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Info Service on WTO and Trade Issues (Jun23/03) Geneva, 2 Jun (D. Ravi Kanth) — The developing countries appear to be left at the receiving end of the proposed reforms of the World Trade Organization’s dispute settlement (DS) system, which includes several provisions such as what is necessary to resolve a trade dispute, on transparency, and even “accessibility” in the “yellow table” circulated by the facilitator overseeing the informal consultations, said people familiar with the development. The facilitator, Mr Marco Molina of Guatemala, recently circulated a “yellow table” of proposals that contain more refined and elaborated proposed solutions for the issues identified by members. The informal consultations are being held to fulfill the mandate set out in paragraph four of the outcome document agreed by trade ministers at the WTO’s 12th ministerial conference (MC12) in June 2022. The WTO members are mandated to “conduct discussions with the view to having a fully and well-functioning dispute settlement system accessible to all Members by 2024.” More importantly, it is public knowledge that the United States, which had paralyzed the WTO’s two-tier dispute settlement system by making the Appellate Body dysfunctional since December 2019, is one of the prime movers of the informal consultations. The former facilitator Ambassador David Walker of New Zealand tried hard to address as well as accommodate all the concerns raised by the US on the functioning of the Appellate Body, the highest adjudicating body at the WTO. While almost all WTO members agreed to adopt the draft General Council decision prepared by Ambassador Walker, the US blocked the decision on grounds that it failed to address Washington’s core concerns. Against this backdrop, the ongoing informal consultations based on the MC12 mandate appear to pry open as many issues as possible in the Dispute Settlement Understanding (DSU), apparently without any clarity as to what would be the end product, said several negotiators, who asked not to be quoted. Many members, including the developing countries, seem somewhat at a loss about whether the two-tier system, with the Appellate Body being the final arm of the Dispute Settlement Body (DSB), will prevail or whether there will be a paradigmatic change that will make the WTO’s enforcement pillar ineffectual, negotiators said. While it remains to be seen how the informal consultations will succeed in establishing fundamental changes, the “yellow table” of proposals circulated by the facilitator comprises several topics. As reported in SUNS #9795 dated 2 June 2023, issues such as the sunset provision, the alternative dispute resolution mechanisms (ADRs), and the streamlined panel process in the “yellow table” were covered. Some of the remaining issues in the “yellow table” such as transparency, and what is necessary to resolve the dispute, are taken up below. TRANSPARENCY PROVISIONS Several developing countries like Indonesia, South Africa, and Pakistan among others raised concerns over the transparency proposals as set out by the facilitator in the “yellow table”. To start with, the facilitator has included three proposals – “publication of submissions on WTO Docs Online”, “publication of adjudicator timetables on WTO Docs Online,” and “access to panel meetings for the general public” – which has been pushed by major industrialized countries like the US for some time now. The facilitator has provided two options for “publication of submissions on WTO Docs Online.” The options include (1) the default is publication, and (2) publication at the discretion of the parties, including the possibility of the agreement of the disputing parties to publish (as currently provided for under the DSU). In response to these two options, members apparently made several observations. They include: (1) “timing – possible undue impact on the panel”; (2) “confidentiality (both in relation to disclosing BCI (business confidential information), and disclosing non-BCI that stakeholders would not like to be disclosed)”; and (3) “scope of submissions that fall under this proposal to be discussed further.” As regards the second proposal concerning “the publication of adjudicator timetables on WTO Docs Online,” the facilitator has suggested two options: (1) timetables published at the beginning of the dispute, and (2) updates to timetables published, if applicable. The observation of members is “to clarify whose obligation this would be.” ACCESS TO PANEL MEETINGS FOR GENERAL PUBLIC On the controversial third proposal concerning “access to panel meetings for the general public,” the facilitator has offered three options. They include: default is access for the general public to the entire hearing: (a) disputing parties can agree to opt out, and (b) disputing parties cannot opt-out. Apparently, the observations made by members on the above option is that it be considered whether this access should be through in-person attendance or via audio recordings. Linked to that is the question of whether access should be in all of the official languages of the WTO. The second option in the “yellow table” on the issue of access to panel proceedings is, default is access for the general public to be part of the hearing with sub-options such as (a) disputing parties can agree to opt-out, (b) disputing parties each have the discretion to opt-out, and (c) default is no access for the general public unless the parties agree otherwise (as currently provided for under the DSU). The general observation on the second option is that members should assess “the impact of access on resources, including on budget, resources, and staffing.” Apparently, during the discussion on the above proposals, there was more consensus than differences. Nevertheless, several reservations were also expressed during the consultations. Costa Rica expressed reservations on the issue of publications, suggesting that it would need more clarity on the timing of the default publication, said negotiators who took part in the consultations. The US is understood to have said that the initial idea was to have publications at the time of the circulation of the report. So, the report and members’ perspectives can be published together, the US apparently said. The US also said that it is open to the idea of delayed submissions, adding that it sees value in having a timetable for publications on the ground that it would bring more accountability, said negotiators familiar with the discussions. Interestingly, the facilitator concurred with the responses from the US, saying that publications will bring more accountability. Mr Molina said the US response will add more to knowledge-sharing and indirect learning. Russia said the rationale and purpose of this proposal is not clear. South Africa proposed some additional language that “some countries raised concerns about undue influence (of access to the general public), live and real-time public access to proceedings and documents under observation.” Indonesia said that it is concerned with all three proposals concerning transparency. It argued that it doesn’t see the need for publications to be made with such urgency. Indonesia also said that it is concerned with stakeholders having access to hearings. It asked what is the point of adding stakeholders, and why invite undue pressure on governments, especially when there is no input expected from them. FOCUS ON WHAT IS NECESSARY TO RESOLVE THE DISPUTE The proposal in the “yellow table” on what is necessary to resolve the dispute says, “adjudicators to address only what is necessary to resolve the dispute, including by exercising judicial economy.” The second proposal is on clarifying that adjudicators should not issue “advisory opinions/interpretation.” The options suggested to address the issue include the need to clarify that adjudicators should address only those issues that are necessary for the resolution of the dispute. Under this option, two sub-options are (a) allow adjudicators to decide how to apply this in specific cases; and/or (b) provide guidance to adjudicators on how to apply this, which could include: (i) the underpinning objectives, and (ii) examples of the correct and incorrect application of the principle. This could include clarification that adjudicators may not make a finding if the finding is not necessary for the finding of a breach and recommendation. Apparently, in response to the above options, the delegations said that they would consider whether to require adjudicators to address only what is necessary to resolve the dispute, including by exercising judicial economy, or to focus on what is necessary to resolve the dispute, including by exercising judicial economy. Several members sought more consultations on the above options. Expressing concern over the two proposals, Indonesia said that it feels that judicial economy in practice can be done but members need to be mindful of false judicial economy. Indonesia said members’ focus should be on justice and not merely on judicial economy. In short, the proposals on transparency and what needs to be done to resolve the dispute seem to be creating more confusion and appear to be an attempt to bring some fundamental changes that could benefit some powerful countries, said negotiators who asked not to be quoted. +
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