US agriculture needs the WTO’s Appellate Body

In less than two weeks, the Appellate Body (AB) of the World Trade Organization (WTO) will no longer be able to function. This is not a win for the United States.

The problem, as has been widely reported, traces to U.S. opposition to new judicial appointees to this seven-person “court.” As of December 10, there simply won’t be enough jurists to hear cases. First rulings, issued by panels, will carry less sway with the 164 members of the Geneva-based institution, absent the AB’s last word.

Recent media coverage asks whether the U.S. has more or less “leverage” to demand reforms of the AB on the verge of its collapse. But leverage to do what?

It’s hard to know what the U.S. wants. The most recent salvo seems to be that AB jurists are paid too much. This, along with complaints about the AB missing deadlines, is a red herring.

More substantively, Washington complains about the role of precedent, by which it means that the AB expects future panels to unquestioningly follow its rulings. This shouldn’t be pushed too far; no one depends more on there being a consistent body of case law than the U.S. Moreover, President Trump’s signature trade deal, the United States-Canada-Mexico Agreement (USMCA), goes out of its way to ensure the consistency of WTO case law on key issues.

So again, leverage to do what?

If the answer is to reduce “judicial activism” on the part of the AB, the WTO already prohibits this, and there are ways to better enforce it. I’ve sketched a way forward previously in The Hill. 

If, instead, the answer is to make the system work better for the United States, then how? The U.S., like complaining parties in general, typically wins. This is really saying something, since the U.S. files more complicated legal cases than almost anyone else.

But here we are, in the 11^th hour, and debating aggregate statistics isn’t going to compel the U.S. to act.

Here’s something that should compel U.S. action: The plight of America’s agricultural exporters. Their fate is tied up with that of the AB.

Given all the U.S. tariffs of late, it’s easy to forget that rich countries use nontariff barriers much more. Regulatory measures, for example, are far more potent than tariffs. A tariff is tax on trade, whereas a health and safety standard can trigger a ban on trade. This is what U.S. agriculture is up against. It’s also why American ranchers and farmers should be vocal champions of the AB.

When the U.S. challenges a trade partner’s health and safety standard, it stirs up political drama. As the U.S. knows from past experience, they typically respond that their nontariff barriers have nothing to do with trade, but instead defend the well-being of their citizens. It’s tough to argue against this in the court of public opinion, but much easier at the WTO. Indeed, there are trade obligations with respect to the substance and process of vetting the science behind health and safety standards.

In the coming years, U.S. agricultural exporters should not only hope that the AB is functioning, but that its past rulings serve as hard precedent.

The reason is that foreign trade partners are doing things with their food import regimes that they could never pull off with tariffs. Take China, for example. Its rules on genetically-modified (GM) foods are at odds with credible science. China also requires that U.S. farmers test as if they were to grow GM foods in China, even though they aren’t allowed to plant there. 

Or take Europe. Its import regime on endocrine disruptors will discriminate against imports of food from the U.S. and elsewhere, even though it is at odds not only with global science, but Europe’s very own scientific agencies. No tariff could trigger a ban on U.S. sweet potatoes or wine, but science, or more accurately a lack thereof, can.

The “leverage” the U.S. needs in these cases will come from AB rulings, not tariffs.

The words that make up a WTO verdict, especially when grounded in precedent, change the domestic politics of compliance abroad. That’s because they decompose the issues into tests, frame the dispute as separable from broader foreign policy and remind stakeholders that to comply today increases the odds of getting them to comply tomorrow.   

Tariffs, on the other hand, only inspire retaliation from countries like China and Europe, and intransigence on the part of others.

The future of the AB isn’t some abstract debate. It’s literally meat and potatoes. The AB, not tariffs, will keep foreign markets open to U.S. agricultural exports.

Marc L. Busch is the Karl F. Landegger Professor of International Business Diplomacy at the Walsh School of Foreign Service at Georgetown University, and host of the podcast TradeCraft.