G20 Osaka Agenda, June 28-29 / Japan proposing WTO system reform

(Credit: The Yomiuri Shimbun)

This is the fourth and final installment of a series on the summit of the Group of 20 major economies in Osaka.

A World Trade Organization dispute settlement panel's decision to accept Japan's claim and recommend that South Korea modify its import ban on Japanese fishery products was overturned in April by the WTO's Appellate Body.

Japan resented the Appellate Body's decision because it was made without making a judgment on whether South Korea's actions conform to WTO rules. The United States was among the WTO members who supported Japan's position.

At a WTO meeting held in early May, the Japanese government made reform proposals that include holding regular dialogue between WTO members and the Appellate Body members and ensuring that decisions of other dispute settlement bodies will not be bound by the Appellate Body ruling.

In early June, trade ministers and digital economy ministers of the Group of 20 major economies met in Tsukuba, Ibaraki Prefecture, under the presidency of Japan, and issued a statement saying, "We agree that action is necessary" to improve the WTO's trade dispute settlement system.

It is the first time that the G20 referred to reform of the dispute settlement system.

However, each G20 member differs on the course of action for reform.

The United States, which is critical of the Appellate Body, has refused to support the appointment or reappointment of Appellate Body members.

As a result, the seven-member Appellate Body only has three members, the minimum required to hear appeals.

The European Union has criticized the U.S. stance, while China has called for the extension of terms of office for Appellate Body members.

Meanwhile, China, whose excessive subsidies for state-owned enterprises are seen problematic, is said to have failed to submit reports on subsidies as required under the WTO agreement.

Especially among WTO members such as the United States and those from Europe, there is a growing call for creating rules on subsidies that include punitive clauses.

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