WTO GC gets progress report on process to resolve AB crisis

The WTO General Council meeting also took stock of ongoing efforts to break the deadlock in appointing new members to the Appellate Body.

by Kanaga Raja

GENEVA: The WTO General Council (GC), at its meeting on 7 May, heard a progress report from Ambassador David Walker of New Zealand, the facilitator of the informal process initiated under the Council’s auspices to find ways to resolve the current crisis in the Appellate Body (AB).

The United States has been repeatedly blocking, at various meetings of the WTO Dispute Settlement Body (DSB), the selection process to fill four current vacancies on the AB, arguing that its concerns over the functioning of the AB remain unaddressed.

The US has so far not tabled any proposal of its own, nor engaged meaningfully on any of the proposals tabled by other members in an effort to address its concerns.

In his progress report, the facilitator touched upon the issues of the 90-day rule for appellate review, the question of municipal law, advisory opinions by the AB, binding precedent, and alleged “over-reach” by the AB. These are some of the concerns that the US had highlighted at various meetings of the DSB.

In his report, Walker said that he had attempted to capture what had been said by the members. It was clear that the process was not going to be easy, and that there was a need to keep trying and to find a way forward, he added.

Walker’s remarks came under the agenda item of the informal process on matters related to the functioning of the AB. Four proposals were submitted for discussion under this agenda item: a proposal from Brazil, Paraguay and Uruguay on guidelines for the work of panels and the AB; a proposal from Chinese Taipei on guideline development discussion; a proposal by Japan, Australia and Chile on the informal process on matters related to the functioning of the AB; and a proposal from Thailand on a General Council decision on the dispute settlement system of the WTO.

Solution-oriented

According to participants at the meeting, in his progress report, Walker said a series of meetings had been held since the previous General Council meeting in February, including an open-ended meeting that took place on 9 April. Five other meetings were held in smaller groups, comprising members who had either tabled written proposals, raised concerns or made oral proposals.

He said that there were two objectives to these meetings, namely, to have a constructive review of the concerns that had been raised, and to try and encourage members to put forward more proposals or raise more concerns or ideas. This was a solution-oriented spirit, Walker said, adding that in the meetings in March, there was a lot of discussion on AB “over-reach”, the issue of precedent, and the distinctions between law and fact.

In April and May, four proposals had been put forward, and these had been the focus of the discussions for the last few weeks. Walker said that these proposals were horizontal in nature and that they were seeking to frame the issues in a way that could produce results.

His assessment was that a great deal of energy had gone into this process. There was a great deal of understanding about the urgency, and it was clear that it would not be easy.

On the 90-day rule for appellate review, Walker said there were no divergences on this issue, in that 90 days meant 90 days. Some of the proposals suggested that if there is a very complex case, the AB could flag this early on and then meet with the parties to the dispute to suggest an extension and, if so, whether it should be a time-limited extension.

On the question of municipal law, members said that it was very important to ensure that fact-based findings by the dispute panel were not the subject of review. According to Walker, there was a convergence among the members to ensure that there was not going to be any unnecessary appeal of facts by parties to the dispute.

On the issue of advisory opinions by the AB, Walker said there was concern that parties should not be putting forward for appeal anything that might not be relevant to solving the dispute and that the AB needed to focus strictly on those areas that were indeed relevant to solving the dispute. If they were not issues raised by either of the parties, the AB should not be taking them up.

On the issue of binding precedent, the facilitator agreed that there was nothing in the Dispute Settlement Understanding (DSU) that said the precedent set by other AB rulings should be the basis for future or current rulings. On the other hand, he added, it was important to have a degree of consistency.

Walker said the issue of AB “over-reach” was the most complex, and the popular notion that had been advanced on how to deal with this issue was to perhaps hold annual meetings between the DSB and AB members.

Walker said he had attempted to capture what had been said by the members. It was clear that the process was not going to be easy, and that there was a need to keep trying and find a way forward. He said that he would continue to report at the next General Council meeting.

Vital importance

Introducing the proposal by Brazil, Paraguay and Uruguay, Brazil highlighted the vital importance of the dispute settlement mechanism for all members. It said it was important not to alter the DSU in any way but to provide guidance. There was a clear pathway ahead but engagement was needed.

Chinese Taipei said that its proposal was a guideline approach. Procedural considerations were something that should be applied in terms of the existing rules. This was guidance and it was the preferable way to address the problem, it said.

Japan introduced the proposal by Japan, Australia and Chile, saying that their idea was to build on other proposals. It said the AB should not add to or diminish the rights and obligations of members, and there should be regular meetings of the DSB with AB members.

Thailand introduced its proposal and mentioned, among others, Rule 15 of the Working Procedures for Appellate Review, the 90-day rule, and the issue of precedent. It also said that regular annual meetings between the DSB and the AB would be important.

Korea, the European Union, Mexico, Canada, Switzerland, Ukraine, Singapore, Colombia, Nigeria, Jamaica [on behalf of the Africa, Caribbean and Pacific (ACP) Group], the Philippines, Argentina, Benin (on behalf of the African Group), Guyana, India, Egypt, China, Chad (on behalf of the least-developed countries), Malaysia, Peru, Indonesia, Vietnam, Bolivia, Turkey, Honduras and the United States then took the floor under this agenda item.

According to participants at the meeting, the US was called upon by many members to either put forward its specific concerns or put forward a different proposal (than those of the other members).

Korea said the informal process was a good channel for ensuring that the proposals could be discussed. It noted that 11 proposals were now on the table. It was of the view that the EU proposal (co-sponsored by the EU, China, Canada, India, Norway, New Zealand, Switzerland, Australia, Korea, Iceland, Singapore, Mexico, Costa Rica and Montenegro) was the most comprehensive, and the proposal by Thailand was complementary to this. Now was the time to progress, it said, so that these proposals could be analyzed and a compilation put together that enabled members to get a clear view of what was out there, it said.

The EU expressed support for the informal process, saying that solving the crisis was urgent and should be a matter of the highest priority. This was why the EU and many others had made sincere efforts to address the concerns of a single member (the US), it said. It said that its proposal took account of all the concerns raised by this single member.

The EU also called on all members, especially the only one that had blocked the AB selection process, to engage.

Canada agreed that the engagement of all members was required. It called on the US to either comment on these proposals or propose solutions. All stakeholders would be affected if the dispute settlement system became paralyzed, it added.

Switzerland welcomed the new proposals. Some referred to guidelines, it said, while others referred to amendments to the DSU. It called for a pragmatic approach and for all members to engage constructively.

Singapore said it was encouraged to see that members had not given up hope. It was important for the members to work together with the facilitator, and for all members including the US to help find a landing zone.

Jamaica, on behalf of the ACP Group, welcomed the report by the facilitator, saying it was still considering a number of the proposals. It added that the dispute settlement system was essential to the primacy of the multilateral trading system and that its independence and impartiality must be respected. It was very important that no actions by the dispute settlement system add to or diminish rights and obligations of members, it stressed.

Speaking on behalf of the African Group, Benin said that the discussions must take up the views of the developing countries. It said that the African Group would be tabling a proposal soon.

Guyana said there was concern that the discussion might become circular and never-ending without a solution. There was a need, it said, to settle the impasse in the AB and look at the question of reform as well.

India said it was extremely important to find a solution to the AB impasse. It noted that many members had submitted proposals and that there were commonalities in these proposals. Some issues, including a dialogue between the DSB and the AB, seemed to be gaining traction, it said, but there should be a system of dialogue that does not in any way threaten the independence of the AB or apply any undue pressure on AB members. It added that all WTO members must adhere to the commitments to appoint AB jurists.

China welcomed the proposals, saying that this was another example of members committing themselves to addressing common concerns. In this case, they were addressing the US’ concerns. The ball was now in the US court, it said. The US would need to meet members halfway by engaging in consultations, making specific comments on the proposals or tabling an alternative proposal.

Chad, on behalf of the LDCs, said that even though the LDCs were not common users of the dispute settlement system, this was very important to them. The impasse in the AB must be resolved as soon as possible, it said. There could not be any solution that calls into question the rights and obligations of members or the independence of the AB.

Repeating what it had said at the December General Council meeting, the US said that the WTO was responsible for upholding the rules-based multilateral trading system. The AB must follow the rules that all members agreed to, it said, adding that 90 days (the time limit for appellate review) was supposed to be 90 days.

The AB had not been able to stick to the rules that had been put forward by the members, the US claimed. The AB may not change a member’s significant rights and obligations. It could not add to or diminish members’ rights or obligations.

It said this issue was not something it had been concerned about for 16 days or 16 months, but for 16 years, through multiple administrations. It wondered why members were now coming around to seeing that there were these problems (with the AB) and why the DSB and other members had not addressed this.

The US said that it would not negotiate a further weakening of the rules or diminish the accountability of the AB. (SUNS8903)                                

Third World Economics, Issue No. 680/681, 1-31 January 2019, pp9-11