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EU Sends WTO Reform Proposals to Break US Deadlock

FILE - A logo is pictured outside the World Trade Organization (WTO) headquarters next to a red pedestrian crossing light, in Geneva, Switzerland, Oct. 2, 2018.
FILE - A logo is pictured outside the World Trade Organization (WTO) headquarters next to a red pedestrian crossing light, in Geneva, Switzerland, Oct. 2, 2018.

The European Union published proposals on Monday for reform of dispute settlement at the World Trade Organization that it has agreed with China, India and other countries, hoping to overcome U.S. objections that have thrown the WTO into crisis.

There was no immediate reaction from the United States, which has previously dismissed the EU's ideas on the subject.

The WTO is scrambling to develop a plan for the biggest reform in its almost 24-year history after President Donald Trump brought the world's top trade court to the brink of collapse by blocking appointments of its judges and threatening a U.S. withdrawal.

Trade diplomats see Trump's tough line on the WTO as part of a pattern of demanding a "fair deal" for the United States and they take his threats seriously because the U.S. has withdrawn from a series of international agreements.

"Now, together with a broad coalition of WTO members, we are presenting our most concrete proposals yet for WTO reform. I hope that this will contribute to breaking the current deadlock," European Trade Commissioner Cecilia Malmstrom said in a statement.

The proposals, building on an EU document published in September and focusing narrowly on the dispute settlement issue, follow months of meetings in Geneva, Beijing, Ottawa and elsewhere.

The EU published two proposals, one issued jointly with India and China, and another which also included Canada, Norway, New Zealand, Switzerland, Australia, South Korea, Iceland, Singapore and Mexico.

U.S. Ambassador to the WTO Dennis Shea has repeatedly criticized the WTO's Appellate Body, effectively the supreme court of world trade, saying it overstepped its authority and broke its own rules, potentially invalidating its judgments.

He has demanded the Appellate Body abide by the rules and has blocked the appointment process, slowly cutting down the number of judges. There are now the bare minimum of three, but from December 2019 there will be only one, making it impossible for the WTO to issue final appeal rulings.

Shea said in October he could not support the EU's ideas on reforming the Appellate Body.

But an EU official said there was no official U.S. position on the earlier EU paper and the EU had not been seeking U.S. input until now.

The new proposals aimed to comprehensively address all the U.S. concerns, although the focus was on the procedural issues rather than questions about judicial over-reach, which would require U.S. input.

"We now expect the United States to do their part, to engage with these formal proposals that are aimed at squarely addressing their concerns. This must then lead to unblocking the Appellate Body appointments," the EU official said.

The proposals will be presented on December 12 to the WTO's General Council, its highest-level format outside of a ministerial meeting. It has the power to adopt the suggestions as amendments to the WTO's dispute settlement rules.

Trade is also expected to be high on the agenda of the G-20 meeting in Buenos Aires later this week.

U.S. officials did not immediately respond to a request for comment.

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