Info Service on WTO and Trade Issues (Oct17/02)
9 October 2017
Third World Network
US again blocks AB selection process from going forward
Published in SUNS #8545 dated 4 October 2017
Geneva, 3 Oct (Kanaga Raja) - The United States has once again said
it is not in a position to agree to launch the process for the selection
of new Appellate Body (AB) members to replace those members whose
terms have either expired or will expire soon until its concerns over
the continued service of former AB members are addressed.
This came about during the discussion on Appellate Body matters at
the meeting of the WTO Dispute Settlement Body (DSB) on 29 September.
The US concerns relate to the issuance of rulings by persons whose
terms as AB members had expired, as well as its longstanding concerns
regarding the "critical necessity" of the DSB asserting
the authority assigned to it under the Dispute Settlement Understanding
(DSU). (See SUNS #8536 dated 21 September 2017).
The two AB members in question whose second four-year terms have expired
or are expiring soon are Mr Ricardo Ramirez-Hernandez and Mr Peter
Van den Bossche.
The second term of Mr Ramirez-Hernandez had already expired on 30
June. He is however continuing his work on the two ongoing appeals
in which he is involved.
The second term of Mr Van den Bossche will expire on 11 December 2017.
The situation has been further compounded by the sudden departure
of AB member Mr Hyun Chong Kim of South Korea who tendered his resignation
(with immediate effect) on 1 August prior to his appointment as a
minister in the Korean government.
According to trade officials, the Appellate Body will thus soon be
down to four members from its regular seven- member complement.
The European Union and a group of Latin American countries have tabled
revised proposals in which they have proposed that the DSB agree to
launch the selection processes to replace Mr Ramirez-Hernandez, Mr
Kim and Mr Van den Bossche.
The EU proposal has set a deadline of 27 October 2017 for Members
to submit nominations of candidates and for the DSB to take a decision
to appoint the three new AB members as soon as possible, and at the
latest at its regular meeting scheduled for 22 November 2017.
The proposal by the Latin American countries (Argentina, Brazil, Colombia,
Chile, Guatemala, Mexico and Peru) has set a deadline of 29 October
2017 for Members to submit their nominations of candidates and for
the DSB to take a decision to appoint the new AB members no later
than at the regular meeting scheduled for February 2018.
According to trade officials, a large number of members expressed
concern about the continued delay in launching the selection process
for new AB members.
The Chair of the DSB, Ambassador Junichi Ihara of Japan, noted that
an informal meeting of the DSB took place on 15 September to discuss
the concerns raised by the US regarding DSB oversight of Appellate
[At that meeting, a large number of WTO members had made clear to
the US that no linkage should be made between its concerns regarding
the Appellate Body and the launching of the selection process for
new AB members. See SUNS #8536 dated 21 September 2017.]
According to trade officials, the DSB Chair noted that the US said
it was not in a position to start the selection process until its
concerns were addressed but that many WTO members expressed concerns
linking discussions on the US concerns with the launch of the selection
process and that some members wanted the US to provide more details
about its concerns and proposals for addressing them.
Consultations will continue in order find a way forward, he said,
adding that more concrete and creative ideas were needed to resolve
The Chair underscored that filling the vacancies was urgent. The AB
was currently reviewing 7 appeals with three more appeals expected
to be filed by the end of the year.
In its statement, the US, referring to the informal meeting of 15
September, said that while it appreciated the willingness to engage,
many of the interventions by delegations were focused on process issues.
"Of course, that is a Member's prerogative. But as a result we
do not have a clear vision of the views of many delegations on the
specific concerns we have raised. What was clear in our informal DSB
meeting is that we did not hear any fundamental disagreements that
the two concerns we raised are important and worthy of the DSB's consideration."
As is clear from the previous item (in reference to the fatty alcohol
dispute), the issuance of a report on appeal that does not adhere
to the requirements set out in the DSU raises yet more concerns.
For the United States, the issues are clear. Under the DSU, the DSB
has a responsibility to decide whether a person who has ceased to
be a member of the Appellate Body should continue serving.
If the DSB agrees that such a person should continue to serve on an
appeal, it would be the DSB's responsibility to provide an appropriate
legal basis to permit this to occur.
And as stated at last month's DSB meeting, the United States would
welcome Mr. Ramirez's continued service on two pending appeals with
appropriate action by the DSB, it said.
"We therefore reiterate our willingness to meet with any interested
delegation to discuss the concerns raised and to develop appropriate
As for the two proposals tabled by the EU and the group of Latin American
countries, the US said it was not in a position to support the proposed
"In the US view, we cannot be considering launching a selection
process to fill a vacancy if the person to be replaced continues to
serve and decide appeals. We first would need appropriate action on
the part of the DSB," it said.
According to trade officials, the European Union and Mexico - speaking
for itself as well as Argentina, Brazil, Colombia, Chile, Guatemala,
Mexico and Peru - noted that their respective proposals for launching
the process(es) were now more or less aligned.
Both now agree that the selection process for all three vacancies
should be launched simultaneously and that replacements should be
According to trade officials, many WTO members said that they were
seriously concerned about the continued impasse over the start of
the selection process and the impact this would have on the Appellate
Body and the dispute settlement system in general; that addressing
US concerns and launching the selection process should not be linked
but rather put on separate tracks; and/or that they were prepared
to accept either of the proposals put forward by the EU and the Latin
American group for starting the process.
These included Canada, Singapore (for ASEAN), the Dominican Republic
(for the informal group of developing countries), Australia, Norway,
China, Japan, Switzerland, Hong Kong-China, New Zealand, Turkey, Venezuela,
Chinese Taipei, Korea, Russia, Ecuador, Guatemala, Chile (for itself
and the GRULAC group), Costa Rica, Peru, Uruguay, Honduras and El
Several members including the Dominican Republic and Ecuador said
Article 17 of the DSU mandates that the Appellate Body vacancies should
be filled as they arise and that the DSB Chair should therefore make
the decision to start the process.
According to trade officials, the DSB chair said he would continue
to make himself available for consultations.
He encouraged delegations to have more conversations among themselves
so that members can come up with more concrete ideas for moving forward.
PROCEDURAL CONCERNS OF THE US AND "POSITIVE CONSENSUS"
The US highlighted its procedural concerns when speaking under the
agenda item of EU anti-dumping measures on imports of certain fatty
alcohols from Indonesia.
The US had raised with Members at the last meeting of the DSB important
systemic questions regarding the Division hearing this appeal, it
The United States noted that Mr. Kim was no longer an Appellate Body
member as of August 1, and the report in this dispute was not circulated
until September 5 - more than one month later.
Members have been informed that Mr. Kim "signed" the report
on July 31, one day before resigning and becoming Korea's Trade Minister.
(Trade officials said the delay in circulation was due to translation
problems into other WTO languages.)
But what is relevant under DSU Article 17.5 is when the report is
circulated, not when it is signed.
"In these circumstances, we do not understand why Mr. Kim was
not simply replaced on the Division, so as to permit a current Appellate
Body member, fulfilling all the requirements of Article 17, to complete
As WTO Members also well know, the term of Mr. Ramirez, another member
of the Division hearing this appeal, expired on June 30. The DSB has
taken no action to permit him to continue to serve as an Appellate
Therefore, Mr. Ramirez too would appear not to have been an Appellate
Body member on the date of circulation of this report, the US maintained.
In these circumstances, the report has not been provided and circulated
on behalf of three Appellate Body members, as required under DSU Articles
17.1 and 17.5. And because the report has not been issued consistent
with the requirements of Article 17, it cannot be an "Appellate
Body report" subject to the adoption procedures reflected in
Rather, the DSB would consider the report's adoption subject to the
positive consensus rule applicable to DSB decisions, pursuant to DSU
Article 2.4 and WTO Agreement Article IX:1, note 3, it said.
"Given the serious concerns the United States has described with
respect to the Division's statements regarding Article 19.1 of the
DSU, we do not endorse the findings set out in the Division's report.
Nor can we support an Appellate Body member's continuation of service
without authorization by the DSB."
"However, we understand the parties to the dispute to support
adoption of the reports of the panel and the Division in this dispute."
As DSU Article 3.7 makes clear, "[t]he aim of the dispute settlement
mechanism is to secure a positive solution to a dispute."
And it would appear that the parties consider that adoption of these
reports would help them achieve that aim.
The US further noted that the situations with Mr. Kim and Mr. Ramirez
only arose late into the appellate proceedings.
In these "particular and exceptional circumstances", therefore,
the United States would be willing to join a consensus to adopt the
reports proposed for adoption today, that is, the report contained
in WT/DS442/AB/R & ADD.1 and the report contained in WT/DS442/R
& ADD.1, as modified by the first report.
According to trade officials, the EU, Canada, Brazil and Japan disagreed
with the US legal interpretation of the DSU procedures.
The EU said it was confused as to what the US thought it was agreeing
to adopt today. It said it would leave that discussion for later.
Canada said it disagreed with any suggestion that the service of Mr
Kim and Mr Ramirez-Hernandez on this appeal undermines the reverse
consensus rule in DSU Article 17.14.
The reverse consensus rule is one of the greatest achievements of
the Uruguay Round. For its part, it considers that the reverse consensus
rule is applicable in this case, said Canada.
The US again said that it does not consider the report circulated
on September 5, 2017, to be an "Appellate Body report" subject
to the adoption procedures reflected in Article 17.14 of the DSU.