EU Revises Plan to Fix WTO in Bid to Get U.S. on Board

(Bloomberg) -- The European Union is revamping its plan to reform the World Trade Organization in an effort to win support from the U.S., according to two people briefed on the process.

The European Commission, the EU's Brussels-based executive, is looking to address U.S. concerns about the WTO's hobbled dispute settlement system when it introduces a revised reform paper prior to the organization's Dec. 12 general council meeting, the people said, asking not to be identified discussing confidential plans.

A commission spokeswoman said that the effort remains a work in progress and declined to offer further details.

The commission introduced a "concept paper" in September with a proposal to fix some of the WTO's flaws and address U.S. concerns about the dispute settlement system.

Specifically, the commission paper sought to address a half-dozen U.S. complaints about the functioning of the WTO appellate body, which has the final say in upholding, modifying or reversing rulings that often affect some of the world's biggest companies and billions of dollars in commerce.

U.S. Block

For more than a year President Donald Trump's administration has blocked new appointments to the appellate body, complaining that the forum has consistently over stepped its remit with aggressive interpretations of the rules.

If the U.S. continues its hold, the body will be paralyzed in late 2019 because it won't have the three panelists required to sign off on rulings.

The EU's initial plan would have meant an increase in the number of appellate body members, extend their term limits, and provide them with full-time jobs. Deputy U.S. Trade Representative Dennis Shea blasted that proposal during an Oct. 4 panel discussion at the WTO.

"Our view is that that means less accountability," he said. "We cannot support something that will make the appellate body less accountable."

Reform Talks

European Trade Commissioner Cecilia Malmstrom will discuss the commission's ideas Nov. 9 in Brussels at meeting of the European Foreign Affairs Council on Trade. She will brief ministers from the 28-country bloc about her outreach efforts with trade officials from China, the U.S., and Japan, among others.

Last week, Malmstrom joined a dozen other senior trade officials in Ottawa to discuss prospects for reforming the Geneva-based trade body. Ministers agreed to work together to strengthen the three core pillars of the WTO's work -- negotiation, dispute settlement, and trade monitoring -- and review their efforts at the WTO's January meeting in Davos.

Still, delegates from the U.S. and China were not invited and the question of how to get the world's two largest economies involved hangs over the reform effort.

To contact the reporter on this story: Bryce Baschuk in Geneva at bbaschuk2@bloomberg.net

To contact the editors responsible for this story: Richard Bravo at rbravo5@bloomberg.net, Ben Sills, Flavia Krause-Jackson

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