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TWN
Info Service on WTO and Trade Issues (Nov24/14) Geneva, 21 Nov (D. Ravi Kanth) — A “work in progress” report issued by the facilitator overseeing the dispute settlement (DS) reform process at the World Trade Organization on 20 November suggests that many critical issues concerning appeal/review are far from closure while other reform ideas seem to portend an “ill omen” for ensuring a strong enforcement function, without which there is little purpose in negotiating new agreements at the rules-based, member-driven trade body, said people familiar with the development. The 35-page restricted report issued by the facilitator seemingly raised serious doubts as regards restoring a “fully and well-functioning dispute settlement system” by the end of this year, as mandated by trade ministers at the WTO’s 13th ministerial conference (MC13) that concluded in Abu Dhabi on 2 March this year. The trade ministers 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.” The restricted “work in progress” document issued by the facilitator overseeing the dispute settlement reform process, Ambassador Usha Dwarka-Canabady of Mauritius, on 20 November, indicates that many issues, particularly on the appeal/review mechanism, are unlikely to be concluded in the next three weeks before the WTO goes on its winter break, said people familiar with the contents of the report. The restricted document (Job/GC/DSR/3), seen by the SUNS, suggests modest progress in the accessibility pillar as compared to other critical areas involving the appeal/review mechanism. The report suggests that the restoration of the Appellate Body, which was paralyzed by the United States in December 2019, is unlikely to happen as part of the DS reform process. As previously reported, the US had already informed members at the last meeting of the Dispute Settlement Body (DSB) on 28 October that it “is not working towards a restoration of the Appellate Body as it was.” The latest report in several ways reinforces the US notion that members will not have an Appellate Body. Instead, they would have to settle for an allegedly ineffective “appeal/review mechanism” which weakens the WTO’s enforcement function, said people familiar with the development. ACCESSIBILITY PILLAR On the status of work as regards the “accessibility pillar”, the report suggests that some “zero drafts” concerning “capacity building”, and “technical assistance” are ready for a discussion at the plenary stage. As regards two other areas focusing on the “dispute settlement fund model” and “reimbursement model”, the report merely states: “two workshops held; moving to table form.” APPEAL/REVIEW TABLES On the appeal/review tables, the work is incomplete, as several “reform ideas” have been discussed “irrespective of the degree of support for these ideas that have been expressed by members.” The tables of the appeal/review mechanism cover (A) “scope of review”; (B) “standard of review”; ( C) “form of the mechanism”; (D) “reducing/changing incentives to appeal”; (E) “clarifying Members’ expectations of adjudicators”; and (F) “access to the mechanism”. While all reform ideas seem to be undeveloped and inchoate on the six aspects, the crucial aspect on the “form of the mechanism” has a serious bearing on what kind of body is being negotiated in place of the Appellate Body, which hitherto remained as the bulwark of the enforcement function, said people familiar with the discussions. In fact, without any payment, which is a prerequisite in any trade negotiations, the US appears to be on its way to securing a weakened appeal/review mechanism for free, said people familiar with the development. FORM OF THE MECHANISM At present, a seven-member standing Appellate Body has been in place since 1995 as per Articles 17.1 and 17.2 of the Dispute Settlement Understanding (DSU). The Appellate Body members enjoyed a term of four years with a provision to reappoint them for another term of four years. Significantly, the Appellate Body is not named in the report even though several provisions of the DSU concerning the Appellate Body are cited. The report issued by the co-convenors on 18 November includes several reform ideas on the “nature of the body.” The reform ideas include:
The report states that the “key objective(s)” of the above five reform ideas include: “Reform ideas 1-5: To address a concern that an institutionalized standing body (with a limited number of adjudicators) may be perceived as having greater authority and legitimacy than other adjudicators, which leads to “rule-making” and de facto precedent, and also does not guarantee correct decisions.” The key objectives appear to be reflecting the US demands, said people familiar with the report. As regards the observations made by members on the above reform ideas, the report states somewhat ambiguously the following: “Members have a shared interest in correctness and consistency. Most Members consider that a standing body of highly-qualified experts supports their interests, which include correctness, predictability, consistency, coherence, legitimacy, transparency, accountability, fairness and efficiency. “Most Members have expressed that these interests would not be met by reform ideas 1, 4 or 5. Regarding reform idea 1, many Members have also said that ad hoc adjudicators would not meet their interests. Some Members have indicated a willingness to explore a form of standing body that differs in some respects to the current system (such as reform idea 2). “Reform idea 3 has not yet been discussed. This Element is linked to “Adherence to timeframes” in Table E, Clarifying Members’ expectations of adjudicators.” SELECTION OF ADJUDICATORS As per Article 17.1 of the DSU, Appellate Body members have been appointed “on the basis of a proposal formulated jointly, after consultations, by the DG, DSB chair, and the chairs of Goods, Services, TRIPS and General Councils.” The proposed reform idea, which again seems to reflect the US concerns, states: “appointment of adjudicators via a mechanism agreed by the disputing parties (on a bilateral or plurilateral basis).” The key objective, according to the co-convenors, is “to address a concern that adjudicators appointed by the Membership (through the DSB) are perceived to speak on behalf of all Members, which may add to the weight that is accorded to their decisions.” Without naming the members who made these observations, the report notes that “this Element is linked to the previous Element (“Nature of the body”). While reform idea 1 relates to the selection of adjudicators, it also presupposes that there would be no standing body.” Significantly, “some Members consider that appointment of adjudicators by Members is important to their interest in legitimacy, as well as in the representativeness and diversity, and expertise and impartiality of the adjudicators.” It notes ambiguously that “many Members wish to see adherence to timeframes in a reformed system, there is a need to consider how to ensure the availability of adjudicators at short notice. See “Adherence to timeframes”, under Table E, Clarifying Members’ expectations of adjudicators.” EXPERTISE REQUIREMENTS The expertise requirements as stated in Article 17.3 of the DSU require members/adjudicators to be persons of recognized authority, with demonstrated expertise in law, international trade, and the subject matter of the covered agreement. Interestingly, there are no reform ideas on expertise requirements, with the observation that “members have a shared interest in ensuring adjudicators have a high place of expertise.” On the issue of representative balance, members seemingly expressed interest “in gender balance”. WORKING PROCEDURES FOR ADJUDICATORS As per the current practice, Appellate Body members can “draw up working procedures” in consultation with the chair of the DSB and the DG. The proposed reform ideas by the co-convenors include:
The co-convenors suggest that the key objectives underlying the above three reform ideas are: “To address a concern that adjudicators do not alter Members’ rights without their consent; to enhance adjudicator consultation with Members regarding the Working Procedures; and to subject the Working Procedures and their implementation by adjudicators to regular review by Members.” As regards the observations made by members on the above ideas, the report states: “Regarding reform idea 2, adoption of the Working Procedures by the DSB would not be required. Further, it has been observed that adjudicators should not establish Working Procedures that are contrary to the DSU or to any relevant aspects of the reform package. Members appear to support the notion that adjudicators should continue to have discretion to make specific rules in individual disputes (such as regarding business confidential information).” There is some support for reform ideas 2 and 3, but some Members continue to see value in the involvement of the DSB Chair and the DG. ADJUDICATORS’ DECISION-MAKING Under the current practice, three Appellate Body members would take up the appeal for a ruling by them. The proposed reform idea on the decision-making by adjudicators suggests applying “different decision-making rules, such as requiring all adjudicators to agree that a panel decision should be modified or reversed.” The objective, according to the co-convenors, is “to address a concern that collegiality and consensus emphasize consistency above correctness and are not necessary.” In response to the above reform idea, the observations include that “some members consider that the reform idea would raise the threshold for the reform of a reversal of a panel idea and that majority decision-making should be preserved.” Many members, according to the co-convenors, “have expressed that they have an interest in a system that delivers consistent and predictable decision-making by adjudicators, which, for some, is supported by the collegiality and consensus principles.” On adjudicators’ impartiality and independence, “most members consider that it is essential to maintain the independence and neutrality of adjudicators, which supports interests including legitimacy, accountability, and transparency.” In short, the basket of reform ideas on the appeal/review mechanism that are being discussed under the dispute settlement reform process portends an “ill omen” for a strong enforcement function, without which there is little purpose in negotiating any agreement at the WTO, said analysts, who asked not to be quoted.
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