EU, China and 14 others agree stop-gap fix for WTO crisis

By Philip Blenkinsop

BRUSSELS (Reuters) - The European Union, China and 14 other World Trade Organization members agreed on Friday on a temporary mechanism to resolve trade disputes after U.S. action rendered the WTO incapable of acting as the arbiter of global trade.

Washington froze the WTO's Appellate Body, which acts as a supreme court for international trade, by blocking appointments for over two years. Two of the body's remaining three members came to the end of their terms in December, leaving it unable to issue rulings.

A WTO "panel" of trade experts will still make initial findings. However, it is no longer possible to appeal against a ruling at the Geneva-based body.

Under the temporary fix, a pool of 10 arbitrators will be set up in the next three months. Three of them will hear any given appeal.

The European Commission said the WTO members involved had

agreed to preserve the WTO's two-step dispute system until the

WTO's own Appellate Body became operational again.

"This is a stop-gap measure to reflect the temporary paralysis of the WTO's appeal function for trade disputes," said EU Trade Commissioner Phil Hogan, adding that restoring the appeal function of the WTO was a priority.

The EU had previously teamed up with Norway and Canada to form a separate appeals body that could resolve disputes.

The other countries that signed up on Friday are Australia, Brazil, Chile, China, Colombia, Costa Rica, Guatemala, Hong Kong, Mexico, New Zealand, Singapore, Switzerland and Uruguay.

Hogan said other countries were welcome to join.

However, South Korea and Panama, who indicated willingness in January to work towards a deal, are not part of the coalition.

(Reporting by Philip Blenkinsop, editing by Larry King)