TWN Info Service on WTO and Trade Issues (Dec18/07)
13 December 2018
Third World Network
       
US urged not to terminate life of WTO's Appellate Body
Published in SUNS #8815 dated 12 December 2018

Geneva, 11 Dec (D. Ravi Kanth) - An overwhelming majority of developing and developed countries on Monday urged the United States at the World Trade Organization not to terminate the life of the Appellate Body (AB) through its intransigent position in repeatedly blocking the selection process for filling four AB vacancies, trade envoys told SUNS.

At an informal Doha Trade Negotiations Committee (TNC) meeting, the US remained silent to the overwhelming calls for addressing the "existential" crisis at the AB by not taking the floor throughout the day-long meeting.

However, the US appears determined to bring in new rules in the negotiating and notification functions of the WTO without addressing the crisis in the AB. Effectively, the AB, which is currently understaffed with only three members since 1 September 2018, will become dysfunctional on 1 December 2019.

Despite the existential threat of the AB's demise remaining unresolved, around 13 developed countries and their developing country allies are working round the clock to bring about "reforms" in the negotiating and notification functions, and enhancing the role of the Secretariat. Together, this would make the organization more imbalanced, several trade envoys said.

In a response of sorts, trade envoys of a large majority of developing and least-developed countries expressed alarm at the proposed reforms without first resolving the crisis at the AB.

On behalf of the African Group, South Africa said "in our view, the key priority for the next year will be to resolve the impasse in the Appellate Body selection process and to prevent a situation where the system is disabled."

The African Group emphasized that "unless and until Members address this core issue, not only existing rules but also any discussion of new WTO rules or reform will be redundant."

The African Group conveyed to the proponents of reforms led by the European Union that "the new proposals that will be taken up at the General Council this week should, at a minimum, mark the beginning of a systematic engagement to resolve concerns that have been addressed."

In a similar vein, China said "the reform[s] shall place the priority on addressing the existential problems faced by the WTO, which are, to take up and resolve the issue of Appellate Body member appointment blockage as soon as possible, reign in actions of unilateralism and protectionism with the strings of the WTO rules, and ensure the smooth functioning of all aspects of the WTO."

Without referring to the textual proposals to address the AB crisis, India said "the one, small silver lining seems to be some suggestions in the form of concrete, textual proposals to address the Appellate Body impasse."

In their joint proposal with the European Union and China, India has called for "addressing specific problems related to the AB, while protecting its independence", arguing that it "presents a window of opportunity to break the logjam."

India maintained that members must first address "the problems facing the WTO sequentially, and in steps."

"Finding a way to preserve the dispute settlement system while trying to improve it, should be the first, and foremost step in the direction of protecting our rules-based system of multilateral trade," India emphasized.

"Without an effective system of enforcement of rules, the appetite for new rules or reforms will, at best, be very limited," India argued.

On behalf of the ACP (Africa, Caribbean, and Pacific) group of countries, Malawi expressed grave concern over the AB crisis, saying that "despite the Group not being active users of the dispute settlement mechanism, it is a priority that the deadlock is removed without which the ongoing negotiations and the overall system mean nothing and puts all the efforts being pursued in total vain."

The Central African Republic, which is the coordinator for the least-developed countries as well as Uganda, also drove home the message that the resolution of the AB crisis must remain the top priority at this juncture.

Singapore, which is the coordinator for the ASEAN (Association of South-East Asian Nations), said that "utmost flexibility [must] be shown so that Members can adopt a DSB decision to launch the Appellate Body selection process expeditiously."

In contrast to the overwhelming view of developing and the LDCs to address the AB crisis before taking up any other issue, the industrialized countries led by the European Union as well as some developing countries want to address both the AB logjam and WTO reforms simultaneously.

The EU, for example, wants an immediate unblocking of the appointment of the AB members. It expressed confidence in its proposals for addressing the AB problem along with proposals for improving "the dispute settlement system while addressing concerns expressed [by the United States]."

The EU said ambiguously that "an efficient and independent dispute settlement system is key, but will not be enough to put the WTO back on track."

Almost on the lines of its earlier strategy of seeking payment for reducing its farm subsidies, the EU has maintained that "new rules are needed to fill the gap of the current rulebook", suggesting that for addressing the crisis created by the US, all members must agree to negotiating new rules.

"We are now intensifying work on future proposals, with a specific focus on "level playing field" issues such as industrial subsidies and barriers to services and investment [Mode 1 of General Agreement on Trade in Services (GATS) for electronic commerce and Mode 3 of GATS concerning commercial presence to address investment facilitation] and forced technology transfer," the EU said.

Without naming China, the EU maintained that its aim for bringing the so-called level playing-field issues is "not to change Members' economic models but to make sure that certain policies and practices are not conducive to unfair trading environment."

The EU also subtly threatened that if members are not going to join its efforts for addressing the level-playing field issues, then, it is "ready to move forward with those willing to advance."

[It was not clear though how it would achieve this, since plurilateral conditional accords in areas covered by existing rules will be illegal, and in other areas would need the consensus of all delegations at Ministerial Conference to become a pluri-agreement. SUNS]

While the US is openly calling for a change in the Chinese economic model, the EU is adopting the same position as the US without issuing any aggressive threats, said a trade envoy who asked not to be quoted.

Other industrialized countries such as Australia, Norway, and Switzerland among others also insisted for addressing the AB crisis as well as WTO reforms.

In short, under the pretext of resolving the AB crisis, a group of industrialized countries are demanding approval for bringing new rules into the negotiating and notification and compliance functions, including a larger oversight role for the WTO.

The large majority of the developing and least-developed countries, who seemed aware of the Penelopian ruse being laid out by the EU and other industrialized countries, remain opposed to reforms that would change the architecture of the WTO and tilt the inter-governmental trade body only to serve the interests of the developed countries on a permanent footing, trade envoys said.