President of the European Council Donald Tusk and Prime Minister Justin Trudeau shake hands during a closing news conference of the Canada-EU Summit in Montreal on Thursday, July 18, 2019. (Paul Chiasson/THE CANADIAN PRESS)

Canada and EU agree on temporary fix for trade dispute resolution body

Canada and the European Union have agreed to a contingency plan to resolve trade disputes between them in case the World Trade Organization’s (WTO) dispute resolution body is paralyzed because of the Trump administration’s policy of blocking appointments to it.

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.

The Appellate Body is down to three members from its normal seven, and two of the remaining members’ terms expire in December.

“If the current impasse persists, the Appellate Body will be unable to hear new appeals after Dec. 10, 2019,” said a joint statement by Canada and the EU.

“Canada and the EU share a resolve for rapid and concerted action to address longstanding and unprecedented challenges facing the multilateral trading system, and will continue to work with all WTO members on ideas and potential solutions that seek to modernize and strengthen the WTO.”

Ottawa and Brussels “strongly support” the informal process chaired by New Zealand’s ambassador to WTO, David Walker, to find a solution to the impasse, the statement said.

“However, in the event these efforts are unsuccessful, due diligence commands that we work together to preserve our rights in WTO disputes,” the statement said. “It is with this aim that Canada and the EU have agreed on an interim appeal arbitration arrangement based on existing WTO rules.”

The interim arrangement will apply to disputes between Canada and the EU in the event the Appellate Body is unable to hear appeals and will remain in effect until the Appellate Body is fully operational, the statement said.

Canada has been leading an effort involving about a dozen like-minded countries — minus the U.S. and China — to reform the WTO, and the fate of the Appellate Body has been its top priority.

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