In recent weeks, during a meeting of the World Trade Organization's Dispute Settlement Body (DSB) in Colombia, the United States once again blocked a proposal to initiate the process of selecting judges to fill the vacancies in the Appellate BodyThis marks the 64th time the U.Shas vetoed such a proposal, resulting in a complete paralysis of the WTO's dispute resolution mechanism for over five years.

The DSB evolved from the dispute resolution system under the General Agreement on Tariffs and Trade (GATT), which was established in the 1960s and 70sUnder the leadership of the United States, GATT's dispute resolution mechanism formed expert panels to address increasing numbers of complaints from member countriesAs trade disputes became more complex and diverse, GATT’s framework, which was largely diplomatic, struggled to keep up with the changing timesThe U.Sonce again led efforts, working with Japan, the European Union, South Korea, and other members to negotiate the "Understanding on Rules and Procedures Governing the Settlement of Disputes," which transitioned GATT's dispute resolution system from one based on power dynamics to one focused on rules

This shift was not just structural but also proceduralWith U.Spersistence, the WTO's dispute resolution system adopted the "reverse consensus principle," replacing GATT's "consensus principle," which required unanimous agreementAdditionally, the establishment of a permanent Appellate Body was implemented, among other key reformsAs a result, the WTO dispute settlement system has successfully resolved over 600 trade disputes, ensuring a stable and predictable global trade environment.

The WTO dispute resolution system is based on a two-tier review process: the first stage involves an expert panel’s initial judgment, while the second stage consists of the Appellate Body’s final rulingThe Appellate Body usually has seven members, each serving a four-year term with the possibility of reappointmentCases are heard by a panel of at least three judges, all of whom must be permanent members of the DSB

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Unlike other international organizations, such as the International Monetary Fund (IMF) and the World Bank, which use a majority vote, the WTO operates on a consensus principleThis also applies to the selection of judges for the Appellate Body, where all members must agree on the appointeesWhen a vacancy arises, the selection process requires the unanimous consent of all member countries.

In contrast to GATT’s "consensus principle," the DSB operates under the "reverse consensus principle." Under the former, if any party disagrees with the judgment, the ruling cannot passThe latter allows the decision to proceed as long as one party is in favorIn practice, the party that files the complaint, or the one that wins the case, usually agrees with the decision to ensure that its rights are enforcedThis has allowed the DSB to effectively and efficiently implement its rulingsThe DSB also has the ability to authorize retaliation against a party that refuses to comply with a ruling

Unlike unilateral measures, this type of retaliation is legally compliant and morally justifiable, adhering to the principles and spirit of multilateralismFor this reason, the DSB has been hailed as the "crown jewel" of the WTO.

However, this "crown jewel" of the WTO has become tarnished since 2017. That year, three of the seven judges on the Appellate Body had their terms endThe following year, the reappointment of a Mauritian judge was blocked, and by 2019, two more judges' terms expiredThe final judge’s term ended in 2020, and due to the U.S.’s consistent blocking of the selection process, the Appellate Body has been left inoperableThe U.Shas not only stalled the appointment of new judges but has also prevented the DSB from functioning effectively.

The U.Swas once a driving force behind the reform of the WTO dispute settlement systemYet today, it has become the primary obstacle to the Appellate Body's operation

The U.Sjustifies this shift by claiming a lack of confidence in the operation of the old dispute resolution system and accusing the Appellate Body judges of "overreach" in their rulingsFurthermore, the U.Shas raised concerns about "delayed rulings" and "overextended service" among Appellate Body judges.

While some of the U.S.’s concerns regarding the Appellate Body’s judges may be valid, the fact remains that the WTO and its DSB have consistently upheld the principles of multilateral tradeIn recent years, the U.Shas increasingly moved away from its original multilateral trade stance, embracing unilateralism insteadThe obstruction of the Appellate Body's judge selection process is emblematic of this shift.

In an attempt to mitigate the escalating trade conflicts caused by the paralysis of the Appellate Body, the European Union, China, and 21 other WTO members initiated the Multi-Party Interim Appeal Arbitration (MPIA), a transitional mechanism designed to maintain some form of dispute resolution

While the MPIA has made some progress, its scope remains limited, as only a few members have joined, and its rulings only bind the participating countriesThe broader impact of this interim mechanism is therefore minimal.

In a desperate bid to address the crisis, the 12th and 13th WTO Ministerial Conferences (MC12 and MC13) promised to establish a fully operational dispute resolution system by 2024. However, as the year draws to a close, there has been no visible progressSome members have called for a comprehensive agreement by the 14th Ministerial Conference, scheduled for March 2026, but at this point, the prospects for a resolution seem bleak, and the WTO’s dispute resolution system remains in limbo.

The dysfunction of the Appellate Body is a reflection of broader tensions within the WTOOnce considered a triumph of multilateralism and global cooperation, the organization now faces increasing pressure as major economies, particularly the U.S., retreat into unilateral actions