Canada says it is close to deal with EU on possible fix to WTO deadlock

OTTAWA (Reuters) - Canada and the European Union are close to agreeing on a possible temporary solution to a U.S. block on appeals in disputes at the World Trade Organization, Prime Minister Justin Trudeau said on Thursday.

U.S. President Donald Trump is barring appointments to the WTO's Appellate Body, saying its judges have overstepped their mandate and ignored their instructions. Unless the block is lifted, the world's top trade court will be unable to hear appeals in international trade disputes after Dec. 11.

Trudeau, speaking after a meeting with top EU officials in Montreal, said Canada backed existing attempts to restore a fully operational Appellate Body.

"In the event that those efforts are unsuccessful, we need to be prepared. So we have been working with the European Union to find an interim fix," he told a news conference.

"After this summit we are closer to finalising an agreement which would help preserve the function of an appeal system within the WTO until we find a more permanent solution."

The U.S. Trade Representative's office declined to comment. Washington argues that the WTO's dispute settlement system, particularly at the Appellate Body level, must be changed since it has "strayed extensively from original understandings," as agreed on by members.

Kelly Ann Shaw, deputy director of Trump's National Economic Council, told an event in Washington on Wednesday that the Trump administration was continuing to press for a series of WTO reforms, and welcomed a commitment by the Group of 20 industrialized countries last month to work on such changes.

A joint statement issued after the Montreal meeting said the fix involved setting up an interim appeal arbitration arrangement based on existing WTO rules.

The EU last month proposed using WTO arbitration rules to set up a shadow version of the body and keep the appeals process moving, but there is uncertainty about how such a structure would work.

Cecilia Malmstrom, the EU's trade chief, told the news conference that the deal on a possible fix "sends a strong message of our shared objective to ensure the full effectiveness of the WTO and the stability of world trade."

"This is a matter of extreme crisis and urgency," Jennifer Hillman, a professor at Georgetown Law School and former judge on the WTO Appellate Body, told a panel hosted by the Centre for Strategic and International Studies on Wednesday.

"We are at the crisis point. We need to come to resolution on how to fix it," she said.

(Reporting by David Ljunggren; Additional reporting by Andrea Shalal in Washington; Editing by Jonathan Oatis and Peter Cooney)

This story has not been edited by Firstpost staff and is generated by auto-feed.