TWN Info Service on WTO and Trade Issues (Jul17/17)
25 July 2017
Third World Network
       
Deadlock persists on selection process for new AB members
Published in SUNS #8508 dated 24 July 2017

Geneva, 21 Jul (Kanaga Raja) - The Members of the World Trade Organisation (WTO) were again unable to agree on launching the process for the selection of new Appellate Body (AB) members to replace the two AB members whose terms have expired, or will expire soon.

This came at a regular meeting of the WTO Dispute Settlement Body (DSB) on 20 July, with most of the meeting being devoted mainly to two issues, namely, the process to select the two new AB members, and a Canadian initiative on a mechanism for developing, documenting, and sharing practices and procedures in the conduct of WTO disputes.

The two Appellate Body 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.

According to trade officials, the second term of Mr Ramirez-Hernandez had already expired on 30 June. He will however continue his work on three ongoing appeals.

The second term of Mr Van den Bossche will expire on 11 December 2017.

AB APPOINTMENTS

The European Union tabled a revised proposal (WT/DSB/W/597/Rev.2) on the appointment of Appellate Body members, which called for launching both AB appointment processes simultaneously.

The European Union proposed that at its meeting on 20 July 2017, the DSB take a decision with regard to the following four elements:

(1) to launch one selection process to replace Mr Ricardo Ramirez-Hernandez, whose second four-year term of office expired on 30 June 2017, and to launch another selection process to replace Mr Peter Van den Bossche, whose second four-year term of office will expire on 11 December 2017;

(2) to establish a Selection Committee, consistent with the procedures set out in document WT/DSB/1 and with previous selection processes, composed of the Director-General and the 2017 Chairpersons of the General Council, the Goods Council, the Services Council, the TRIPS Council and the DSB, to be chaired by the DSB Chair;

(3) to set a deadline of 10 August 2017 at 6 pm for Members to submit nominations of candidates; and

(4) to request the Selection Committee to carry out its work in September/October 2017 in order to make recommendations to the DSB as soon as possible so that the DSB can take a decision to appoint two new Appellate Body members as soon as possible, and at the latest at its regular meeting scheduled for 24 October 2017.

A separate revised proposal (WT/DSB/W/596/Rev.2) regarding the Appellate Body selection process was tabled by Argentina, Brazil, Colombia, Chile, Guatemala, Mexico and Peru, which called for the immediate start of the selection process for replacing Mr Ramirez-Hernandez.

The seven Latin American countries noted that in accordance with Article 17.2 of the Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU), the Dispute Settlement Body (DSB) "shall appoint persons to serve on the Appellate Body" and that "[v]acancies shall be filled as they arise".

They said on 30 June 2017, the second four-year term of Mr. Ricardo Ramirez-Hernandez expired, and that there is an outstanding legal obligation to fill this vacancy as from 1 July 2017.

The proposal by the seven Latin American countries states:

The Dispute Settlement Body agrees to the following four elements:

(1) to launch a selection process for the vacancy in the Appellate Body that arose on 1 July 2017;

(2) to establish a Selection Committee, consistent with the procedures set out in document WT/DSB/1 and with previous selection processes, composed of the Director-General and the 2017 Chairpersons of the General Council, the Goods Council, the Services Council, the TRIPS Council and the DSB, to be chaired by the DSB Chair;

(3) to set a deadline of 31 August 2017 at 6 pm for Members to submit nominations of candidates; and

(4) to request the Selection Committee to carry out its work throughout October/November 2017 in order to make a recommendation to the DSB as soon as possible, so that the DSB can take a decision to appoint a new Appellate Body member no later than at its regular meeting scheduled for 22 November 2017.

The proponents also requested the Chair of the DSB to continue his efforts to ensure that this body fulfills the established procedures urgently. Thus, in future selection processes the DSB should avoid similar situations of delay as the present one.

At the DSB meeting, the EU said it failed to understand why one selection process should be singled out. It urged the chair of the DSB to continue his consultations with Members in order to find a solution.

According to trade officials, the US said it is ready to go along with the proposal from the seven Latin American countries (on the selection process for Mr Ramirez-Hernandez) but was not in a position to agree to the launch of a selection process for a vacancy that will only occur in December (to replace Mr Van den Bossche).

According to trade officials, more than a dozen delegations expressed their growing concerns about the delay and the impact that it will have on a dispute settlement system that is already straining under the weight of the increasing number and complexity of trade disputes brought to the WTO for resolution.

The Appellate Body was at increasing risk of having only five members by the beginning of next year, down from its normal seven-strong team, they said.

Several delegations pointed out that the expiry of Mr. Ramirez-Hernandez's second term made it even more urgent to find a solution. They urged members to show a flexible and constructive attitude.

According to trade officials, the delegations that took the floor on this issue included the EU, the US, the seven Latin American proponents, Australia, Singapore, Canada, Japan, China, Chinese Taipei, Russia, Ecuador, New Zealand, Norway, Turkey, Indonesia, Korea, Brazil, and Hong Kong-China.

Australia restated its deep disappointment that the DSB is once again unable to reach an agreement on a process or processes to make appointments to the Appellate Body.

In Australia's view, the failure to do so is contrary to Article 17 of the DSU (Dispute Settlement Understanding), which requires a seven member Appellate Body, where vacancies are filled as they arise.

It said delays in commencing a selection process or processes have resulted in the Appellate Body having only six members, and it is deeply concerned that "we are at risk of that number being reduced to five by January 2018."

According to Australia, this comes at a time when "we are all aware that the workload on the Appellate Body is intensive, and a full contingent of Appellate Body members is required to promote the effective and efficient resolution of disputes."

Once again, Australia urged all Members to engage positively and constructively to find a solution to the current impasse and to fill the current and upcoming vacancies on the Appellate Body as soon as possible.

Japan said that it can join consensus to support either of these two proposals.

All WTO Members, acting as the DSB which governs the WTO dispute settlement system, are responsible for ensuring the proper functioning of the Appellate Body, including at the time of its transition, it said.

Singapore reiterated its serious systemic concerns and regrets on the lengthy delay in the launch of the Appellate Body selection process.

It urged Members to show flexibility with the proposals and to be pragmatic to come to a consensus to launch the selection process or processes as soon as possible.

Mexico said that the WTO's Dispute Settlement Understanding required Appellate Body vacancies to be filled "as they arise". Since Mr. Ramirez-Hernandez's term has ended, Members are mandated to carry out this task.

Mexico was of the view that no decision is required by the DSB to move forward on this, which called on the DSB chair to proceed with the relevant consultations.

According to trade officials, the chair of the DSB, Ambassador Junichi Ihara of Japan, said he would continue consultations on resolving the impasse and to find a solution which could garner consensus from all WTO members.

The chair said that what was missing was flexibility and the necessary instructions from capitals to launch the process/processes as soon as possible.

MECHANISM FOR CONDUCT OF DISPUTES

Under this DSB agenda item, Canada noted that last July, 17 Members endorsed a Mechnism for developing, documenting, and sharing practices and procedures in the conduct of WTO disputes.

These Members considered that the Mechansim would improve the operation of the dispute settlement system.

Recently, said Canada, Members have been discussing four new practice documents, which were circulated prior to this DSB meeting.

These documents relate to: streamlining panel composition by inviting nominations and appointments of non-governmental third party nationals and suitable candidates who have not previously served on a panel; promoting electronic filing and service procedures in disputes; encouraging prompt responses to third party requests to participate in consultations; and publishing procedural documents and preliminary rulings in disputes.

Canada said that it is pleased that a number of Members have indicated that they will endorse these documents.

Canada encouraged Members that have not yet done so to endorse the Practices Mechanism and embrace it as the best means through which incremental improvements can be made to the dispute settlement system.

It noted that in his speech on the occasion of the presentation of the Appellate Body's 2016 Annual Report, Chairman Ujal Singh Bhatia had noted that the WTO's system of dispute settlement should not be taken for granted and that it requires nurturing through timely interventions.

"We agree with Mr Bhatia and hope that others join with us in nurturing the system both through these practice documents and through engagement with the Practices Mechanism," said Canada.

According to trade officials, sixteen delegations took the floor, with all welcoming Canada's efforts to work with Members on improving WTO dispute settlement proceedings.

Those that took the floor on this issue included the US, China, Australia, Singapore, Chinese Taipei, Norway, Costa Rica, Japan, New Zealand, Ukraine, Switzerland, Colombia, Korea, Brazil, the EU and Chile.

Many noted that they had already endorsed the previous set of voluntary practices put forward last year and were ready to endorse some or all of the new documents now being circulated.

Many also said that while the practices would only produce incremental changes, anything which could help overcome procedural delays and accelerate dispute proceedings was welcome.

Australia welcomed the Canadian initiative in developing and circulating the proposed practice documents.

It said the dispute settlement system is the cornerstone of the multilateral trading system and it is essential for the health of the WTO that its effectiveness and efficiency be maintained.

According to Australia, the four proposed new practice documents circulated seek to improve key practices and procedures for the benefit of all Members by:

* simplifying the filing procedure by way of electronic filing of all documents;

* expanding the range of eligible panellists and by doing so, contributing to a more efficient panel composition process;

* providing greater transparency to the procedures and time-tabling of disputes by timely publication on the DS document series for the dispute; and

* reducing unnecessary delays, by seeking prompt responses by Members to a dispute to third party requests.

These add to the positive contribution made by the practice documents circulated in July last year in relation to: written notifications; transparency of dispute settlement proceedings; participation of third parties in dispute proceedings; and improving and streamlining dispute proceedings, it said.

The endorsement of both the new and previously circulated practice documents will produce much needed efficiency gains in the dispute settlement system which has come under increased workload pressures.

Australia said that it is happy to join other Members in endorsing these documents.

Japan said that it is among the WTO Members that participated in this mechanism.

This is a voluntary, Member-driven, incremental, non-binding, transparent and experimental exercise which, in Japan's view, could enhance transparency and predictability in the system, reduce procedural uncertainty and unnecessary burden in dispute proceedings, and importantly, "generate practical experience" which can be collectively shared by the entire membership.

On the new documents circulated by Canada, Japan said it can support the following three documents: document on "Electronic Filing"; document on "Responses to Third Party Requests to Participate in Consultations"; and document on "Publication of Working Procedures, Timetables, Working Schedules, and Preliminary or Procedural Rulings."

Singapore said that it is pleased to indicate its endorsement of the four new practice documents under the said Mechanism.

All Members recognise the importance of the dispute settlement system to the security and predictability of the multilateral trading system.

However, said Singapore, we can see that there are various issues which are affecting the functioning of the dispute settlement system including the workload issue.

The Mechanism or the relevant practice documents would not necessarily resolve the issues but they would certainly play a small part by developing, documenting and sharing practices and procedures for WTO disputes.

This would in turn help the resolution of disputes by reducing procedural disagreements and delays, and generate practical experience, it said.

The EU said that it supports this Member-driven initiative. In part, this responds to the call by the WTO Director-General to Members to do more to respond to the workload issues.

The EU agreed that additional practices and procedures exchanged via this mechanism could facilitate the resolution of disputes and reduce the scope for procedural disagreements and delays.

Therefore, the EU already supported a number of these documents last year, and it is pleased to inform that it can endorse the document on responses to third party requests to participate in consultations and the publication of working procedures, timetables and schedules for disputes.

The EU said that it wished to make clear again that it does not see this exercise as a substitute for DSU review.

Rather, this exercise could generate practical experience with approaches that Members may choose to follow.

The US said that it has certain questions about the overarching mechanism suggested by Canada as well as the associated documents.

For example, one key issue is the intended legal effect, if any, of Members "endorsing" Canada's suggested mechanism or individual documents.

Nonetheless, at today's meeting, we appreciate the opportunity for Members to discuss these four proposals, it said.

With respect to the document concerning publication of panel working procedures, timetables and other documents, the US agreed that the WTO dispute settlement system would benefit from greater transparency.

In fact, it said, transparency in dispute settlement proceedings benefits all WTO Members, including in particular those with more limited resources who may not be able to follow every dispute closely.

The US said it has long sought to increase transparency in WTO dispute settlement, including through its DSU review proposal, and looks forward to collaborating with Canada and other Members on increasing transparency.

"We would also inquire whether Members consider that there is currently any basis for keeping any working procedures and timetables confidential?"

In that regard, the US noted the Appellate Body's working procedures, including the timeline for submissions, are already public, and this has not raised concerns among WTO Members.

On the proposal on third party requests to participate in consultations, the US considered that it is appropriate to inform the requesting Member in a timely manner and it has seen this occur in numerous disputes.

On electronic filing, the US welcomed the opportunity to continue to discuss with Members practical issues and experience with electronic filing.

According to trade officials, China welcomed Canada's efforts and asked those Members that endorsed last year's practices Mechanism to report back how they have worked in practice so far, so that other Members could better understand the Mechanism.

The next regular meeting of the DSB is scheduled to take place on 31 August.