News & Insights

Job creation, economic growth and increased consumption options are a few benefits which highlight the importance of Australia’s engagement in international trade. The current economic environment is stifled due to COVID-19 (coronavirus) restrictions. However, it is still crucial that Australian exporters remain able to export now and more so when the coronavirus pandemic ends.

The World Trade Organisation (‘WTO’) operates at a global scale to ensure that participating nations comply with the rules of international trade dealings. Nations sign WTO agreements which are then ratified in their respective parliaments.

The WTO Appellate Body was established in 1995 and is comprised of seven Members who hear appeals and trade disputes brought forward by the WTO nations. This provides nations with certainty and security when engaging with trade deals.

In December 2019, the Trump Administration blocked the appointment of Members to the WTO’s Appellate Body. This meant that there were less than seven Members to decide trade disputes so the Appellate Body could no longer be deemed as fully operational. This posed a threat for the pending international trade deal appeals and future disputes to come as there was no longer an avenue to resolve trade disputes.

In light of the WTO Appellate Body’s inability to rule on trade disputes, Australia and 15 other WTO nations took it upon themselves to create a temporary ‘Multiparty Interim Appeal Arbitration Arrangement’ (‘Arrangement’).

The 15 other WTO nations are Brazil, Canada, China, Chile, Colombia, Costa Rica, the European Union, Guatemala, Hong Kong, Mexico, New Zealand, Norway, Singapore, Switzerland and Uruguay.

This Arrangement will act as a contingency measure that will provide recourse to any nation which may become involved in a trade dispute. Australia and the other nations will have more security in ensuring that international trade rules will be respected and enforced when obligations aren’t being complied with. Nations which have signed the Agreement will be able to rely on it for disputes which are already underway, as well as future disputes.

The Arrangement put in place does not differ greatly from the normal WTO appeals rules. However, once the WTO Appellate Body becomes fully functional again, the temporary Arrangement will cease to exist.

This current economic climate is changing rapidly and it is vital for everyone to stay updated on the changes. Australia’s participation in this interim Arrangement will offer protection to exporters now and especially later when the coronavirus pandemic passes.

Macpherson Kelley is a commercial law firm with extensive experience handling international trade matters. We are the trusted law firm for a large number of foreign-owned subsidiaries in Australia. If you’re engaged in international trade, please contact Mark Metzeling or one of our foreign owned subsidiary team.

The information contained in this article is general in nature and cannot be relied on as legal advice nor does it create an engagement. Please contact one of our lawyers listed above for advice about your specific situation.