• But once the AB started functioning, there was a qualitative change.
• In the anti-dumping dispute over bed linen between India and the European Union, the AB ruled against the use of zeroing methodology, which inflated anti-dumping margins.
• Subsequently, the ruling against zeroing methodology became a benchmark for rejecting US’ anti-dumping measures in various trade disputes raised by different countries.

Appeasement bid

• The US chose not to implement several rulings by the AB for more than 17 years, causing lawlessness in the global trade order.
• The advent of the Donald Trump regime, the lawlessness took the ugly form of unilateral actions and complete disregard for rules.

Way forward:

• Even as 163 members condemned the US for spiking the AB, there was a deliberate attempt to appease Washington, which came from none other than the Director-General of the trade body, Roberto Azevedo.
• The more needs to be done to address the concerns raised by the US about the functioning of the AB.
• The DG did not even mention once, much less criticise, the US ’actions that caused the impasse over filling AB vacancies, ending the two-stage binding dispute settlement process for the time-being.

  Online Coaching for UPSC PRE Exam

  General Studies Pre. Cum Mains Study Materials

Prelims Questions:

Q.1) With reference to the U.S.-Mexico-Canada Agreement (USMCA), consider the following statements:
1. USMCA gives the U.S. greater access to the dairy markets of Canada.
2. Canada managed to preserve the dispute-settlement mechanism as a protection for its wood industry.

Which of the statements given above is/are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2

Answer: C
Mains Questions:
Q.1) What are the aftermath challenges faced by WTO by blocking the functions of Appellate Body?

Why the US has chosen to paralyse WTO (The Hindu)

Mains Paper 2: International Organisation
Prelims level: Appellate Body of WTO
Mains level: Role of Appellate body

Context:

• The Chinese envoy said he “foresaw the result” that is coming at the WTO.
• The envoy was referring to the result centring on a decision taken by the US to block the selection process for filling vacancies at the highest adjudicating body of the WTO.

Role of Appellate Body:

• The Appellate Body has served the WTO members well for the past 25 years.
• Its binding rulings since 1995 were never easy.
• They dealt with complex trade issues and tensions arising from mennu ki faida (what benefits me most) trade policies/measures for maximising dollar-and-cent gains in the international trade.
• The AB was one of the final pieces of the jigsaw puzzle called the Uruguay Round of trade negotiations, that established the WTO in 1995.
• The US played a major part in creating the two-stage dispute settlement system. In the first stage of a dispute, countries would invoke panel proceedings which would take place almost for more than a year.
• The panel’s verdicts if not acceptable to either of the parties — can be contested before the Appellate Body, which is the second and final stage.
• However, rulings by the AB members seldom satisfied the two sides — complainants and defendants — in equal measure.

Rigid rulings

• The US has increasingly regarded the AB as a threat to its unilateral decisions and ‘America First’ trade policies, including billions of dollars of revenue collected from anti-dumping and counter-vailing (anti-subsidy) duties.
• Earlier, the US was able to turn its back to the GATT (General Agreement on Tariffs and Trade) panel rulings because they were not binding.
• But once the AB started functioning, there was a qualitative change.
• In the anti-dumping dispute over bed linen between India and the European Union, the AB ruled against the use of zeroing methodology, which inflated anti-dumping margins.
• Subsequently, the ruling against zeroing methodology became a benchmark for rejecting US’ anti-dumping measures in various trade disputes raised by different countries.

Appeasement bid

• The US chose not to implement several rulings by the AB for more than 17 years, causing lawlessness in the global trade order.
• The advent of the Donald Trump regime, the lawlessness took the ugly form of unilateral actions and complete disregard for rules.

Way forward:

• Even as 163 members condemned the US for spiking the AB, there was a deliberate attempt to appease Washington, which came from none other than the Director-General of the trade body, Roberto Azevedo.
• The more needs to be done to address the concerns raised by the US about the functioning of the AB.
• The DG did not even mention once, much less criticise, the US ’actions that caused the impasse over filling AB vacancies, ending the two-stage binding dispute settlement process for the time-being.

  Online Coaching for UPSC PRE Exam

  General Studies Pre. Cum Mains Study Materials

Prelims Questions:

Q.1) With reference to the U.S.-Mexico-Canada Agreement (USMCA), consider the following statements:
1. USMCA gives the U.S. greater access to the dairy markets of Canada.
2. Canada managed to preserve the dispute-settlement mechanism as a protection for its wood industry.

Which of the statements given above is/are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2

Answer: C
Mains Questions:
Q.1) What are the aftermath challenges faced by WTO by blocking the functions of Appellate Body?

Why the US has chosen to paralyse WTO (The Hindu)

Mains Paper 2: International Organisation
Prelims level: Appellate Body of WTO
Mains level: Role of Appellate body

Context:

• The Chinese envoy said he “foresaw the result” that is coming at the WTO.
• The envoy was referring to the result centring on a decision taken by the US to block the selection process for filling vacancies at the highest adjudicating body of the WTO.

Role of Appellate Body:

• The Appellate Body has served the WTO members well for the past 25 years.
• Its binding rulings since 1995 were never easy.
• They dealt with complex trade issues and tensions arising from mennu ki faida (what benefits me most) trade policies/measures for maximising dollar-and-cent gains in the international trade.
• The AB was one of the final pieces of the jigsaw puzzle called the Uruguay Round of trade negotiations, that established the WTO in 1995.
• The US played a major part in creating the two-stage dispute settlement system. In the first stage of a dispute, countries would invoke panel proceedings which would take place almost for more than a year.
• The panel’s verdicts if not acceptable to either of the parties — can be contested before the Appellate Body, which is the second and final stage.
• However, rulings by the AB members seldom satisfied the two sides — complainants and defendants — in equal measure.

Rigid rulings

• The US has increasingly regarded the AB as a threat to its unilateral decisions and ‘America First’ trade policies, including billions of dollars of revenue collected from anti-dumping and counter-vailing (anti-subsidy) duties.
• Earlier, the US was able to turn its back to the GATT (General Agreement on Tariffs and Trade) panel rulings because they were not binding.
• But once the AB started functioning, there was a qualitative change.
• In the anti-dumping dispute over bed linen between India and the European Union, the AB ruled against the use of zeroing methodology, which inflated anti-dumping margins.
• Subsequently, the ruling against zeroing methodology became a benchmark for rejecting US’ anti-dumping measures in various trade disputes raised by different countries.

Appeasement bid

• The US chose not to implement several rulings by the AB for more than 17 years, causing lawlessness in the global trade order.
• The advent of the Donald Trump regime, the lawlessness took the ugly form of unilateral actions and complete disregard for rules.

Way forward:

• Even as 163 members condemned the US for spiking the AB, there was a deliberate attempt to appease Washington, which came from none other than the Director-General of the trade body, Roberto Azevedo.
• The more needs to be done to address the concerns raised by the US about the functioning of the AB.
• The DG did not even mention once, much less criticise, the US ’actions that caused the impasse over filling AB vacancies, ending the two-stage binding dispute settlement process for the time-being.

  Online Coaching for UPSC PRE Exam

  General Studies Pre. Cum Mains Study Materials

Prelims Questions:

Q.1) With reference to the U.S.-Mexico-Canada Agreement (USMCA), consider the following statements:
1. USMCA gives the U.S. greater access to the dairy markets of Canada.
2. Canada managed to preserve the dispute-settlement mechanism as a protection for its wood industry.

Which of the statements given above is/are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2

Answer: C
Mains Questions:
Q.1) What are the aftermath challenges faced by WTO by blocking the functions of Appellate Body?

Why the US has chosen to paralyse WTO (The Hindu)

Mains Paper 2: International Organisation
Prelims level: Appellate Body of WTO
Mains level: Role of Appellate body

Context:

• The Chinese envoy said he “foresaw the result” that is coming at the WTO.
• The envoy was referring to the result centring on a decision taken by the US to block the selection process for filling vacancies at the highest adjudicating body of the WTO.

Role of Appellate Body:

• The Appellate Body has served the WTO members well for the past 25 years.
• Its binding rulings since 1995 were never easy.
• They dealt with complex trade issues and tensions arising from mennu ki faida (what benefits me most) trade policies/measures for maximising dollar-and-cent gains in the international trade.
• The AB was one of the final pieces of the jigsaw puzzle called the Uruguay Round of trade negotiations, that established the WTO in 1995.
• The US played a major part in creating the two-stage dispute settlement system. In the first stage of a dispute, countries would invoke panel proceedings which would take place almost for more than a year.
• The panel’s verdicts if not acceptable to either of the parties — can be contested before the Appellate Body, which is the second and final stage.
• However, rulings by the AB members seldom satisfied the two sides — complainants and defendants — in equal measure.

Rigid rulings

• The US has increasingly regarded the AB as a threat to its unilateral decisions and ‘America First’ trade policies, including billions of dollars of revenue collected from anti-dumping and counter-vailing (anti-subsidy) duties.
• Earlier, the US was able to turn its back to the GATT (General Agreement on Tariffs and Trade) panel rulings because they were not binding.
• But once the AB started functioning, there was a qualitative change.
• In the anti-dumping dispute over bed linen between India and the European Union, the AB ruled against the use of zeroing methodology, which inflated anti-dumping margins.
• Subsequently, the ruling against zeroing methodology became a benchmark for rejecting US’ anti-dumping measures in various trade disputes raised by different countries.

Appeasement bid

• The US chose not to implement several rulings by the AB for more than 17 years, causing lawlessness in the global trade order.
• The advent of the Donald Trump regime, the lawlessness took the ugly form of unilateral actions and complete disregard for rules.

Way forward:

• Even as 163 members condemned the US for spiking the AB, there was a deliberate attempt to appease Washington, which came from none other than the Director-General of the trade body, Roberto Azevedo.
• The more needs to be done to address the concerns raised by the US about the functioning of the AB.
• The DG did not even mention once, much less criticise, the US ’actions that caused the impasse over filling AB vacancies, ending the two-stage binding dispute settlement process for the time-being.

  Online Coaching for UPSC PRE Exam

  General Studies Pre. Cum Mains Study Materials

Prelims Questions:

Q.1) With reference to the U.S.-Mexico-Canada Agreement (USMCA), consider the following statements:
1. USMCA gives the U.S. greater access to the dairy markets of Canada.
2. Canada managed to preserve the dispute-settlement mechanism as a protection for its wood industry.

Which of the statements given above is/are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2

Answer: C
Mains Questions:
Q.1) What are the aftermath challenges faced by WTO by blocking the functions of Appellate Body?