The agreement is designed to temporarily replace non-functioning WTO Appellate Body

The Council of the EU has given its go-ahead to the multi-party interim appeal arbitration arrangement (MPIA), which has since come into force following notification to the WTO’s Trade Dispute Settlement Body. The MPIA is designed to temporarily replace the WTO Appellate body, which ceased to function in December 2019, following the refusal of the United States to endorse new appointees since 2017.

The MPIA will enable the participating members to benefit from a binding resolution of trade disputes and have the right to an independent and impartial appeal review of panel reports, as is the case in the WTO system. It is based on Article 25 of the WTO Dispute Settlement Understanding (DSU) and is intended as an interim solution to the impasse surrounding the appellate body.

The agreement was negotiated between the EU and 17 other WTO members: Australia, Brazil, Canada, China, Chile, Chinese Taipei, Colombia, Costa Rica, Guatemala, Hong Kong, China, Mexico, New Zealand, Norway, Singapore, Switzerland, and Uruguay. It is open to any WTO member and has since been joined by Iceland, Pakistan and Ukraine, with more members expected to join now that it has come into force. While the members who have already joined the agreement account for about half of global merchandise trade, it does not include Japan, India or the United States, the latter being by far the largest target of trade complaints in the WTO’s trade dispute settlement system. The UK has signed the agreement in a temporary capacity in respect of its status under the EU Withdrawal Agreement transition period, but is not expected to join the agreement in its own right.

In a press release, the Council stated that ‘the EU remains committed to working with all WTO members to find a permanent and urgent solution to the paralysis of the WTO Appellate Body’ and that the MPIA is intended to ‘protect key features of the multilateral trading system’ in the interim.