Info Service on WTO and Trade Issues (May16/19)
27 May 2016
Third World Network
Isolated US, still vetoes Chang reappointment to AB
Published in SUNS #8246 dated 24 May 2016
Geneva, 23 May (D. Ravi Kanth) -- The United States on Monday (23
May) stood completely isolated at the World Trade Organization for
its belligerent opposition to the reappointment of Mr Seung Wha Chang
from Korea to the Appellate Body for a second term of four years.
The US, however, remained adamant and succeeded in vetoing Mr Chang's
reappointment, despite a vociferous demand from several countries
- the European Union, Switzerland, Korea, Brazil, India, Egypt, and
Nigeria among others - for a second term to Mr Chang, participants
present at a Dispute Settlement Body meeting told the SUNS.
The developed and developing countries denounced the aggressive opposition
from the United States for the reappointment of Mr Chang on the grounds
that he had deviated from the covered agreements of the GATT/ WTO
In an extraordinary war of nerves between the US on the one side,
and the rest of the membership on the other, at the Dispute Settlement
Body meeting, countries from the North and the South delivered a stinging
rebuke to the US for its aggressive "my way or highway"
stance to block the reappointment of Mr Chang on baseless grounds.
"Though the US stood completely isolated from its partners, it
remained defiant by attacking the Appellate Body members for issuing
the letter and overstepping their boundaries," a developing country
participant told the SUNS.
To cover up its aggressive stance at the DSB, the US issued an elaborate
statement as to why Mr Chang cannot be reappointed. The US said Washington
does not consider Mr Chang's service reflects the role assigned to
the AB members.
The Korean Appellate Body member's failure to adhere to rules in several
cases has undermined the WTO's Dispute Settlement Body system, the
The reappointment to the DSB, according to the US, is not automatic
and members' consensus is needed for granting a second term.
The US exhorted members not to take their responsibility lightly in
considering the reappointment.
Washington stuck to the line that the panels and the AB cannot add
to or diminish rights and obligations, participants said.
The AB's role, including Mr Chang's positions, in delivering the adjudicative
approach lacked substance and raised "systemic" concerns,
the US maintained.
The US went on to cite four cases in which Mr Chang was either a presiding
member or part of the three-member Division.
The four cases are:
(i) DS453 - Panama's dispute against Argentina on allegedly restrictive
measures imposed by Buenos Aires on goods and services. The AB presided
by Mr Chang struck down the earlier panel ruling and issued obiter
dicta pronouncements. The US said the AB is not an academic body,
nor can it make law.
(ii) DS 430 - the US dispute against India on allegedly restrictive
measures imposed by New Delhi on the American agricultural products.
The US said the AB's ruling contained lengthy discussions that was
irrelevant to the points raised by the two sides. The US argued that
the AB engaged in abstract discussions.
(iii) DS 437 - China's dispute against the US countervailing duties
in which the AB delivered a major ruling in favor of Beijing.
The US said the AB adopted an approach that involved new standards
instead of considering evidence and arguments. The US complained that
the AB cannot make a case on its own and behave like an independent
(iv) DS 449 - China's dispute against the US for allegedly illegal
anti-dumping and countervailing duties imposed by the US Commerce
Department. The US said that the AB reviewed domestic law which is
not in its domain.
WTO adjudicators, according to the US, overstepped their mandate and
contributed complexity to the workload.
The AB invariably ignored the evidence and became a playground for
views which are not responsible, the US suggested.
The US indicated that trust in the AB cannot be built in the vacuum.
The US emphasized the importance of maintaining trust by holding the
AB members accountable. It argued that the reappointment is not automatic,
emphasizing that the DSB's role cannot be reduced.
The US described the AB letter (please see SUNS #8244 dated 20 May
2016) as "unfortunate." By sending the letter directly to
members, the AB is setting a precedent and seeking to act outside
its role, the US charged, according to participants.
But the US broadside against Mr Chang and the Appellate Body failed
to garner any support from its traditional allies or developing countries.
Korea issued the strongest statement yet on how the arbitrary position
adopted by one member undermined "trust" in the AB and nearly
hollowed out its "independent and impartial authority."
A senior European Union trade official told the SUNS that the US'
decision to block the reappointment has "politicized" the
It would have chilling effects on the independent and impartial functioning
of the AB, the official said, while asking not be to quoted.
In its statement, Korea said the US decision to block Mr Chang's reappointment
is "very inappropriate" and raises "serious systemic
concerns as well."
Korea asked how can an Appellate Body member be singled out for criticisms
when the reports are written by the three-member division.
As the AB members confirmed in their letter to the DSB chair on 18
May, "an AB decision cannot be attributed to any particular member,
because it is the decision of the ‘Appellate Body'" Korea said.
The US opposition, according to Korea, "is an attempt to use
reappointment as a tool to rein in AB members for decisions they make
on the bench."
"Its message is loud and clear: If AB Members make decisions
that do not conform to US perspectives, they are not going to be reappointed,"
Effectively, if the US message "is allowed to prevail, it would
seriously undermine the independence and integrity of the Appellate
Body," Korea maintained.
"First-term AB members may have to reflect more on how their
rulings will be viewed by major Members rather than on the merits
of the cases," Korea argued.
"Linking reappointment with decisions made in specific disputes
will create a dangerous precedent that other WTO Members may be tempted
to follow," Korea warned.
Korea agreed with the letter of AB members which had said: "[W]e
are concerned about the tying of an Appellate Body reappointment to
interpretations in specific cases, and even doing so publicly. The
dispute settlement system depends upon WTO Members trusting the independence
and impartiality of Appellate Body Members. Linking the reappointment
of a Member to specific cases could affect that trust."
Korea emphasized: "For an adjudicator to be truly independent,
he or she must have assurance that his or her decisions, made in good
conscience, will not result in what is effectively removal from office."
"The US opposition contravenes this most fundamental judicial
principle," Korea argued.
Further, the hidden and subtle aspect of the US' opposition to Mr
Chang's reappointment is that "the AB rulings Professor Chang
was involved with went beyond the boundary of the AB mandate, which
is to adjudicate appeals and clarify existing provisions of the covered
agreements without adding to or diminishing the rights and obligations
provided in those agreements."
While the request for ensuring "that the AB remain within the
boundary of its mandate is seemingly legitimate," it is pertinent
to argue "that some AB decisions were not consistent with the
AB mandate and oppose reappointment of an AB member who participated
in those decisions on that basis conceals one important fact,"
Given the differing views among WTO Members on the role and jurisdiction
of the Appellate Body, it is difficult or impossible to argue "where
the boundary of the AB mandate exactly lies," Korea pointed.
"The right way of addressing this situation is to continue the
efforts to build a consensus through discussions among the Members,"
Instead, the United States chose to impose "its own perspective
on other WTO Members, as well as on the Appellate Body, by replacing
an AB member who they believe has a different view," Korea maintained.
"This approach is of course misguided," Korea said, arguing
that "in the absence of an agreement on the clear boundary of
AB mandate, replacing AB members will not eliminate differences in
views regarding the consistency of specific AB decisions with its
Korea suggested an alternative to overcome this ugly situation. It
proposed that [WTO] Members launch a discussion devoted to the question
of the boundary of Appellate Body review with the goal of finding
a common understanding.
"We believe that this is the right way to address the concerns
of many Members, including the United States, while maintaining the
integrity and independence of the Appellate Body," Korea maintained.
Instead of settling for an "immediate fix that will in the end
cause harm," Korea said it is important to adopt an appropriate
way "that does not ignore the systemic concerns that we expect
will be voiced almost in unison today."
Regardless of the good intentions of the US, Korea said it cannot
"find justification in the US opposition to reappoint Professor
"This is why we would like to urge the United States to reconsider
and withdraw its opposition," Korea appealed.
"Our first priority is to restore an environment where the sitting
and incoming Appellate Body Members can do their jobs properly without
looking over their shoulders," Korea concluded.
In similar vein, India said "a successful dispute settlement
mechanism is grounded on an independent and impartial Appellate Body."
The process of reappointment and the basis for opposition to the reappointment,
according to India, will "undoubtedly have serious consequences
on the independent functioning of the Appellate Body."
India said the issue is not whether the reappointment is automatic
but on what "grounds reappointment is opposed." The alleged
reasons cited by the US, according to India, are "troubling."
India questioned the underlying rationale and said "attributing
a particular adjudicative approach to a particular Member of a Division
India said the AB functions and hears appeals as a whole as per Rule
3 (a) of the Working Procedures for Appellate Review.
Significantly, "if a question is raised on the legal approach
of a particular Appellate Body member in a Division hearing an appeal,
does it imply that all other Members of that Division are also responsible
for that allegedly erroneous approach?" India asked.
Clearly, this line of reasoning deployed by the US "has serious
implications for the working of the Appellate Body itself," India
As per Rule 4 (1) of Working procedures, according to India, the AB
functions as "Collegium" for ensuring "consistency
and coherence in decision-making, and to draw on the individual and
collective expertise of the members."
"Therefore, opposing the reappointment of an Appellate Body Member
on an approach or legal interpretation followed allegedly by one Member
constitutes a serious questioning of the functioning of the Appellate
Body as a whole," India maintained.
Arguably, the opposition "to the reappointment on the basis of
the reasons/approach provided in particular disputes signifies, in
our view, a critical threat to an independent, neutral and impartial
Appellate Body," India emphasized.
"Suffice it to say that opposition to reappointment on the basis
of positions, legal interpretations and approaches Appellate Body
takes in specific cases strikes at the very basis of an independent,
rule-based judicial body," India maintained.
India said the AB draws its mandate from the DSU regardless of the
diametrically opposing positions adopted by members on whether the
mandates have been properly adhered to.
But if the differing views of members become the ground for denying
the reappointment, "then this is a slippery slope that we are
entering," India argued.
"What are the contours and limits of the reasons to oppose a
reappointment?" India asked.
"For example, could a developing country Member, in another context,
oppose the reappointment of a particular member on the basis that
that Appellate Body member's interpretation has consistently not been
in accordance with the flexibilities and circumstances of developing
countries that the DSU and covered agreements provide?," India
sought to know.
"If they become reasons for opposing reappointment, it is a very
serious existential question for the functioning of an impartial and
independent dispute settlement mechanism," India warned.
India said the underlying message of the US action to block the reappointment
of Mr Chang is loud and clear.
"By making the adjudicative approach as the basis for reappointment
is essentially providing a strong signal that Appellate Body Members
who do not follow a particular approach or an adjudicative viewpoint,
or who do not share the views of particular members in the way they
need to approach the covered agreements, may not be considered for
reappointment," India concluded.
In crux, "this could, in the long run, have a chilling effect
on the way Appellate Body members decide appeals and undermines the
India said it supports Korea and other members in expressing support
for the reappointment of Mr Chang to the Appellate Body.
Despite its complete isolation, the US succeeded in vetoing Mr Chang's
reappointment on Monday. The moot issue is whether the developing
countries can veto the US actions which are diametrically opposed
to their developmental concerns, trade diplomats said. +