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Info Service on WTO and Trade Issues (Jan24/09) Geneva, 19 Jan (D. Ravi Kanth) — The facilitator overseeing the informal process on reform of the World Trade Organization’s dispute settlement system (DSS) has issued a fourth version of the confidential draft ministerial decision that continues to remain silent on the appeal/review mechanism as well as on the restoration of the Appellate Body, while introducing terms like “adjudicators”, which does not exist in the current Dispute Settlement Understanding (DSU), said people familiar with the discussions. In an email sent to members on 15 January, the facilitator, Mr Marco Molina, the deputy trade envoy of Guatemala, said: “This version incorporates feedback on ADR (alternative dispute resolution); Arbitration; Streamlining the Panel Process; Conciseness and Time-Frame Adherence, as received during the plenary meetings held from January 10th to the 12th.” “Additionally,” he wrote, “to deal with one single document, I have replaced the sections on panel composition, focus on what is necessary to resolve the dispute and compliance with versions circulated on 6 January.” He said the latest round of discussions that started on 17 January will focus “on revising chapters not addressed last week.” ABSENCE OF APPELLATE BODY IN DRAFT DECISION “Significantly, the omission of the Appellate Body, which is the backbone of the WTO’s DSU, in the draft text is a serious cause for concern,” said a negotiator, who preferred not to be identified. More disturbingly, the facilitator from Guatemala has been demanding the restoration of the Appellate Body on behalf of more than 130 countries at the Dispute Settlement Body (DSB) meetings that are held every month, the negotiator said. Yet, the facilitator appears to be skirting the issue of the restoration of the Appellate Body in the informal discussions, raising serious questions on the integrity of the process, the negotiator added. With the clock ticking down to the WTO’s 13th ministerial conference (MC13), which begins in Abu Dhabi from 26 February, doubts are being cast as to whether the facilitator will include the issue of Appellate Review/Standing Appellate Body as set out in Article 17 of the DSU, or cause a surprise at the eleventh hour by incorporating an attenuated appeal/review mechanism, the negotiator said. The facilitator on 15 January issued a 52-page draft ministerial decision that appears to have brought several changes in the chapeau and various other provisions. The fourth version of the confidential draft ministerial decision, seen by the SUNS, has been discussed since 17 January. MC12 MANDATE The discussions on dispute settlement reform are being held in relation to paragraph four of the Outcome Document issued at the end of the WTO’s 12th ministerial conference (MC12) on 17 June 2022. Paragraph four of the MC12 Outcome Document (WT/MIN(22)/24) states: “We acknowledge the challenges and concerns with respect to the dispute settlement system including those related to the Appellate Body, recognize the importance and urgency of addressing those challenges and concerns, and commit to conduct discussions with the view to having a fully and well-functioning dispute settlement system accessible to all Members by 2024.” It remains somewhat of a mystery as to why the facilitator appears to be shying away from including discussions on the appeal/review mechanism. In every draft text that he has issued, the appeal/review mechanism is mentioned as a work in progress. The fourth version of the confidential draft ministerial decision, which has been discussed since 17 January, indicates several changes in the chapeau. For example, it mentions paragraph 1 of Article IV of the Marrakesh Agreement, which was absent in the third draft. Paragraph 1 of Article IV on the structure of the WTO states: “There shall be a Ministerial Conference composed of representatives of all the Members, which shall meet at least once every two years. The Ministerial Conference shall carry out the functions of the WTO and take actions necessary to this effect. The Ministerial Conference shall have the authority to take decisions on all matters under any of the Multilateral Trade Agreements, if so requested by a Member, by the specific requirements for decision-making in this Agreement and in the relevant Multilateral Trade Agreement.” Significantly, the chapeau does not mention paragraph three of Article IV of the Marrakesh Agreement concerning the functioning of the Dispute Settlement Body. Paragraph three of Article IV states: “The General Council shall convene as appropriate to discharge the responsibilities of the Dispute Settlement Body provided for in the Dispute Settlement Understanding. The Dispute Settlement Body may have its own chairman and shall establish such rules of procedure as it deems necessary for the fulfillment of those responsibilities.” Further, the chapeau in the fourth version mentions paragraph 1 of Article IX of the Marrakesh Agreement concerning consensus-based decision-making, which reflects the positive consensus framework wherein any one member can block consensus. However, the Dispute Settlement Body, which was established at the end of the Uruguay Round of trade negotiations in 1995, functions on the basis of negative consensus wherein the Appellate Body’s recommendations/rulings can only be overturned through consensus among all the members of the WTO. Paragraph 14 of Article 17 of the DSU on the adoption of Appellate Body reports states explicitly: “An Appellate Body report shall be adopted by the DSB and unconditionally accepted by the parties to the dispute unless the DSB decides by consensus not to adopt the Appellate Body report within 30 days following its circulation to the Members. This adoption procedure is without prejudice to the right of Members to express their views on an Appellate Body report.” However, the ongoing efforts by one major industrialized country to “strangulate” the Appellate Body could perhaps be the reason for lack of mention in the fourth version of the draft ministerial decision, said negotiators familiar with the discussions. The language in the chapeau of the latest version of the draft ministerial decision, which seems to be evolving, says the following: “The Ministerial Conference, Having regard to paragraph 1 of Article IV and paragraph 1 of Article IX of the Marrakesh Agreement Establishing the World Trade Organization, as well as paragraph 4 of the Twelfth Ministerial Conference MC12 Outcome Document (WT/MIN(22)/24), whereby Members committed to conduct discussions with the view to having a fully and well-functioning dispute settlement system accessible to all Members by 2024, Recalling that the aim of the dispute settlement mechanism is to secure a positive solution to a dispute and that a solution mutually acceptable to the parties to a dispute and consistent with the covered agreements is clearly to be preferred, Underscoring the objective of meaningful reform of the dispute settlement system so that it operates in a manner consistent with the interests of Members, Desiring to facilitate the settlement of disputes via the voluntary use of alternative methods of dispute resolution, Recalling that Article 25 of the Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU) provides for arbitration within the WTO as an alternative means of dispute settlement that can expedite the solution of certain disputes, Considering that the prompt settlement of disputes is essential to the effective functioning of the WTO and the maintenance of a proper balance between the rights and obligations of Members; and that streamlining panel proceedings and strict adherence to timeframes and word limits contribute to the prompt settlement of disputes and keeps the focus on what is necessary to resolve them, Acknowledging the importance of selecting highly qualified adjudicators while fostering diversity in the composition of panels, with a specific emphasis on achieving gender balance, geographical representativeness, and a diverse range of legal backgrounds, Bearing in mind that the rights of the parties under the DSU to make factual and legal arguments before the panel through their submissions must be preserved, in particular by adjusting the length of written and oral submissions to the complexity of disputes, Noting that any categorization of a dispute as standard, complex, or extraordinarily complex is to be used only for the purposes of procedural management of the dispute and shall not impact the dispute itself, including the analysis, interpretation or the conclusions of the adjudicators or any future disputes, [Appeal/review mechanism] Recognizing the imperative of prompt compliance with the recommendations or rulings of the DSB for the purpose of ensuring effective resolution of disputes to the benefit of all Members, Taking into account that prompt compliance with recommendations or rulings of the DSB is essential in order to ensure effective resolution of disputes to the benefit of all Members, Recognizing the importance of stating Members’ understandings and expectations about how the dispute settlement system should operate, Determined to ensure that these reforms are fully implemented in practice and are long lasting, Reaffirming the responsibility of the membership in the Dispute Settlement Body (DSB) for the administration of the rules and procedures of the DSU, without prejudice to the functions of adjudicators under the DSU, Acknowledging the imperative and significance of promoting increased accessibility for developing and least developed country Members to the dispute settlement system, including through the implementation of streamlined proceedings, enhanced transparency, more effective and tailored capacity-building initiatives, improved provision of legal advisory support, the extension of a broader array of options for preventing and resolving disputes, and the enhancement of compliance procedures, among other considerations, Recognizing the contribution of other organizations, including the Advisory Centre on WTO Law (ACWL), to the accessibility of developing and least developed country Members to the WTO dispute settlement system and noting the importance of supporting their work, Affirming their intention to regularly undertake a meaningful review of the operation of the dispute settlement system, with a focus on the implementation of the reforms to the dispute settlement system made in this Decision (“Reforms”), and to take any action considered necessary,” As regards the specific provisions, the first chapter deals with issues concerning “alternative dispute resolution procedures and arbitration.” It sets out all the procedures such as general principles, request for information, initiation or termination of procedures, notification to the DSB, and secretariat support among others. Chapter 1 also covers rules of procedure for mediation in Appendix 1, rules of procedure for conciliation in Appendix 2, procedure for the conciliator or mediator-assisted consultation, and so on. Chapter 2 covers “Simplified Arbitration Proceedings Pursuant to Article 25 of the DSU”. It includes issues such as “panel proceedings”, “panel composition”, and panels to be composed by the Director- General in the event a divide emerges among parties to the dispute on the composition of the panel members. Under Title III, wherein the Appeal/Review Mechanism is incorporated, the draft decision says in square brackets: “work in progress.” Title IV deals with compliance, while Title V deals with guidelines for adjudicators. There is a separate chapter for Secretariat Support, as well as on transparency. Title IX of the draft ministerial decision deals with “accessibility with respect to technical assistance, capacity building and legal advice” and “accountability mechanism.” ACCOUNTABILITY MECHANISM The proposed language on the establishment of the accountability mechanism states: 1. “A meeting of the DSB shall be convened at the level of Head of Delegation to consider an item titled “Review of the Operation of the Dispute Settlement System and the Implementation of the Reforms” in: a. October 2026; and b. October of every second year thereafter, (“Accountability Mechanism Meeting”). 2. At the Accountability Mechanism Meeting, Members will review the operation of the dispute settlement system, with a focus on the implementation of the elements of the Reforms listed in the Appendix to this Title, on the basis of the report by the DSB Chairperson referred to in paragraph 10. 3. To the extent possible, the review of the implementation of the Reforms shall be based on the factual and statistical information in the Appendix to this Title. This is without prejudice to the right of Members to express any views on the implementation of the Reforms or the operation of the dispute settlement system in general. 4. At the Accountability Mechanism Meeting, the Director-General shall give an oral report on the Secretariat’s compilation of factual and statistical information on the implementation of the reforms and the DSB Chairperson shall give an oral report on the consultations conducted pursuant to paragraph 7.” Lastly, work is in progress to determine when the transitional provisions will come into effect. +
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