TWN Info Service on WTO and Trade Issues (May16/16)
24 May 2016
Third World Network

AB members challenge US over reappointment of Seung Wha Chang
Published in SUNS #8244 dated 20 May 2016

Geneva, 19 May (D. Ravi Kanth) - The six remaining members of the World Trade Organization (WTO)'s adjudicating body, the Appellate Body (AB), on Wednesday (18 May) spoke their mind against the unilateral decision of the United States to block the reappointment of Mr Seung Wha Chang on unjustifiable grounds.

The US decision has generated chilling "risks" for the "trust" placed in the independence and impartiality of Appellate Body Members on which the dispute settlement system depends, the members said in a letter to the Chairman of the Dispute Settlement Body (DSB), a copy of which was obtained by the SUNS.

In a strong letter to the chair of the DSB, Ambassador Xavier Carim of South Africa, on 18 May, the six members of the AB - Mr Thomas R. Graham, chair for the AB, Mr Ujal Singh Bhatia, Mr Ricardo Ramirez Hernandez, Mr Shree Baboo Chekitan Servansing, Mr Van Den Bossche, and Ms Yuejiao Zhang - challenged the reasons cited by the US for blocking Mr Chang's reappointment.

The US has alleged that Mr Chang deviated from the covered agreements in three cases which he had presided at the AB.

The three cases involve China's complaint against the countervailing duties imposed by the US, China's dispute against allegedly inconsistent anti-dumping and countervailing duties imposed by the US on several Chinese products, and Panama's dispute against Argentina concerning Buenos Aires' allegedly restrictive measures against goods and services.

Besides, Mr Chang also participated in several cases involving the US as part of the three-member division.

Without naming the US, the AB members addressed their letter to the US through the offices of the DSB chair and the WTO Director-General who was clearly aware of the storm that was building up at the WTO, several trade envoys told the SUNS.

"With regard to accuracy, no case is the result of a decision by one Appellate Body Member, nor should interpretations or outcomes be attributed to a single Member," the six AB members maintained.

The main criticism of the US is that Mr Chang deviated from the covered agreements and entered in obiter dicta in the rulings.

"Appeals are heard and decided by three Members who are chosen randomly to constitute the Division for each case," the AB members maintained.

"During a Division's consideration of a case, there is always a formal, intensive exchange of views, in person in Geneva, between the three Division Members and the Appellate Body Members who are not on the Division," the six members argued.

In short, "Our reports are reports of the Appellate Body," they asserted.

Effectively, the AB members pointed a finger at the US by asking how could it direct criticism at the doorstep of Mr Chang when decisions in the three cases were decided by the full AB Division after consultations with the rest of the AB members.

Further, the AB members said that they are guided by Articles 3.2, 17, and 19.2 of the Dispute Settlement Understanding in adjudicating appeals and clarifying existing provisions of the covered agreements "without adding to or diminishing the rights and obligations provided in those [covered] agreements."

"We strive to adhere to that mandate when deciding complex issues that arise in a variety of circumstances, frequently on matters of first impression," the AB members said.

"Whether we have always succeeded is a subject we leave to the WTO membership to discuss," the six members suggested, maintaining that the WTO members are well within their rights to comment on the AB reports as set out in Article 17.14 of the Dispute Settlement Understanding. The AB members said they are open to "other informed and constructive comments."

As regards the "trust that WTO Members place in the independence and impartiality of AB Members," the six members said, "we are concerned about the tying of an Appellate Body Member's reappointment to interpretations on specific cases and even doing so publicly."

"The dispute settlement system depends upon WTO Members trusting the independence and impartiality of Appellate Body Members," the six members emphasized.

"Linking the reappointment of a Member to specific cases could affect that trust," they lamented.

Commenting on the work done by Mr Chang, the six members said "we have the highest respect for Mr Seung Wha Chang as a person of integrity, independence and impartiality."

"He [Mr Chang] has worked hard together with us to maintain the quality of our reports and to foster constructive improvement of our operations," the AB members stressed.

"We recognize that there is no right of reappointment," the six members argued, suggesting that they have no role in decisions for reappointment.

However, the AB members said that they "felt compelled" to make their reasons known to the DSB chair.

The AB members copied their letter to the WTO Director-General Roberto Azevedo who is yet to make a public comment on the "lawlessness" created unilaterally by the United States in destroying the adjudicating role of the trade body after severely undermining the negotiating functions of the trade body, several trade envoys told the SUNS.

The DG was aware of the US action well before it became public but he maintained a deafening silence until it blew up into a grave systemic crisis, said a trade envoy who is familiar with the development.