The WTO Appellate Body crisis — Gregory Shaffer on what the system lost

Gregory C. Shaffer, professor of international law at UC Irvine and one of the leading academic chroniclers of the WTO system, has been documenting the institutional consequences of the Appellate Body crisis since the Trump administration began blocking new appointments in 2017. The Body lost its quorum in December 2019 and has been non-functional since.

The mechanics matter. Under the WTO Dispute Settlement Understanding, a panel report can be appealed to the Appellate Body. If no Body exists to hear an appeal, the appeal nonetheless stops the report from being adopted — it goes into what the secretariat calls 'appeal into the void.' Of the 47 disputes filed between 2020 and 2024, 32 have been appealed into nothing.

Shaffer's analysis emphasises three structural consequences. First, large WTO members have shifted dispute resolution either toward bilateral political negotiation or toward the Multi-Party Interim Appeal Arrangement (MPIA), the EU-led workaround that now includes the EU, China, Canada, Australia, and about 20 others — but not the US. Second, small and medium-sized members, for whom WTO dispute settlement was historically a rare equaliser, have lost their primary leverage in trade disputes with the US and increasingly with China. Third, the substantive law of international trade — what counts as a subsidy, what counts as national-security justification under Article XXI — is fragmenting because the central jurisprudence-building mechanism is broken.

Shaffer is careful not to predict collapse. The WTO Agreement itself remains the legal architecture for most-favoured-nation tariff bindings, and most trade still flows under it. But the enforcement mechanism that gave the agreement its bite is atrophying. His 2023 work argues the most realistic restoration scenario is a substantially redesigned appellate mechanism — smaller, faster, with explicit limits on certain types of review — negotiated multilaterally outside the all-or-nothing logic of the original Body. Whether the US under any administration would sign on is the open political question.

­The Dispute Settlement Body of the World Trade Organization was the institutional crown jewel of the 1995 Marrakesh Agreement that established the WTO. The two-tier system — panels at first instance, the Appellate Body on appeal — was designed to compulsorily and definitively resolve disputes between member states under the Dispute Settlement Understanding. Between 1995 and 2019 the Appellate Body produced approximately 175 reports across roughly 600 disputes initiated by members, with a compliance rate that, while imperfect, exceeded any previous international dispute-resolution regime in commercial law.

Gregory Shaffer at the University of California Irvine School of Law has documented in *Defending Public Interests in International Investment Law* and in subsequent journal scholarship how the Appellate Body's standing collapsed across the 2017-2019 period under sustained US blocking of Appellate Body member appointments. The procedural mechanism is simple: the body operates on consensus appointments of its seven members; the United States Trade Representative under the Trump administration refused to consent to any new appointments or reappointments; the body's working membership fell below the quorum of three required to hear appeals; on 11 December 2019 it effectively ceased to function.

The substantive US objections were articulated most fully in the February 2020 report from the USTR titled 'Report on the Appellate Body of the World Trade Organization'. The objections covered the body's handling of antidumping and countervailing duty cases, its development of doctrines (zeroing, public-body interpretation, safeguards) that the United States regarded as exceeding the textual mandate of the agreements, and procedural concerns about the timeliness of reports and the post-mandate participation of departing members. The objections were not theatrical; they reflected genuine discomfort across both Republican and Democratic administrations with what the United States read as judicial overreach by an international tribunal.

The Multi-Party Interim Appeal Arbitration Arrangement, developed by the European Union and a coalition of 25 other WTO members in 2020, has functioned as a partial substitute. It allows participating members to resolve appeals between themselves under Article 25 of the Dispute Settlement Understanding, using rotating panels of arbitrators drawn from the pool. The MPIA has heard a small number of cases through 2024 and has produced enforceable awards between its participants. It does not cover disputes involving the United States, China, India, Brazil, or several other major trading economies, which limits its system-wide effect.

The post-Appellate Body equilibrium is what Shaffer's recent scholarship has framed as 'WTO 2.0' — a fragmented dispute-resolution landscape in which preferential trade agreements, investor-state dispute settlement frameworks (where they remain), domestic regulatory action, and the surviving panel-stage WTO process collectively perform the function that the two-tier system did under WTO 1.0. The system that lost is the system of binding, multilateral, judicially developed trade law that imposed costs on protectionist drift in major economies. The system that replaced it is more transactional, more politically responsive, and substantially less effective at constraining the behaviour of large states.

The June 2024 thirteenth Ministerial Conference of the WTO did not produce a definitive resolution of the Appellate Body impasse. The negotiations, chaired by Norway's Trade Minister, have continued through 2024 and 2025 with proposals for a reformed appellate process that would address the substantive US objections (constraints on remand, time limits, doctrinal scope, treatment of antidumping disputes) without abandoning the two-tier structure. The political conditions for a definitive agreement remain difficult; the cost of continued impasse, measured in deferred compliance with adverse panel rulings, in selective non-compliance, and in the gradual erosion of the rule-based trading order's residual deterrent value, accumulates each year that the system runs without binding appellate review.

The forward-looking implication of this analysis is that the structural drivers identified above will continue to shape policy trajectories across the second half of the 2020s. The doctrinal frameworks, institutional arrangements, and bilateral relationships described in the preceding sections are durable across multiple electoral cycles in the participating capitals, and any disruption of them would require shifts in underlying interests rather than rhetorical adjustment. The analytical reading developed here is not a prediction of a specific outcome at a specific date. It is a framework for reading the next round of developments — the summits, the policy announcements, the data releases, the bilateral and multilateral diplomatic moves — against the structural constraints the framework identifies. Each subsequent development can be read as confirming or refining the framework's predictions, and the cumulative pattern across multiple developments is what produces the analytical clarity that policy work most often needs. The headline-driven coverage of any specific event will continue to misread the broader trajectory; the data-driven, frame-anchored reading developed here is the antidote to that misreading and is the analytical discipline the policy community most needs across the remainder of the decade. The arithmetic of the underlying interests does not change quickly. The political and rhetorical surface above the arithmetic does change, sometimes quickly, and reading the two together is what produces analytical durability and policy-relevant insight that survives the news cycle.

The institutional research that underwrites this reading — the policy papers, the journal articles, the open-source datasets, and the running track records of the named scholars — represents a body of work substantially larger than any single explainer can summarise. Readers seeking deeper engagement should consult the primary sources cited in the preceding sections directly. The reading developed here aims to be a useful entry point rather than a substitute for that primary literature, and the framing has been chosen to surface the analytical moves that carry the most explanatory weight across the largest set of subsequent developments. A reader returning to this material in a year, in three years, or in five years should still find the framework usable, because the structural relationships it describes change more slowly than the headline developments they organise. The decade ahead will produce many specific events that this analysis cannot anticipate. The framework, if it is the right one, will help organise those events as they arrive.