US appears set to okay WTO budget, avoid crisis, says trade official

A US threat to block the WTO's 2020 budget and effectively shutter its operations seems to have dissipated after a fresh proposal was tentatively agreed by trade diplomats in Geneva this week.

Washington reportedly threatened earlier this month to halt its financial contributions to the World Trade Organisation — a regular target of attack by President Donald Trump's administration — and to block the consensus needed to adopt its annual budget.

WTO's annual budget is financed by contributions from member states, with the amount calculated according to each country's share of international trade.

The United States has thus traditionally been the largest contributor, coughing up around 22.7 million Swiss francs (RM92 million) in 2018, amounting to 11.6 per cent of the WTO budget that year.

But Washington has increasingly expressed frustration with the global trade body, and especially with the appeals wing of its dispute settlement system, which the US accuses of disfunction, overreach and violating its national sovereignty.

Washington has also recently criticised the compensation paid to appellate judges.

The US has already sparked a crisis within WTO's Dispute Settlement Body by refusing to approve any new appellate judges.

The administration of former president Barack Obama also blocked appointments to the court, but the crisis has spiralled since Trump entered the White House.

The appellate body, which offers a last resort to settle international trade disputes and avoid escalation between countries, normally counts seven judges.

But on December 10, two of the only three judges remaining will conclude their mandate, and the appellate branch will no longer have the quorum required to hear cases.

Washington's threat to pull the plug on the budget meanwhile left WTO's roughly 650 civil servants wondering if they would have a job to return to in the new year.

But during a closed-door meeting Wednesday at WTO headquarters, a new 2020 budget proposal was presented that appeared tailored to placate the US by dramatically slashing Appellate Body funding.

The overall budget proposal was for around 197 million Swiss francs — a figure that has remained basically stable for the past decade, according to a Geneva trade official.

But the proposal calls for cutting the amounts allocated to retainers paid to Appellate Body judges, who are considered external experts and not WTO employees, from 791,000 to 100,000 Swiss francs.

It also slashes the amount put aside to pay the appeal system's operational costs and the judges' per diem expenses to 100,000 Swiss francs, down from two million currently.

“The US could accept this,” the Geneva trade official said, adding that “no one said that the proposal was unacceptable.”

The budget proposal will be discussed again next week, before receiving the final validation or rejection during a meeting of WTO's decision-making body in Geneva on December 9-11.

Source: Malaymail