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TWN
Info Service on WTO and Trade Issues (Sept24/02) Geneva, 2 Sep (D. Ravi Kanth) — The facilitator overseeing the World Trade Organization’s dispute settlement (DS) system reform process plans to convene a meeting on 9 September to discuss several elements of the proposed Appeal/Review mechanism that is likely to replace the binding Appellate Body, in a move that could attenuate the WTO’s enforcement function, say people familiar with the development. In an email sent to members on 23 August, seen by the SUNS, the facilitator, Ambassador Usha Dwarka- Canabady of Mauritius, informed members that “the co-convenors on Appeal/Review have prepared draft tables to document several important aspects of the discussions held on each of the sub-topics: scope of review; standard of review; form of the mechanism; reducing/changing incentives to appeal; clarifying Members’ expectations of adjudicators; and access to the mechanism.” She said that the draft tables have been prepared with several caveats, including that the draft tables on the above topics “are not negotiating texts but have been designed to aid Members in their ongoing discussions.” The facilitator said that “the co-convenors will update the tables as the discussions progress which will allow Members to gauge the progress being made through the technical discussions.” According to the facilitator, “the tables do not exhaustively capture each point made by Members but do highlight some of the main points based on the discussions held.” She maintained that detailed discussions on some of the sub-topics and elements within those sub-topics are yet to be held. “Since the reform ideas are not exhaustive, new ideas and contributions are encouraged from Members,” Ambassador Dwarka-Canabady suggested. Clarifying the tables, the facilitator said that “it is not the intention of the co-convenors to convey that all sub- topics or all elements under those sub-topics require reform.” She said the tables are open to discussion to members on 9 September 2024 during the dedicated expert-level session on appeal/review (see below). The co-convenors also remain open to meeting with Members, on request, to discuss the tables, she added. As regards the meeting on 9 September, the facilitator said: “Members will first have the opportunity to comment on the draft Appeal/Review tables.” “The remainder of the meeting, as well as the meeting on 17 September, will focus on the following sub-topics (which will be addressed in the order set out below). Consistent with the interest-based nature of the discussions, experts are asked to respond to the questions by reference to their interests or concerns.” Privately, several members seem rather alarmed at the manner in which the discussions are going to be held, particularly on the future of the Appellate Body in the WTO’s two-tier dispute settlement system, said people familiar with the discussions. KEY TOPICS The topics to be discussed on 9 September include: (1) “reducing/changing incentives to appeal”, (2) “scope of review”, and (3) “standard of review”. As regards “reducing/changing incentives to appeal,” the facilitator said that “experts will be invited to respond to the following questions: * Regarding the element “Adjusting the reasonable period of time (RPT) for compliance” in the Appeal/Review tables, what are your views on reform ideas 1 (Change the calculation of the RPT so that the start date for the RPT is when an appeal is initiated by the responding party) and 2 (Provide the responding party with a longer RPT if it does not appeal)? In responding to this question, experts may also wish to express views on the concerns/questions regarding reform idea 1 that are in the Observations column. * Regarding the element “Enhancing use of interim review” in the Appeal/Review tables, what are your views on reform ideas 1 (Require or incentivize the parties to raise alleged errors of both fact and law with the panel during the interim review stage) and 2 (Extend the time for the panel to conclude its work at the interim review stage)? If you see value in reform idea 1, what ideas do you have regarding how to give the panel a genuine opportunity to address perceived factual and legal errors while avoiding a re-litigation of the entire dispute?” SCOPE OF REVIEW On the “scope of review”, the facilitator wants the experts to address several questions. They include “clarifying the appeal/review adjudicators’ role with respect to review of a panel’s objective assessment of the facts.” The experts are also asked to address the following: “With respect to any claim relating to the panel’s assessment of the facts, requiring the substance of the claim to be raised with the panel at the interim review stage, as an admissibility requirement to a party bringing an appeal/review claim [Reform idea 2, of the element “Filters, criteria or admissibility tests for claims” in the Appeal/Review tables].” Further, on the “ideas” prepared by the co-convenors “on the element on “Review of the panel’s “objective assessment” of the facts under DSU (Dispute Settlement Understanding) Art. 11″ in the Appeal/Review tables, what are your views on reform idea 1 (Clarify that a panel’s objective assessment of the facts is subject to appeal only to the extent that there is an egregious error in the panel’s assessment (i.e. an error that undermines the objectivity of the panel’s assessment))?” The experts are asked to indicate their views on “appeal claims relating to the panel’s objective assessment of the facts be subject to appeal only to the extent that there is an egregious error? (See also, Australia and the Republic of Korea’s non-paper (dated 12 January 2024)). Why/why not? If yes, how do you think this would operate in practice?” Furthermore, the experts will have to provide their views on the element “Review of the panel’s “objective assessment” of the facts under DSU Art. 11″ in the Appeal/Review tables. They will have to indicate “their views on reform idea 2 (Clarify that the parties should not re-submit factual arguments from the panel stage under the guise of challenging the objectivity of the panel’s assessment of the facts).” The facilitator said the experts should also spell out their views on the element “Filters, criteria or admissibility tests for claims” in the Appeal/Review tables. For example, they are required to provide their views on “reform idea 1 (Limit appeal/review claims to errors of law that would have a material impact on the respondent’s implementation obligations with respect to a measure).” STANDARD OF REVIEW On the “standard of review”, the facilitator wants the experts to address the following questions. They include: * “Regarding the element “Standard of review” in the Appeal/Review tables, what are your views on reform idea 1 (A high or limited standard of review that gives some deference to the panel (such as a standard under which an appellant must establish that the panel’s decision on a legal issue was “clearly erroneous” or “plainly unreasonable”))?” * “Leaving aside any specific standard of review and whether it should/should not be changed, do you consider it would support your interests for Members to clarify their expectations of appeal/review adjudicators regarding any applicable standard of review?” “CONFOUNDING” THE DISCUSSIONS The structure of the dispute settlement reform process appears to be “confounding” the discussions in remaining silent on the core issues, said a legal analyst who asked not to be quoted. From the above questions as well as other issues raised in “reducing/changing incentives to appeal”, “scope of review”, and “standard of review”, it appears rather unclear whether the binding two-tier dispute settlement system for ensuring a robust “enforcement” mechanism will be continued, the analyst said. Without a strong enforcement function, which is at the core of the WTO’s architecture along with the negotiating and the implementation functions, members’ rights and obligations could remain in limbo. Also, there is little or no merit in negotiating new agreements when the enforcement function is attenuated, the analyst said. As previously reported in the SUNS, after the United States made the Appellate Body dysfunctional in December 2019 and continues to repeat its concerns over the demands made by the majority of members on restoring the highest adjudicating body in the two-tier dispute settlement system, doubts continue to persist if the US would agree to a robust appeal/review mechanism that would undergird the enforcement function of the WTO, said people familiar with the discussions. The US had already drawn its markers in its statement issued at the Heads of Delegation meeting on 30 May, as captured in document WT/GC/DSR/M/1. The US said that it has “an interest in a dispute settlement system that supports parties in the resolution of their disputes and that has legitimacy, not just here but also at home.” “In that context,” the US maintained, “we would like to explore further with delegations whether appeal/review is a necessary feature of a system that supports parties in resolving their disputes.” It added that it heard “points made about the need for consistency and the ability to correct legal errors.” However, “we do not view a standing Appellate Body as the only way of achieving those objectives,” the US said, adding that “consistency, if wrong, does not serve anyone’s interests.” “In addition, you can have a binding system without having a second tier – and by “binding”, we mean finality in the dispute,” the US argued. “We have seen how an appeal/review mechanism – and by extension the dispute settlement system – can stray from this foundational purpose,” the US said, citing a report that the USTR published on the Appellate Body in 2020 that identified several US concerns with that appeal mechanism. Given the rather ambiguous mandate provided by trade ministers at the WTO’s 13th ministerial conference (MC13) that concluded in Abu Dhabi on 2 March, who merely instructed their 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”, it appears that everything in the ongoing discussions is “up for a toss”, said people familiar with the discussions. +
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