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TWN Info Service on WTO and Trade Issues (Jun16/02)
6 June 2016
Third World Network

Trade: Former AB Members censure US on Chang reappointment veto

Geneva, 1 Jun (D. Ravi Kanth) -- Former Appellate Body members at the World Trade Organization on Tuesday (31 May) censured the United States for its decision to block the reappointment of Mr Seung Wha Chang from Korea for a second term on grounds that it would raise the possibility of "inappropriate pressures by participants in the WTO trading system."

"There must be no opening whatsoever to the prospect of political interference in what must remain impartial legal judgements in the WTO's rule-based system of adjudication," the 13 living former members of the Appellate Body have said in a letter Tuesday (31 May) to the chair of the Dispute Settlement Body, Ambassador Xavier Carim of South Africa, accessed by SUNS.

The US decision for not granting a second term to a sitting member on grounds that he was part of the three- member division for delivering rulings in certain appeals could "threaten to politicize WTO dispute settlement and imperil the impartial independence of every member of the Appellate Body that is required by the WTO Rules of Conduct," the former Appellate Body members argued.

In a three-page letter to the DSB chair, the 13 former Appellate Body members - Georges Abi-Saab, James Bacchus, Luiz Olavo Baptista, Lilia R. Bautista, Claus-Dieter Ehlermann, A. V. Ganesan, Jennifer Hillman, Merit E. Janow, Mitsuo Matsushita, Shotaro Oshima, Giorgio Sacredoti, Yasuhei Taniguchi, and David Unterhalter - expressed grave concern about the unmitigated dangers posed by the US decision to "upholding the rule of law in international trade."

"The continued impartial independence of the WTO Appellate Body is essential to upholding the rule of law in international trade," the former AB members maintained.

"Moreover, we see it as a prerequisite to providing security and predictability for the rule-based multilateral trading system for the benefit of all of the Members of the WTO," they emphasized.

Without naming the US in their letter, they said that "the concerns raised for us by the current reappointment process are wholly institutional."

"One Member of the Appellate Body [Mr Seung Wha Chang] has been singled out for criticism by one Member of the WTO (the United States) by reference to rulings in certain appeals in which he was a Member of the division concerned," the former AB members said.

On 23 May, the US had severely criticized the rulings in which Mr Chang was involved either as a sitting member of the three-member division or as a presiding member of the division.

The US had citied four rulings in which Mr Chang had allegedly deviated from the DSU jurisprudence and erred.

The four rulings cited by the US are:

(i) DS 453 - 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, adding that 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 were irrelevant to the points raised by the two sides, and the AB had engaged in abstract discussions.

(iii) DS 437 - China's dispute against the US on countervailing duties in which the AB delivered a major ruling in favour 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 investigator.

(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 had argued that the AB had reviewed domestic law which is not in its domain.

Around 30 WTO members, from both developed and developing countries, had criticized the US decision to block the reappointment of Mr Chang at the DSB meeting on 23 May.

Commenting on these criticisms which were directed toward Mr Chang, the former AB members said these "could just as easily have been directed toward any of the six other Appellate Body Members."

"As the six other Members of the Appellate Body have explained in a recent letter to the Members of the WTO, the rulings and the recommendations of the Appellate Body cannot be attributed solely to any one Appellate Body Member, because ‘our reports are reports of the Appellate Body'," the former Appellate Body members maintained.

Throughout the first twenty years of the WTO and the Appellate Body, they maintained that the AB owned all the decisions "as one" to mutually reinforce "the strength of their individual commitment to impartiality and independence."

"But if, now, the fact that a Member [Mr Chang] of the Appellate Body joined in the consensus on the outcome on a particular legal issue or on a particular dispute becomes for the first time a factor in a decision on that Member's [Mr Chang's] reappointment, all of the accomplishments of the past generation in establishing the credibility of the WTO dispute settlement system can be put in jeopardy," the 13 former Appellate Body members argued.

In short, the US decision "raises the possibility of inappropriate pressures by participants in the WTO trading system."

Therefore, "there must be no opening whatsoever to the prospect of political interference in what must remain impartial legal judgments in the WTO's rule-based system of adjudication," the former Appellate Body members cautioned.

They cited their late colleague Julio Lacarte who once said of any action that might call into question the impartiality and the independence of the Appellate Body, "This is a Rubicon that must not be crossed."

Further, "the unquestioned impartiality and independence of the Members of the Appellate Body has been central to the success of the WTO dispute settlement system, which has in turn been central to the overall success of the WTO."

Against this backdrop, "undermining the impartial independence of the Appellate Body now would not only call into question for the first time the integrity of the Appellate Body; it would also put the very future of the entire WTO trading system at risk," they warned.

WTO members are entitled to "differ with a decision reached by the Appellate Body, but this does not necessarily mean that the Appellate Body has acted outside its mandate in reaching that decision," the former Appellate Body members argued.

Indeed, "differences [over the Appellate Body rulings] are unavoidable in a rule-based system that seeks to resolve international disputes between disputing parties that maintain conflicting views of the meaning of the rules."

If anything, differences over the AB verdicts "are intrinsic to the very process of legal interpretation - the core competency of the Appellate Body."

A decision on the reappointment of a sitting member "should not be made on the basis of the decisions in which that Member has participated as a part of the divisions in particular appeals, lest the impartiality, the independence, and the integrity of that one Member, and, by implication, of the entire Appellate Body, be called into question."

"Nor should either appointment or reappointment to the Appellate Body be determined on the basis of doctrinal preference, lest the Appellate Body become a creature of political favour, and be reduced to a more political instrument."

The standard for both appointment and reappointment, according to the 13 former AB members, should be based on whether the person in question is "of recognized authority, with demonstrated experience in law, international trade and the subject matter of the covered agreements generally."

"As provided in Article 17.3 of the WTO Dispute Settlement Understanding, the standard for both appointment and reappointment should be whether the person in question is ‘of recognized authority, with demonstrated expertise in law, international trade and the subject matter of the covered agreements generally,'" they maintained.

They said if WTO members conclude that the Appellate Body has erred when clarifying a WTO obligation in WTO dispute settlement, then, members must change the covered agreements through a ministerial or General Council decision by a three-fourths majority of the members under Article IX: 2 of the Marrakesh Agreement.

And the amended provisions following the ministerial decision or General Council recommendation are binding on the WTO dispute settlement, they argued.

To ensure the impartial independence of the Appellate Body, WTO members should abolish the current system of reappointment for a second term of a sitting member and offer "longer term" for all members of the Appellate Body, they maintained.

"Instead of one four-year term, with the possibility of a second four-year term, we recommend a single, longer term for all Members of the Appellate Body," the former Appellate Body members concluded.

In crux, the United States crossed the "Rubicon" and has irreparably undermined the "impartiality and independence of the Appellate Body members."

It has ensured "political interference" in the so-called rule-based system of adjudication.

Ironically, the US action against Mr Chang, whose term expired on 31 May, coincided with the vehement attack launched on Tuesday by the presumptive presidential candidate of the US Republican Party on a US district court judge Gonzalo Curiel against the Trump University "playbooks", in ordering the unsealing of evidence.

"The judge has been very unfair, has not done a good job, has been very bad judge, and he knows he is unfair," said Donald Trump, the presumptive Republican Party nominee for the US President.

Some comments and views of legal experts in the US, reported in the media, have said Trump's comments on the judge verged on criminal contempt.

Between the US charges against Mr Chang on 23 May, and Mr Trump's broadside against the US district court judge Mr Curiel on 31 May, there is very little to choose in terms of the US attitude to rule of law whether domestically or internationally. +

 


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