YES

TRS:

  merge(x,nil()) -> x
  merge(nil(),y) -> y
  merge(++(x,y),++(u(),v())) -> ++(x,merge(y,++(u(),v())))
  merge(++(x,y),++(u(),v())) -> ++(u(),merge(++(x,y),v()))

max/plus interpretations on N:

  merge_A(x1,x2) = max{0, x1, x2}
  merge#_A(x1,x2) = max{0, x1, x2}
  nil_A = 0
  nil#_A = 0
  ++_A(x1,x2) = max{0, x1, x2}
  ++#_A(x1,x2) = max{0, x1, x2}
  u_A = 0
  u#_A = 0
  v_A = 0
  v#_A = 0

precedence:

  merge > nil = ++ = v > u