Since its creation in 1995, the WTO’s dispute settlement system has been based on rules, levelling the playing field for small economies. This approach supported unprecedented growth in global economic prosperity.

However, it was undermined in December 2019 when the WTO Appellate Body lost the ability to hear appeals due to an impasse over the appointment of new members to sit on it. The Ministry played an important role in developing an interim solution while this impasse continues.

The WTO’s inability to conclusively resolve trade disputes amongst its members presents significant risk to small, export-reliant countries like New Zealand. Decisions are legally binding on WTO members, subject to a second tier of review, and can be enforced through approved trade sanctions.

The Ministry supported the Prime Minister and its Ministers in a range of international engagements to press the importance of a functioning WTO dispute settlement system and engage like-minded partners on the issue. In Geneva, our Permanent Representative to the WTO also led an ‘informal process’ in his personal capacity to try to find a solution to the impasse through intensive consultations that identified ways to improve the system.

New Zealand and a group of other WTO members negotiated and agreed the text of an interim solution called the Multi-Party Interim Appeal Arbitration Arrangement (MPIA). The MPIA is a stop-gap measure that preserves a second-tier of review in trade disputes between participants for the period the Appellate Body is unable to function.

As at 30 June 2020 the MPIA had 22 WTO members, including Australia, China and the European Union (EU), and covers over 50 percent of New Zealand’s exports. Consistent with New Zealand’s support for ‘open plurilateralism’, it remains open to any WTO Member wishing to join.

New Zealand also successfully nominated Dr Penny Ridings for the group of 10 arbitrators established under the MPIA, engaging the Ministry’s offshore posts to garner support for her in recognition of her outstanding credentials and the strong contribution she would make. Reaching agreement on the arbitrators within a deadline set prior to COVID-19 (on 31 July 2020), and primarily through virtual means, was a significant achievement and one that highlights the constructive engagement of all participating WTO members.