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TWN
Info Service on WTO and Trade Issues (Sept22/08)
Trade: US may seek payment for reforming WTO's enforcement
function Geneva, 22 Sep (D. Ravi Kanth) -- The United States Trade Representative (USTR) Ambassador Katherine Tai has said that "fundamental reform of the WTO dispute settlement must reflect the real interests of all Members, including Members that have not traditionally turned to formal dispute settlement." The USTR's statement, made from the margins of the ongoing G20 trade ministers' meeting in Bali, Indonesia, on 21 September, seems somewhat akin to "kicking the can down the road" on resolving the current impasse at the Appellate Body (AB), which the US has been solely responsible for since December 2019. It seemingly indicates that due to the unilateral opposition of one member, i.e., the United States, the repeated calls by 126 WTO members to fill the seven vacancies at the AB as soon as possible are never going to materialize, said people, who asked not to be quoted. After hosting a meeting with several countries including Argentina, Brazil, Cambodia, India, Indonesia, and South Africa on the margins of the ongoing G20 trade ministers' meeting, Ambassador Tai said that "the ongoing reform conversation should continue to work towards a system that meets the needs of all." According to the USTR's statement, Ambassador Tai "identified the United States' areas of interest and invited participants to offer views on possible improvements to dispute settlement, including how a reformed dispute settlement system can better help Members resolve a dispute in an efficient and cost-effective manner." Going by past statements and its underlying intentions, it appears to be clear that the US will not settle for the restoration of the AB, and if anything, it seems determined to press for a pre-WTO (GATT) type of dispute settlement system where "might" prevailed over "right". Ambassador Tai's statement also has a rather dangerous implication, in that Washington seems to be seeking a payment, in trade parlance, for its reform proposals concerning the WTO's negotiating function and implementation function to be accepted in return for whatever the US will agree on a "weakened" dispute settlement system. THE US HAS MADE AB DYSFUNCTIONAL Since December 2019, the US has continued to block any attempt at restoring the AB on one premise or the other. It all started when Washington blocked a draft decision proposed by the former New Zealand trade envoy, Ambassador David Walker, who facilitated the process to address the US concerns over the AB. The draft decision, as contained in the document Job/GC/225, addressed the US objections. They include: A. The Appellate Body rulings were broad on issues concerning non-discrimination; B. Lack of deference to national investigating authorities in trade remedy cases, including in rulings rejecting (the US) use of the "zeroing" methodology in trade disputes and the proper interpretation of the term "public body" (the AB rulings in trade disputes between the US and China); C. Expansive approach to appeals of factual issues, including appeals under DSU (Dispute Settlement Understanding) Article 11.9; D. The Appellate Body was offering advisory opinions on matters that did not need to be addressed to resolve the dispute at hand; E. The Appellate Body treated its past rulings as binding precedent; and F. The Appellate Body was failing to meet the 90-day deadline for issuing its rulings and seeking postponements without consulting the parties to the dispute. Interestingly, the systematic undermining of the AB began under the Obama administration and continued more aggressively during the Trump administration in 2019 and 2020. Addressing these concerns, the facilitator, Ambassador Walker, proposed a draft decision at the General Council (GC) meeting on 9 December 2019, highlighting the growing concerns about the AB's functioning. He made the following remarks at that GC meeting: * First, the adoption of such a General Council Decision would constitute a shared assessment by Members that the Appellate Body has, in some respects, not been functioning as intended under the DSU. * Second, the adoption of such a Decision should be accompanied by agreement to launch the selection processes to fill vacant positions - that being, of course, on the basis that a Decision can only apply if there is a body to which it can apply. * Third, such a decision would have implications for the actions of the Appellate Body, but it would also carry implications for how Members look to use the Appellate Body. * Fourth, to take such "reset" action, Members would need to have sufficient trust and confidence in each other that they will work together to implement any such Decision in the coming years. Against this backdrop, Ambassador Walker proposed that while it is consistent with Article 17.6 of the DSU wherein the AB is obliged to issue its rulings within 90 days, "in cases of unusual complexity or periods of numerous appeals, the parties may agree with the Appellate Body to extend the timeframe for issuance of the AB report beyond 90 days." On the scope of the appeal, Ambassador Walker suggested the following changes: (1) Article 17.6 of the DSU restricts matters that can be raised on appeal to issues of law covered in the relevant panel report and legal interpretations developed by the panel; (2) the meaning of "municipal law" is to be treated as a matter of fact and therefore, is not subject to appeal; (3) the DSU does not permit the AB to engage in "de novo" review or to "complete the analysis of the facts of a dispute"; and (4) consistent with Article 17.6 of the DSU, it is incumbent upon Members engaged in appellate proceedings to refrain from advancing extensive and unnecessary arguments in an attempt to have factual findings overturned on appeal, under DSU Article 11, in a "de facto" "de novo" review. On the issue of advisory opinions, Ambassador Walker proposed that "issues that have not been raised by either party may not be ruled or decided upon by the Appellate Body" and the AB "shall address issued raised by the parties in accordance with Article 17.6 of the DSU." In an attempt to satisfy the US, Ambassador Walker suggested that "precedent is not created through WTO dispute settlement proceedings." Lastly, on the AB's alleged "overreach", the facilitator said that "as provided in Articles 3.2 and 19.2 of the DSU, findings and recommendations of Panels and the Appellate Body and recommendations and rulings of the DSB cannot add to or diminish the rights and obligations provided in the covered agreements." In short, the facilitator addressed all the concerns raised by the US that seem to favour the US more while curbing the autonomy availed of by the AB from 1995 to December 2019. It is a well-recognized principle that "at the core of a functioning multilateral trading system is an effective dispute resolution mechanism," said India's former trade envoy Ambassador J.S Deepak, who had participated in the consultations with the facilitator. "Although not perfect, the dispute settlement system has led to meaningful reductions in unfair trade practices and has helped to strengthen the rules-based international trading system," he said. Apparently, the US has been one of the biggest users of the WTO's dispute settlement system and a beneficiary "of this public good," he said. "Unless the Membership acts in concert ... to lift the block on AB vacancies, we are going to lose this public good", which has served members very well, he added. In short, despite securing full benefits, including the manner in which the AB's autonomy for independent and impartial functioning has been curtailed, the US appears determined to create a new system in which it could continuously seek unilateral payments for advancing its allegedly anti-development and anti-developing country reforms at the WTO, said people familiar with the development. +
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