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TWN
Info Service on WTO and Trade Issues (Mar24/12) Geneva, 20 Mar (D. Ravi Kanth) — The United States came under intense pressure on 19 March for failing to implement the rulings issued by the World Trade Organization’s dispute settlement system (DSS) as well as for blocking the selection process for filling vacancies in the Appellate Body, as demanded by Colombia on behalf of 130 countries, said people familiar with the development. At a meeting of the WTO’s Dispute Settlement Body (DSB) on 19 March, the US, which is yet to implement several past rulings issued by the dispute settlement system, agreed to the adoption of a compliance panel report that upheld the European Union’s complaint over Washington’s failure to comply with the panel’s ruling against US anti-dumping and countervailing duties on imported ripe olives from Spain. The EU welcomed the comprehensive ruling issued by the compliance panel on 20 February, saying that it left no room for doubt that the US has failed to comply with the original panel’s finding on the “pass-through” of subsidies from upstream olive producers to downstream processed products. Brussels appears to have urged the US to fully and promptly implement the compliance panel ruling to ensure relief to the Spanish olives sector. The EU cautioned the US that it reserves its right to take further steps if Washington fails to implement the panel ruling promptly, said people familiar with the discussions. Expressing its disappointment over the panel’s ruling, the US appears to have indicated its willingness to work with the EU to resolve the dispute. The US seems to have said that it took several actions in response to the original panel ruling, indicating that those compliance actions were not challenged by the EU. In its intervention concerning the findings of the compliance panel, Canada supported the conclusive findings issued by the panel that Washington has not brought its measures into conformity with the WTO rules. The US track record for not implementing the DSB’s past recommendations and rulings appears to be a cause for concern, as every monthly meeting of the DSB lists the Appellate Body/panel reports that have not been implemented by the US for several years. The US failure to implement WTO rulings seems to have induced a state of “lawlessness” in global trade jurisprudence when the largest member appears to turn a blind eye time and time again to previous Appellate Body/panel recommendations and rulings, said people familiar with the US actions. At the DSB meeting on 19 March, China expressed sharp disappointment over Washington’s failure to implement for the past five years the Appellate Body ruling in the dispute (DS471) on “United States – Certain Methodologies and their Application to Anti-Dumping Proceedings Involving China.” “We, therefore, once again urge the United States to honour its obligation by bringing its measures into conformity without further delay,” China said at the meeting. US BLOCKS FILLING OF AB VACANCIES At the DSB meeting, for the 74th time, the US blocked a joint proposal from 130 countries for immediately launching the selection process to fill the vacancies in the Appellate Body, which has remained dysfunctional since 2019. On behalf of the 130 countries, Colombia appears to have stated that their joint proposal is an expression of “common interest in the functioning of the Appellate Body and, more generally, in the functioning of the dispute settlement system.” Colombia said the joint proposal seeks four immediate actions. They include: (1) starting seven selection processes for filling seven vacancies in the AB; (2) establishing a Selection Committee; (3) setting a deadline of 30 days for the submission of candidacies; and (4) enabling the Selection Committee to issue its recommendations within 60 days after the deadline for nomination of candidates. Colombia urged “all Members to support this proposal in the interest of the dispute settlement and the multilateral trading system(s).” The US, however, seemingly stuck to its oft-repeated position by categorically rejecting the joint proposal by the 130 countries to commence the selection processes for the appointment of Appellate Body members on grounds that its longstanding concerns with WTO dispute settlement remain unaddressed. The US echoed its demand to build a new system that overcomes the problems of the past, as part of the ongoing DSS reform discussions. The US cautioned that “as members engage on reform, they must bear in mind that re-launching the Appellate Body selection process will not address US concerns, and calls for the restoration of the Appellate Body undermine the collective efforts for reform.” In a second intervention, Colombia regretted that members are not able to launch the selection processes for filling the vacancies in the Appellate Body. “We continue to fail (to) fulfill our duties as Members of this Organization”, said Colombia, citing Article 17.2 of the Dispute Settlement Understanding (DSU), which clearly states that “vacancies shall be filled as they arise”. According to Colombia, “Ongoing conversations about reform of the dispute settlement system should not prevent the Appellate Body from continuing to operate fully, and Members shall comply with their obligation under the DSU to fill the vacancies as they arise.” Among the 23 members who took the floor to support the joint proposal issued by Colombia, China said that it supports the statement delivered by Colombia on behalf of the 130 co-sponsors. It urged other members to join this proposal, emphasizing that “like others, we reiterate our firm commitment to an independent, impartial two-tier dispute settlement system, which has not only facilitated prompt and fair resolution of disputes between members, but also provided security and predictability to the multilateral trading system.” China also underscored the need for “constructive engagement in the discussions of DS reform, and urge all members to engage in this exercise with pragmatic, outcome-oriented spirits.” DSS REFORM According to the outgoing chair of the DSB, Ambassador Petter Olberg of Norway, many members want the ongoing DSS reform discussions to be conducted under the direct oversight of the WTO’s General Council. Reflecting on the decision reached by trade ministers at the just-concluded WTO’s 13th ministerial conference (MC13) in Abu Dhabi, the DSB chair said that he held discussions with some 31 delegations that reaffirmed their commitment to having a fully and well-functioning dispute settlement system accessible to all by 2024. At the failed MC13 in Abu Dhabi early this month, trade ministers agreed on a few decisions, including the need to conclude the DSS reform by the end of this year. Trade ministers decided on the following: * Recalling our commitment made at our Twelfth Session to conduct discussions with the view to having a fully and well-functioning dispute settlement system accessible to all Members by 2024, we take note of the work done thus far. * We recognize the progress made through this work as a valuable contribution to fulfilling our commitment. We welcome all submissions from Members that help advance our work. * We instruct officials to accelerate discussions in an inclusive and transparent manner, build on the progress already made, and work on unresolved issues, including issues regarding appeal/review and accessibility to achieve the objective by 2024 as we set forth at MC12. The DSS reform discussions informally conducted by the former deputy trade envoy of Guatemala, Mr Marco Molina, came under intense criticism from several countries like India and Indonesia among others. The former Guatemalan trade official adopted an opaque process to advance the interests of one major member, said a capital-based official, who asked not to be quoted. However, the WTO Director-General, Ms Ngozi Okonjo-Iweala, praised the Guatemalan official at the Abu Dhabi meeting. According to the DSB chair’s comments at the meeting on 19 March, most members said that they consider the General Council to be the appropriate forum to oversee the discussions, with a majority of members believing that the General Council would provide the necessary political impetus to complete this process by the mandated deadline, said people who asked not to be quoted. Two members expressed support for “formalizing the process under the auspices of the DSB, to be overseen by the DSB Chair, given that this is a dispute settlement matter,” the chair added. As regards the appointment of a new facilitator, the chair said many members believed that a facilitator should be at the level of Ambassador with prior legal expertise and experience in WTO dispute settlement. Several members seem to have told the chair that the new facilitator “should be impartial, able to maintain the delicate balance between ensuring full participation and facilitating quick progress, and comfortable with holding members accountable to carry out the instruction from ministers by the deadline.” Though there is no agreement yet on who ought to be the new facilitator to oversee the DSS reform discussions, the name of Australia’s new trade envoy to the WTO was suggested, said a member who asked not to be quoted. Many members put forward different names of candidates for this role, the chair said, suggesting that members want a legal expert from another delegation to support the facilitator during the discussions. As no consensus has been reached yet on the candidate, the chair said he was unable to seek the appointment of a facilitator at the upcoming 21-22 March General Council meeting as he had hoped. During the discussion, more than two dozen members intervened with their respective views on several aspects, such as (1) when to formalize the process and in what WTO body; (2) the qualities required of a new facilitator; (3) whether to continue with the “interest-based” approach taken in the informal process versus a more traditional “position-based” discussion with record-keeping and circulation of member proposals; (4) the status of the consolidated text that emerged from the informal process and circulated in advance of MC13; and (5) how best to ensure the talks are open, transparent and inclusive while advancing the progress made so far. In its intervention, China set three markers for conducting the negotiations. First, is appointing a new facilitator to lead the reform discussions as soon as possible, and avoid procedural issues affecting the progress of substantive issues. “We see the benefit of appointing an ambassador-level facilitator who could be supported by a legal expert who is familiar with previous discussions and can guarantee the continuity of the reform work.” Second, China said that members must build on the progress already made and continue the “interest-based” discussions. “The discussions should be conducted in an inclusive and transparent manner, while warranting the effectiveness and efficiency of the reform given the limited time we have.” Finally, China said that members should “focus on unresolved issues, especially the appeal/review mechanism, which is the most difficult but extremely important one for all Members in this reform.” “In our view, the next three months is the most critical period.” China wants the substantive discussions to be concluded before the summer break so as to ensure an outcome by the end of the year. Given the US elections in November this year, it appears highly improbable that there would be any outcome on restoring a functioning two-tier dispute settlement system, said people familiar with the discussions. +
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