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TWN
Info Service on WTO and Trade Issues (May24/07) Geneva, 16 May (D. Ravi Kanth) — With the enforcement function of the World Trade Organization having been made dysfunctional amidst escalating trade tensions, the new facilitator overseeing the reform of the fractured dispute settlement system has her task cut out, particularly in restoring a binding Appeal/Review mechanism that provides legal certainty to developing and least-developed countries in resolving global trade disputes, said people familiar with the development. At a meeting of Heads of Delegations (HoD) on 14 May, the new facilitator, Ambassador Usha Dwarka- Canabady of Mauritius, informed members that she will convene a HoD meeting to discuss the Appeal/Review mechanism, said people familiar with the development. She informed members that regular technical meetings will be conducted at the level of experts from member countries, as well as a HoD meeting every month, starting with the most sensitive issue of the Appeal/Review mechanism, said people familiar with the development. “I must say that across the consultations, a common element was a sense of urgency to complete work by 2024 and earlier, if possible,” Ambassador Dwarka-Canabady said, according to a statement posted on the WTO website. “It is our common responsibility to take care of the system, and I know I can count on your constructive approach,” she added. In her comments at the meeting, the WTO Director-General, Ms Ngozi Okonjo-Iweala, said: “Let’s get it done so that it will be something treasured by each and every member, which means we have to listen to each other and think of the greater good. I’m very optimistic.” MANDATE At the WTO’s 13th ministerial conference (MC13) that concluded in Abu Dhabi on 2 March, trade ministers merely agreed on the following decision: “* 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 works 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.” However, it is moot whether the United States will agree to the restoration of a robust Appeal/Review mechanism with binding powers, said a trade envoy, who asked not to be quoted. More so, at a time of the presidential elections in the US, there is little or no chance of committing to a strong Appeal/Review mechanism, the envoy suggested. It is, therefore, not clear whether the Appeal/Review mechanism would replace the binding Appellate Body, the highest adjudicating body at the WTO for resolving global trade disputes, or whether a “truncated” version of the Appellate Body without binding powers will be put forward, said a legal expert who asked not to be quoted. Without a binding Appeal/Review mechanism, the WTO’s enforcement function will serve little purpose in providing legal certainty and equity, said people familiar with the development. At a regular meeting of the Dispute Settlement Body (DSB) on 26 January, the US had said, “as we approach MC13, we are in favor of neither speeding too quickly to an outcome that overlooks the needs of certain members, nor artificially slowing down the discussions by imposing constraints that limit rather than encourage constructive dialogue.” Also, it is not clear how the members intend to proceed with the huge volume of work done by the previous facilitator, Mr Marco Molina, deputy trade envoy of Guatemala, who was abruptly removed by his government days before MC13. Apparently, Mr Molina’s removal came about due to opposition from one powerful member who seemingly disapproved of the rapid issuance of drafts on various aspects of dispute settlement reform, said a trade envoy, who asked not to be identified. At a General Council meeting on 14 February, Mr Molina touted that the process he adopted “is solution- oriented and builds up on the interests that Members identified in 2022, when the United States convened meetings to understand Members’ expectations regarding the operation of the dispute settlement system. From April 2022 to January 2023, Members identified and discussed over 230 different interests. We took those 230 interests that had already been identified by Members and classified them into different groups.” He said that “the informal process on dispute settlement reform started on 17 February 2023, when we transitioned to more focused and solution-oriented discussions, based on identified interests. Subsequently, I invited Members to propose ideas and conceptual approaches that could potentially address the interests identified by Members.” Further, he said that “the response and commitment by Members were unprecedented. Members presented more than 70 proposals. In doing so, Members themselves, collectively, defined the scope of the informal process on dispute settlement reform.” POLICY SPACE Early this year, at a DSB meeting, the US, which triggered the discussions on reform of the dispute settlement system after paralyzing the Appellate Body in December 2019, said “difficult issues remain to be addressed.” At that meeting, the US said that difficult issues “include the needs of developing country members and LDCs, but also on critical substantive areas where “judicial” overreach has damaged the functioning of the WTO and altered the Members’ rights and obligations.” While several developing countries use the dispute settlement system more frequently for safeguarding their rights, many other members of the Global South are not known to have used the system that often, said people familiar with the discussions. In contrast to the continued US opposition to restoring the Appellate Body by filling the vacancies that Washington had blocked since December 2019, a large majority of developing countries and several industrialized countries want the Appellate Body to become functional again expeditiously, said people involved in the discussions. As reported in the SUNS, in a seemingly targeted dig at the developing countries that are demanding policy space for pursuing their development-oriented policies, the US asked somewhat rhetorically, “if you are concerned about policy space, you should be for a reformed dispute settlement system.” “A reformed system should address erroneous interpretations on such issues as essential security, regulatory space, remedies for unfair trade, and other fundamental systemic issues,” the US said. The US arguments seemed somewhat disingenuous, as it appears to liken its concerns over an independent and impartial Appellate Body as if they are the concerns of all members, said a negotiator who asked not to be quoted. In contrast to the US statement at that meeting, China said rather categorically that “the restoration of a fully and well-functioning dispute settlement mechanism accessible to all members by 2024 is the top priority of China, most members and this organization.” China said, “there are still a number of fundamental issues ahead of us, particularly the issue of appeal/review mechanism, the most difficult but extremely important one in our process.” +
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