Former AB members censure US on Chang veto

by D. Ravi Kanth

GENEVA: Former WTO Appellate Body members have censured the United States for its decision to block the reappointment of Seung Wha Chang 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 AB said in a letter dated 31 May to the chair of the Dispute Settlement Body, Ambassador Xavier Carim of South Africa, accessed by the South-North Development Monitor (SUNS).

The US decision to not grant a second term to a sitting AB member on grounds that he was part of the three-member division 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 AB members argued.

The 13 former AB members who signed the three-page letter to the DSB chair are 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.

“The continued impartial independence of the WTO Appellate Body is essential to upholding the rule of law in international trade,” they 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.”

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 has been singled out for criticism by one Member of the WTO 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 Chang was involved either as a sitting member of the three-member division or as a presiding member of the division. The US cited four rulings in which Chang had allegedly deviated from the DSU jurisprudence and erred.

Commenting on these criticisms which were directed towards 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 AB members maintained.

Throughout the first 20 years of the WTO and the AB, they said, 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 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 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 ex-AB 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 judgements in the WTO’s rule-based system of adjudication,” the former 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 AB, “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 AB members argued.

Indeed, “differences [over 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.”

Standard for reappointment

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 mere political instrument.”

“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’,” the 13 former members maintained.

They said if WTO members conclude that the AB 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.

To ensure the impartial independence of the AB, WTO members should abolish the current system of reappointment for a second term of a sitting member and offer “a single, longer term” for all AB members, the 13 former members concluded.

In crux, the US 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 Chang, whose term expired on 31 May, coincided with the vehement attack launched on the same day by the presumptive presidential candidate of the US Republican Party, Donald Trump, against a US district court judge Gonzalo Curiel presiding over a lawsuit against Trump University.

“The judge has been very unfair, has not done a good job, has been a very bad judge, and he knows he is unfair,” said Trump.

Some legal experts in the US have reportedly said that Trump’s comments on the judge verged on criminal contempt.

Between the US charges against Chang on 23 May, and Trump’s broadside against the US district court judge Curiel on 31 May, there is very little to choose in terms of the US attitude to rule of law whether domestically or internationally.   (SUNS8253)                              

Third World Economics, Issue No. 616/617, 1-31 May 2016, pp18-19