TWN Info Service on UN Sustainable Development (Oct18/06)
22 October 2018
Third World Network
Members warn demise of AB is the worst crisis facing the WTO
Published in SUNS #8776 dated 18 October 2018

Geneva, 17 Oct (D. Ravi Kanth) - A large majority of members of the World Trade Organization on Tuesday warned that the worst existential crisis facing their trade body at this juncture is the possible demise of the Appellate Body (AB), the highest adjudicating arm for resolving global trade disputes.

The US, which has blocked for more than one year a proposal from more than 100 members for filling the vacancies at the AB, stuck to its isolationist position that the dispute settlement system has gone far beyond what was intended in the Uruguay Round commitments.

At the informal Trade Negotiations Committee (TNC) meeting on Tuesday (16 October), the standoff between the large majority of members on one side, and the US on the other, exposed the irrelevance and redundancy of crafting new rules through plurilateral negotiations in electronic commerce, investment facilitation, disciplines for micro, small, and medium enterprises (MSMEs), domestic regulation in services, and trade and gender at a time when the AB is going to disappear by December 2019.

On behalf of the African Group, South Africa said forcefully "that unless and until Members come to terms with the growing threat to the dispute settlement mechanism, not only existing rules but also any discussion of new WTO rules or reform will become redundant."

"The DSM [dispute settlement mechanism] is the one matter on which we need urgent engagement," said Ambassador Xavier Carim of South Africa.

India said "the existential crisis facing the Appellate Body is our gravest concern."

"With only 3 Members left, its effectiveness is compromised, and with the continuing impasse, its future is a question mark," said India's Ambassador J S Deepak, according to trade envoys present at the meeting.

"The looming paralysis and possible disappearance of the Appellate Body will be the death knell of the dispute settlement system, which in spite of its limitations, has served us well," India maintained.

In this context, India argued, "the topmost priority for the Membership nee ds to be to break the impasse in the filling up of the vacant positions of the Appellate Body members."

"A number of ideas have been floated to address the issues raised, and we are open to engage on any or all of them; and to focus our efforts on arriving at a breakthrough in this important area," India said.

"A swift and independent, two-stage dispute settlement system is necessary, we believe, for fair enforcement of the rules of international trade and preserving the credibility of the WTO," India argued.

"This needs to be at the top of the agenda in the coming weeks and months!" India maintained.

China pointedly criticized the US for blocking the appointment process for filling four vacancies at the AB. "The entire dispute settlement system is in severe crisis," China said.

"Ever since August last year, more than 100 WTO members voiced serious concerns by means of joint proposals, joint statements or interventions at various occasions," China's trade envoy Ambassador Dr Zhang Xiangchen said at the TNC meeting.

"Recently, EU, Canada and Honduras put forward some concrete suggestions as well," China argued.

Malawi, on behalf of the ACP (African, Caribbean, and Pacific) group of more than 90 countries, said "at this juncture it puts priority support in the unblocking of the selection of AB members. Without which the system will not function, therefore placing the merits of negotiating new rules into question."

The ACP countries pointed out that "developing countries, including the ACP Group, have in the past tabled proposals on the reform of the WTO Dispute Settlement System but some of the members now calling for reform blocked those proposals."

"Even though our concerns on the DSU still remain not addressed, we do not think blocking the whole system is the way to handle things," Malawi said.

The European Union said it is particularly worried about the situation surrounding the Appellate Body. The EU argued that "the blockage of appointments, hostage-taking of the dispute settlement system, and its eventual crippling cannot be accepted as a "new normal"."

Japan cautioned that if "the Appellate Body ceases to operate, the entire dispute settlement system could be brought to a halt."

Australia, Canada, and several other countries also called for addressing t he gravest crisis at the WTO.

But the US, which called for reforms in the transparency and notification functions of the Secretariat, and pursuing plurilateral negotiations, remained unmoved by the calls for filling the vacancies at the AB.

The WTO's Director-General Roberto Azevedo said there is no progress in ending the stalemate for filling the vacancies at the AB.

Consequently, the DG's repeated calls for crafting new rules to address the 21st century challenges lacks credibility and integrity, said trade envoys, who asked not to be quoted.