Japan has agreed to join an alternative dispute resolution system to the World Trade Organization (WTO) after a prolonged inactivity of the WTO Appellate Body left the country’s dispute cases in limbo.
The cabinet approved the decision to participate in the Multi-Party Interim Appeal Arbitration Arrangement (MPIA) on Friday, according to the Japanese Ministry of Economy, Trade, and Industry.
It said the Appellate Body has “ceased functioning” for over three years, and the yearly number of WTO dispute settlement cases had dropped to “less than half of what it was before the current situation began.”
“As an interim measure until the dispute settlement function is restored, the Japanese government decided to join the MPIA,” it added.
In turn, the Appellate Body cannot hear appeals because it lacks the numbers to constitute a body.
The MPIA was set up after the WTO Appellate Body was frozen. However, both parties must be willing to submit to an MPIA ruling, which could be another means to effectively “kill” the case.
The European Commission welcomed Japan’s decision to join the MPIA, citing global trade regulations as the “best guardrail against global economic fragmentation.”
South Korea’s WTO Dispute Against Japan
South Korea said on Monday that it will halt a WTO dispute process sparked by a complaint against Japan as the two countries discuss Japan’s export curbs on high-tech materials to South Korea.“The suspension of the WTO dispute resolution process is not really a withdrawal ... but a pause,” Kamchan Kang, director-general at Korea’s trade ministry, told reporters.
“If the issue does not progress well, the process may resume again,” Kang added.
In July 2019, Japan imposed export curbs on materials used in smartphone displays and chips amid a decades-old row with Seoul about South Koreans who said they were forced to work under Japan’s 1910–1945 occupation of Korea.
South Korean tech firms such as Samsung Electronics Co. Ltd., SK Hynix Inc., and LG Display Co. Ltd. were among companies widely expected to be affected by Tokyo’s curbs on fluorinated polyimides, photoresists, and hydrogen fluoride, in which Japanese production dominated.
South Korea recently announced that its companies would compensate people forced to work under Japan’s 1910–1945 occupation, as the country seeks to end a dispute that has undercut U.S.-led efforts to present a unified front against China and North Korea.