Info Service on WTO and Trade Issues (Dec18/10)
18 December 2018
Third World Network
US reveals its intentions to permanently paralyse the AB
Published in SUNS #8817 dated 14 December 2018
Geneva, 13 Dec (D. Ravi Kanth) - After failing to provide any "options"
for addressing its specific concerns about the functioning of the
World Trade Organization's Appellate Body (AB), the highest adjudicative
body for addressing global trade disputes, the United States on Wednesday
unwittingly revealed its intentions to permanently paralyse the AB,
trade envoys told SUNS.
At the WTO's year-end General Council meeting, two countries - India
and China - pointedly asked the US trade envoy Ambassador Dennis Shea
to provide "options" for the specific issues it had raised
about the functioning of the AB, especially the AB's failure to adhere
to the 90-day limit for issuing findings or overstepping the core
provisions of the Dispute Settlement Understanding (DSU), according
to trade envoys, who asked not to be identified.
At the meeting, the US simply rejected a proposal from India, China,
and the European Union, saying that the proposal from the "trilateral"
will make the AB "even less accountable."
The US trade envoy spoke briefly about Washington's core concerns
about the AB and how it strayed away from adhering to the rules established
Ambassador Shea said the proposal by the "trilateral" -
India, China, and the EU - intends "to change the rules to authorize
and accommodate the very approaches that would make the AB even less
The US had made it very clear the AB members must follow the rules
that were agreed to in 1995, he added.
But the US did not provide any "option" for addressing its
specific concerns, said several trade envoys, who asked not to be
India said the "existential crisis" facing the AB is its
gravest concern. " We believe that an independent, two-stage
dispute settlement system is imperative for the fair enforcement of
the rules of international trade," India maintained.
"The impending paralysis and possible disappearance of the Appellate
Body will be a fatal blow to the credibility of the WTO," India's
trade envoy Ambassador J S Deepak argued.
"Without a system of enforcement of existing rules, the appetite
for making new rules or for reforms would be poor," he maintained.
"Therefore, an expeditious resolution of the Appellate Body crisis
needs to be at the top of the agenda in the coming weeks and months,"
In the WTO, the normal practice is that any "Member" who
has specific concern on any issue will offer possible options on how
to address it, Ambassador Deepak pointed out.
"However, we find ourselves in the unique position where the
Member [the US] who has issues with the functioning of the Appellate
Body has failed to put forth a single proposal to address their oft-repeated
concerns," India said.
India thanked the EU for taking the initiative to provide "concrete"
textual proposals to address "the concerns that have been raised
by the United Stat s in the US President's Trade Policy Agenda of
India, which is a co-sponsor of the two proposals circulated by the
EU, said the underlying goal of the two proposals is "to unblock
the appointments to the AB by tackling the procedural concerns raised
by the United States."
"Once the appointments to the AB have been unblocked, WTO Members
would engage in discussions on the complex substantive issue of "rule-making"
by WTO panels and the AB," India maintained, arguing that it
would support a "calibrated approach."
India said the three proponents had made an honest attempt to come
up with a concrete proposal to address the concerns articulated by
It called for building trust "amongst the Membership in these
difficult times" by engaging on these proposals "without
putting any pre-conditions or linking these to other areas of the
Intervening twice during the GC meeting, China's trade envoy Ambassador
Dr Zhang Xiangchen said "the United States views that some suggestions
by EU, China and India will make the Appellate Body even less accountable."
"Could the United States give a response to the proposal regarding
which of its concerns have been addressed and which are not?,"
Ambassador Dr Xiangchen asked.
"Does the United States have specific suggestions on how to address
those remaining concerns?" China asked.
"If not, is it the intention of the United States to sit back
and wait for the paralysis of the Appellate Body," Ambassador
Dr Xiangchen pointedly asked.
The US trade envoy, who remained mum to the specific questions raised
by India and China, merely said the US would like to engage in the
deep discussions with other Members on this issue.
During the press briefing after the meeting, SUNS asked the WTO's
spokesperson Keith Rockwell to clarify whether the US is seeking a
"payment" to resolve the crisis it had created at the AB.
Rockwell replied that he was not in a position to address the question
and that it should be directly addressed to the US.
Even though the GC chair Ambassador Junichi Ihara of Japan informed
members that he would hold open-ended informal meetings to break the
logjam at the AB, the US has not budged from its intransigent position
to let the AB remain permanently paralysed, said several trade envoys
who asked not to be quoted .
"The crisis of the Appellate Body has lasted for more than a
year without any silver lining," said China's trade envoy, suggesting
"the individual WTO Member [the US] flagged its concerns over
the appellate process, but provided no concrete suggestions or solutions."
"If this issue remains unresolved, the Appellate Body will cease
to function after next year," said Ambassador Dr Xiangchen, suggesting
that "the selection of Appellate Body Members has become an imminent
crisis facing the WTO and needs to be resolved at the earliest time."
Citing the ancient Chinese philosopher Mencius who said, "laws
alone cannot carry themselves into practice," Ambassador Dr Xiangchen
said "the dispute settlement mechanism is the core pillar of
"As India just said, [the] joint proposal marks a beginning rather
than the end or the final result," the Chinese envoy said, urging
the Chairman of the General Council to "actively host the discussions
and consultations after this meeting, so that the discussion momentum
could be maintained through certain appropriate mechanism."
In his second intervention after the US statement, Ambassador Dr Xiangchen
said he "felt a little disappointed and confused, though not
China raised several questions in response to the US statement. Ambassador
Dr Xiangchen asked whether it is proper to expect "the 90-day
deadline for the appellate review" when "cases have become
more and more complex, case materials therefore also surged."
"In early years, cases, such as United States Gasoline (DS2),
a small carton suffices for all case related materials" but "that
is no longer the same situation," he said.
"Nowadays, we probably need dozens of cartons to pile relevant
materials for almost every case" and "this is the reality
that Appellate Body cannot finish its work on time," Ambassador
Dr Xiangchen pointed out.
"Given the United States' position to oppose the increase of
resources, what should we do?," the Chinese envoy asked pointedly.
"We are struggling to find a way, for example, in the future
when we select Appellate Body members, may we look for those who are
able to read ten lines at a glance or can we ask the Appellate Body
members to work 16 hours, sleep 5 hours and eat for 3 hours per day?,"
Ambassador Xiangchen sought to know from his American counterpart.
On the issue of the AB's "over-reach," China said it wants
"the Appellate Body to stay in line with its mandate, rather
than expanding its adjudications," but "members do not have
consensus over criteria to determine whether the over-reach occurs."
Commenting on the issue of precedent, the Chinese envoy said "when
the Appellate Body made adjudications in previous disputes, I don't
know why these judgments cannot be used as reference?"
He asked why members "should waste time and resources to redo
the analysis of the already analysed legal issues?"
"It also runs against the judicial economy principle, which directly
conflicts with the positions of the United States to enhance the efficiency
of dispute settlement," the Chinese envoy maintained.
At the General Council meeting, a large majority of industrialized,
developing and least-developed countries rallied around the EU's two
proposals, saying they offer a way forward for breaking the impasse
in the AB crisis.
The EU said while the co-sponsors acknowledge the concerns raised
about the AB, it is important "to fill the vacancies and amend
certain provisions of the DSU [dispute settlement understanding]."
The EU elaborated on the proposed five amendments to the DSU.
The EU's proposal which was co-sponsored by China, Canada, India,
Norway, New Zealand, Switzerland, Australia, Korea, Iceland, Singapore,
Mexico, Costa Rica, and Montenegro, has suggested the following amendments:
i. a transitional rule for ensuring that an outgoing AB member is
allowed to continue with the approval of the members,
ii. enhanced consultations for extending the 90-day time limit for
the findings by the AB,
iii. issues of law covered in the panel report and legal interpretations
developed by the panel, in the meaning of Article 17.6 of the DSU,
do not itself include the meaning of the municipal measures,
iv. the AB shall address each of the issues raised on appeal by the
parties to the dispute to the extent this is necessary for the resolution
of the dispute, and
v. to address AB's approach to treat its own reports effectively as
precedent that panels are to follow absent "cogent reasons,"
annual meetings would be held between the AB and WTO members to discuss
systemic issues or trends in the jurisprudence.
The EU said "in view of the urgency of the matter, and in order
to allow for the AB appointments to be taken swiftly, the co-sponsors
propose that these amendments be adopted by the General Council as
soon as possible."
The EU also explained the second proposal along with China and India
to increase the number of AB members to nine and a longer term between
6 to eight years, allowing outgoing AB members to discharge their
duties until their places have been filled, and launching an automatic
selection process in advance of the expiry of the term of office of
the outgoing member.
In conclusion, it is clear as daylight that the US is unlikely to
address the impasse it had unilaterally created for ensuring the permanent
paralysis of the WTO 's AB. The US stance on the AB should serve as
an eye-opener to developing and poorest countries that without resolving
the AB crisis, grand rule-making reforms are being foisted on them,
several trade envoys told SUNS.