The WTO might return to diplomatic settlements for trade disputes. Here’s why.

The global trade appeals system has stalled. Did it ever really work?

The World Trade Organization's headquarters in Geneva
The World Trade Organization's headquarters in Geneva. (Photo courtesy of The Washington Post)

In December, the World Trade Organization’s ability to rule on trade disputes stalled after the Trump administration refused to appoint judges to its Appellate Body. Is this yet another blow to the international liberal order, as some policymakers worry? The answer is most likely no. Like other trade crises that President Trump has provoked, the paralysis in the WTO is less of a departure from the status quo than it might initially appear.

The WTO’s dispute settlement understanding (DSU) sought to provide recourse to smaller countries in the global trading system. But poorer nations tend to bring fewer cases than expected. Instead, the WTO’s docket has been dominated by cases like the endless back-and-forth between the United States and the European Union over aircraft productionDiplomatic side deals are the norm. In fact, countries resolve more than 40 percent of cases via private settlements.