Alternative to WTO trade arbitration gains steam as Japan joins

Geneva: Japan has become the latest country to join an alternative mechanism for resolving disputes to the World Trade Organization, it said in a statement on Friday, in a move that observers say could urge others to follow suit.

The top appeals bench of the global trade watchdog which rules on trade disputes has been idle for more than two years because of holds on appointments during the administration of former President Donald Trump. The United States, which continues to resist regular calls to approve appointments, is instead leading discussions on how to reboot the dispute system.

“As an interim measure until the dispute settlement function is restored, the Japanese government decided to join the MPIA,” Japan’s economy ministry said in a statement, referring to the Multi-Party Interim Appeal Arbitration Arrangement.

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European Union Trade Commissioner Valdis Dombrovskis welcomed the move on Twitter, saying that global trade rules were the best “guard rail against economic fragmentation.”

*EU WELCOMES JAPAN JOINING MPIA*

🇯🇵 will join Multi-party Interim Appeal Arbitration Arrangement in absence of functioning @wto appellate body.

Global rules = best guardrail against economic fragmentation.

EU continues to lead #WTO reform effort.🇪🇺🌍 pic.twitter.com/IEQZQkzOU5

— Valdis Dombrovskis (@VDombrovskis) March 10, 2023

Japan, a regular user of the WTO dispute system including in a recent case with South Korea, is the 26th member to join the alternative arrangement, according to the MPIA website. Parties include the European Union, Canada and Brazil.

“Japan’s membership may increase pressure on wavering potential members, like the United Kingdom and South Korea,” Dmitry Grozoubinski, executive director of the Geneva Trade Platform, told Reuters. He added that its adhesion would offer a legal path forward for any future disputes between Japan and China, since they are both members.

The paralysis of the WTO’s top dispute bench means that the losing side can appeal the outcome from the lower court into a legal void, as has happened to Japan twice. This has led to fewer cases being brought to the WTO.

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