WTO Dispute Settlement Body (DSB)

Once again, Africa finds itself trapped in the geopolitical tussle between China and the United States. This time, it is the struggle over Africa’s critical minerals. Beginning in August 2022, President Joe Biden of the United States signed the Inflation Reduction Act (IRA) into law with the promotion of American investments in clean energy and climate-driven technologies as a primary goal of this law. The IRA’s corollary objective was the promotion of environmental justice in the United States. Therefore, for both energy capitalists and transition economy enthusiasts, this was supposed to be a win-win situation. However, more was unsaid. The IRA’s passage was not only about building American industries and homegrown green technologies. One of its goals was to significantly reduce America’s reliance on China for the supply of critical minerals. Despite the significant steps taken under the IRA to reduce American dependence on China for critical minerals, it is evident that the United States feels the need to do more. Recently, the United States Senate passed the Intergovernmental Critical Minerals Task Force Act (ICMTFA). The expectation is that the ICMTFA would ramp up American efforts to reduce its demand on China and other states the United States labels as adversarial states. Together, a combined reading of the IRA and ICMTFA represents a new frontier of American national security interests styled as clean energy laws and transition policies. These developments take place against a backdrop of a significant demand in critical minerals that will outpace supply in less than two decades from now. These maneuvers also speak to the lesser-explored American experience with China nearly a decade ago in a dispute involving China’s restrictions on the export of rare earth minerals. The United States, together with other states, challenged China’s export quotas at the Dispute Settlement Body (DSB) of the World Trade Organization (WTO). The DSB ruled that China’s restrictions violated WTO law.

WTO Members have discussed WTO reform since the collapse of the WTO Appellate Body (AB) in 2019, which was caused mainly by the US opposition to appointing new AB members. The US attacked the AB for its performance and its interpretation of WTO rules. The US has also consistently criticized the WTO’s incapability to reach agreements and reform itself. Nonetheless, this Western discomfort towards the organisation and the AB began at the Third Ministerial Meeting in Seattle (1999) when developing countries opposed the Global North’s attempt to open new trade negotiations. This push continued during the Fourth Ministerial Conference in Doha(2001), where the membership loosely agreed on a mandate for “Global and Sustainable Development”, albeit one without clear expectations to cut a deal in line with such a mandate of achieving a fair balance between trade and development at the multilateral trading system. One ministerial conference after the other, there was a failure to agree on Western driven “Development Agenda” until the Members agreed on the Trade Facilitation Agreement and the agricultural subsidies exports prohibition in Bali (2013) and Nairobi (2015), respectively. However, and even after the collapse of the AB, a criticised agreement on fishery subsidies (2022) was reached with a sunset clause of 5 years, making it in turn a chimera because of the short term.

Dispute settlement at the World Trade Organisation (WTO) is in urgent need of reform. For nearly two decades, the USA had accused the Appellate Body of judicial overreach and action against the institution escalated under both the Obama and Trump administrations. In November 2022, the quasi-judicial system that has long been referred to as the ‘jewel in the crown’ of the WTO lost its appellate function as the term of its final Member, Dr Hong Zhao, expired. With the US refusal to reappoint members to the Appellate Body, the WTO’s dispute settlement system has been slowly asphyxiated. The WTO’s two-tier dispute settlement system was designed to ensure that Members had access to transparent, independent and timely decision-making.

The adoption of imprecise and relaxed SDT provisions that can easily provide leeway for countries to evade SDT obligations will only work contrary to the stated objective of the Agreement to promote and attain sustainable and inclusive socio-economic development among State Parties. Just as Amartya Sen correctly puts it, “the central issue of contention is not globalization itself, nor is it the use of the market as an institution, but the inequity in the overall balance of institutional arrangements—which produces very unequal sharing of the benefits of globalization”