TWN Info Service on WTO and Trade Issues (Jun24/01)
4 June 2024
Third World Network

Trade: Many members call for enforceable appeal/review mechanism at WTO
Published in SUNS #10018 dated 4 June 2024

Geneva, 31 May (D. Ravi Kanth) — Many members on 30 May called for preserving the two-tier dispute settlement system, including the binding Appellate Body, to ensure the continuation of a robust enforcement function at the World Trade Organization, said people familiar with the discussions.

At the first formal meeting on dispute settlement reform at the level of Heads of Delegation (HoD) on 30 May, the new facilitator, Ambassador Usha Dwarka-Canabady of Mauritius, explained the process that she would follow in the coming days and months.

In an “urgent” email sent to members on 27 May, Ambassador Canabady, who had participated in one or two dispute settlement panels in the past, informed members that “the focus of the 30 May 2024 DS Reform HoDs meeting should be on how to resolve the questions of appeal/review and accessibility.”

“To that end,” she said, “I suggest we frame the discussion around the following questions: (1) Being mindful of the interest-based negotiating modality that Members have been using to make progress on dispute settlement reform, describe your delegation’s interest on appeal/review, including possible characteristics and ideas for developing convergence; and (2) What steps are necessary to make the dispute settlement mechanism more accessible to all Members?”

In her email, seen by the SUNS, the facilitator informed members of the appointment of six co-convenors for the technical work under the dispute settlement reform process.

The six co-convenors are: Mr. Joel Richards of Saint Vincent and the Grenadines and Ms Jessica Dickerson of Australia to oversee the discussions on appeal/review mechanism; Mr David Stranger-Jones of the United Kingdom and Ms Claudia Diaz Paulino of Mexico to assist in the discussions on accessibility; and Mr Firat Yeltekin of Turkiye and Mr Stacy-Paul Healy of Canada to oversee the discussions on “any other issues to be considered at the later stage.”

The facilitator wrote that “through this exercise, we received thirty-seven responses, representing 124 WTO members.”

It is not clear whether the co-convenors have substantial institutional knowledge about the dispute settlement reform discussions, which had been conducted informally by the former facilitator, Mr Marco Molina, deputy trade envoy of Guatemala, till the last week of January, said a person who asked not to be quoted.

Mr Molina was abruptly dismissed by his government, with one major member being unhappy with the speed at which he produced revised texts. Apparently, several countries wanted to send a petition to request the Guatemalan government to change its decision, but one member disapproved of the attempt, said a trade envoy, who asked not to be quoted.

So far, there is little clarity on the large volume of work that was almost finalized by the previous facilitator and whether it will be used by the six co-convenors, the person said.

MANDATE

At the WTO’s 13th ministerial conference (MC13) that concluded in Abu Dhabi on 2 March, trade ministers agreed on the following mandate:

“* 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.”

RESPONSES

In the battle between the United States on the one side, and many members on the other, the central issue is whether Washington will agree to the restoration of a two-tier dispute settlement system with a binding Appellate Body, as being demanded by many members, said people familiar with the negotiations.

At the HoD meeting on 30 May, the US is understood to have said that the US Trade Representative Ambassador Katherine Tai had delivered a statement/policy guideline on how the dispute settlement system (DSS) reform ought to be carried out, said a trade envoy who asked not to be quoted.

However, on the USTR website, no such statement was posted (at the time of filing this story), said a participant who asked not to be quoted.

The last statement made by the US concerning DSS reform was at a Dispute Settlement Body (DSB) meeting on 24 May.

In that statement, the US made two pertinent observations.

First, it maintained that “as we undertake our work with the Facilitator, we must bear in mind that re-launching the Appellate Body selection process will not address the concerns – and calls for the restoration of the Appellate Body undermine our collective efforts for reform.”

Secondly, the US said, “As WTO Members continue our efforts to better understand each other’s interests in WTO dispute settlement, the United States remains focused on achieving a reformed system that meets the interests of all Members to the greatest extent possible. The United States has been working with Members to advance this goal, and we look forward to continued engagement.”

The US has already set a “red-line” to the DSS reform discussion by stating that “calls for the restoration of the Appellate Body undermine our collective efforts for reform,” said one member, who asked not to be quoted.

At the HoD meeting on 30 May, many members out of the 46 delegations that took the floor said somewhat categorically that the restoration of the two-tier dispute settlement system is the core priority.

China, which is a regular user of the WTO’s dispute settlement system, said that it supports the facilitator’s work plan, “in particular prioritizing appeal/review and accessibility, the two issues identified in the MC13 Ministerial Decision and also hold the key to success.”

“As always,” China said, it is “committed to making constructive contributions in the solutions-finding process.”

On the most important issue concerning the appeal/review mechanism, China said that “like many others, it is China’s core interest to retain an independent, impartial, binding, two-tier dispute settlement system.”

“This is the central element in providing security and predictability to the multilateral trading system as enshrined in the DSU,” China said, adding that “based on the intensive discussions of the past two years, I detect two elements that are crucial for our further work.”

According to China, the two elements are, firstly, “the imperative to take a holistic approach to address the appeal/review issue.”

Elaborating on this issue, China said that “we should also bear in mind that Members have collectively explored tools to balance and improve a mutually supportive system as reflected in the consolidated text. For example, treaty interpretation, no precedential effect, focus on what is necessary to resolve the dispute, and an advisory working group to review interpretations in particular, as well as strengthened panel stage and accountability mechanism in a more general sense.”

As regards the second element, China pointed to “the value of a “filter and focus” approach to explore a more focused and efficient appeal/review mechanism.”

“Under this approach,” it argued that “members have conceptually discussed what I summarize as a “seven- element framework”, which covers Interim Review, MII (material impact on implementation), admissibility check, order of analysis, streamlined process, output of appeal, and incentives to reduce frivolous appeals.”

“The above elements, in our view, could serve as a good basis for finding balanced and comprehensive solutions to this critical issue,” China said, adding that “a substantial amount of work remains to be done.”

To intensify the discussions as per the two approaches it outlined above, China suggested the need for “three minds.”

These “three minds”, according to China, include:

“1. An open mind. Speak less about yes or no, but think creatively about how.

2. Second, a holistic mind. When advancing our own interest, think of others’ competing interests and endeavour to find middle ground.

3. Third, a focused mind.”

Given the paucity of time, China suggested that members should not “let perfect be the enemy of good.”

China also set a deadline for finding a solution to the appeal/review issue by July.

The Chinese trade envoy, Ambassador Li Chenggang, stressed “the critical importance to find a solution to appeal/review by July. Achieving that goal, albeit difficult and challenging, could boost members’ confidence and mutual trust, pave the way for resolution of other tough issues and successful conclusion of the reform by 2024.”

On the facilitator’s second question on accessibility, China said that “it is a necessary step to make the dispute settlement system more inclusive and responsive to the needs of the broader membership.”

Several other developing countries, including India, Indonesia, and from Africa issued strong statements at the meeting in support of a binding two-tier dispute settlement system.

While India is understood to have focused on the issues of accessibility and capacity-building, Indonesia issued a strong statement calling for a binding dispute settlement system.

Indonesia’s trade envoy, Ambassador Dandy Iswara, said that “the restoration of a fully and well-functioning dispute settlement system accessible to all Members by 2024, is the priority of many of us, if not all.”

Ambassador Iswara said the co-convenors with their expertise “will be able to facilitate us in seeking common solutions, especially in addressing the priority issues.”

He expressed the hope that the co-convenors “can also bridge the different views on many outstanding issues in the latest consolidated text.”

Indonesia, he said, had “cast its vote with full consideration that all members, big or small, and irrespective of whether they are a frequent user of the system or not, could lead the technical work under this process.”

On the main question concerning the appeal/review mechanism, Indonesia conveyed two main reflections.

It said, “First, on the appeal/review mechanism. Our first and foremost interest is clear, as particularly pointed out in our joint submission in JOB/DSB/8, that: In order to uphold the primacy of the two-tier system, the central focus of the reform efforts should be aimed at prioritizing the restoration of the Appellate Body.”

Indonesia said, “We believe that it is in our best interest to take a second and deeper look at the yellow table, lastly circulated in October 2023, to review some elements that might be missing.”

“Such aspects include (i) how members access the mechanism, (ii) what type of mechanism it would be, as well as (iii) selection of adjudicators.”

More importantly, Indonesia said that “the issue of the Appellate Body appointment cannot and should not be put aside in this process.”

On the second issue raised by the facilitator in her email concerning accessibility, Indonesia  said that “on accessibility, the Doha Ministerial Declaration, paragraph 44 mandates that all SDT(special and differential treatment) provisions shall be reviewed with the view to strengthening them, making them more precise, effective and operational.”

“With that in mind, additional SDT elements should be incorporated across the agreement, including provisions relating to accessibility and capacity-building needs. Indeed, it is important for us to ensure the availability of support, especially for members that are still experiencing difficulties in accessing the system.”

Indonesia called for a “technical-level pre-negotiation meeting on appeal/review mechanism and accessibility” before embarking on hard negotiations.

At the meeting, several other industrialized countries, in varying levels of emphasis, called for the restoration of the two-tier dispute settlement system, said participants who took part in the meeting. +