It is hard to disagree with the prognosis of New Zealand senior trade official, Vangelis Vitalis that the golden weather for international trade is over.¹ This is most clearly manifested in the United States charging its trading partners tariffs that breach its international trade obligations.² It is also apparent in increasing protectionism globally, securitisation of international trade, and the use of economic coercion.

Writing about the situation, one respected trade economist said recently that “a generation of trade diplomats brought up on the ‘rules based’ trading system need to adjust to new realities”.³

Yet on the same day, another equally respected economist wrote that “apart from the 15 per cent of world trade the US accounts for, the rules continue to be respected. The world trade game continues.”⁴

It is all rather disorienting for lawyers and begs the question: does international trade law have any teeth?

When Vangelis Vitalis talks about the ‘golden weather’, he is referring to the period beginning in 1995 with the conclusion of the Uruguay Round of negotiations that transformed the 1947 General Agreement on Tariffs and Trade (GATT) into the World Trade Organisation (WTO). As Jennifer Hillman writes, as part of that process, the old diplomatic-style approach to settling disagreements was transformed into an ever-increasingly legal system.⁵ The WTO’s dispute settlement system allows automatic establishment of a dispute panel on request by any Member seeking a ruling on another Member’s alleged breach of the rules. A separate appeals process with a standing Appellate Body to hear appeals from panel decisions was also created.

From 1995 until the late 2010s, the dispute settlement system was often referred to as the ‘Crown Jewel’ of the international trading system, the “strongest, most successful and most frequently used global dispute settlement in the history of international law”.⁶ Since 1995, over 600 disputes have been heard by the system. For smaller countries like New Zealand, the system is particularly important, providing an impartial forum for resolving trade disputes on the basis of the rule of law, rather than through the use of power. Despite some high profile instances of Members’ failure to comply with dispute rulings, the system has been successful more often than not, with compliance rates cited at over 80 per cent.⁷

Today, however, the system is in a precarious position. Since 2019, the Appellate Body has been unable to function due to the United States blocking appointment of new ‘judges’, meaning it no longer has the quorum required to hear disputes. Further, panel decisions that are appealed cannot become legally binding until the Appellate Body makes a ruling, providing an opportunity for Members to block adoption of reports by simply filing an appeal (known as appealing ‘into the void’). The United States’ actions stem from concerns including the tendency of the Appellate Body to inappropriately extend precedent. The United States is not the only one with such concerns⁸ but progress towards reform is slow.

Since December 2019, the majority of WTO disputes have been appealed into the void, while the number of WTO cases launched has decreased to approximately one-third the number of cases being brought when the Appellate Body was still functional.⁹ This arguably signals that Members no longer see the dispute settlement system as having sufficient teeth to enforce the rules and therefore worth using.

But the system is not completely dead in the water. In 2020, a group of WTO Members, including New Zealand, established the Multi-Party Interim Appeal Arbitration Arrangement (MPIA). This is an interim measure that allows appeals to take place until the Appellate Body can be restored. Members who have joined the MPIA agree not to appeal into the void, and instead to use the Arrangement’s procedures for hearing an appeal. The MPIA began hearing appeals in 2022 and has heard three appeals to date. There are over 56 members counting the 27 EU member states individually, and others including Australia, Canada, China, Japan, Singapore and the United Kingdom.

The WTO is not the only source of international trade law. Legally binding rules also exist in bilateral and regional agreements, such as the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP) Agreement. While some argue that these agreements undermine the WTO, they are, for better or worse, part of the global trade landscape. Many of them contain legally binding dispute settlement mechanisms. Recently, New Zealand brought the first legal dispute under the CPTPP when it challenged Canada’s administration of its dairy tariff rate quotas, demonstrating that FTAs are capable of being enforced.

To conclude, international trade law faces significant challenge. WTO Members will need to give their concerted support and continue using the system to ensure that it does not become a toothless tiger. There is much to be gained by preserving as far as possible a system that has worked as well as it has.

1. See for example address to the 2025 Primary Industries NZ Summit, reported in Farmers Weekly, 27 June 2025 (Annette Scott, “Golden weather is over: Vitalis”). He has made similar comments at various presentations attended by the author.

2. Including obligations under the General Agreement on Tariffs and Trade (GATT) to cap its tariffs at negotiated “bound rates” and not to discriminate among its trading partners.

3. Simon Evenett, on LinkedIn, 30 August 2025.

4. Richard Baldwin, “America Walked Off the Pitch: Why Didn’t the World Trade Game End?” 30 August 2025, on LinkedIn.

5. Jennifer Hillman, “Moving Towards an International Rule of Law?”. In Gabrielle Marceau, ed., A History of Law and Lawyers in the GATT/WTO: The Development of the Rule of Law in the Multilateral Trading System (Cambridge University Press, 2015).

6. Kristen Hopewell, “Unravelling of the trade legal order: enforcement, defection and the crisis of the WTO dispute settlement system” (2025) 101:3 International Affairs 1103 at p. 1104.

7. The WTO cites a 80 per cent compliance rate: https://www.wto.org/english/thewto_e/minist_e/mc11_e/briefing_notes_e/bfdispu_e.htm.

8. See for example, Jeffrey Kucik, Lauren Peritz and Sergio Puig, “Legalization and Compliance: How Judicial Activity Undercuts the Global Trade Regime” (2022) 53:1 British Journal of Political Science 221.

9. Hopewell, above, at p. 1104.