TWN Info Service on WTO and Trade Issues (Feb18/19)
23 February 2018
Third World Network

AB impasse accentuated by DG's silence, voting mooted by some
Published in SUNS #8627 dated 22 February 2018

Geneva, 21 Feb (D. Ravi Kanth) - The grave crisis facing the World Trade Organization's Appellate Body (AB) is being accentuated by the continued silence of the World Trade Organization Director-General Roberto Azevedo over the destructive role played by the United States.

Though isolated, the US has persistently blocked repeated attempts to fill the vacancies at the highest adjudicating body for global trade disputes, said an authoritative source who asked not to be quoted.

"The director-general thinks it is better to keep silent over repeated attempts by the US to block the selection process for filling three vacancies at the Appellate Body and take up the issue privately [with Washington]," the source said.

"Azevedo's strategy is not to raise the issue in the public but hold consultations with the USTR [United States Trade Representative Ambassador Robert Lighthizer]," the source maintained.

But such a strategy won't work as the US is in no mood to relent from its position, the source added.

At a brainstorming meeting of the ACP (Africa, Caribbean, and Pacific) trade envoys on 15 February, Azevedo said, "We must also face up to concerns around the Appellate Body."

He did not, however, elaborate on the concerns which are undermining the effective functioning of the highest adjudicating arm of the global trade body.

Clearly, the concerns are arising due to the actions of only one country, i.e. the United States which has blocked the selection process for several months.

Instead of calling the spade a spade, Azevedo merely said at the meeting that "no doubt this [the systemic crisis at the Appellate Body] is in the forefront of members' minds, given the urgency of the situation."

"We should seek to resolve this issue as quickly as we possibly can," he said, without suggesting how it can be resolved.

Is he suggesting that members must opt for voting to resolve the issue one way or the other?

"We must also reflect on how to keep the system functional while the solution eludes us," the Director-General said, knowing full well that the workload has increased on the depleted AB members.

He goaded the members "to take the lead here".

"Indeed we have already seen some efforts to this end", Azevedo maintained.

A day after Azevedo spoke to the ACP trade envoys, more than 60 countries made a desperate appeal for launching the selection process for filling three vacancies at the AB even as the US is determined to continue with its obstructionist position to block any fresh appointment, according to people familiar with the development.

Ahead of the Dispute Settlement Body (DSB) meeting on 28 February, leading developed and developing countries spoke in one voice about "the urgency and importance of filling the vacancies in the Appellate Body" so as to ensure proper functioning of the highest global disputes-resolution body.

In a proposal circulated on Friday (16 February), the signatories - Argentina, Australia, Bolivia, Brazil, Canada, Chile, China, Colombia, Costa Rica, Dominican Republic, Ecuador, El Salvador, the European Union (which includes 28 countries), Guatemala, Honduras, Hong Kong (China), India, Israel, Kazakhstan, Korea, Mexico, New Zealand, Nicaragua, Norway, Pakistan, Panama, Paraguay, Peru, Russia, Singapore, Switzerland, Chinese Taipei, Turkey, Ukraine, Uruguay, and Viet Nam - made a four-point appeal for launching the immediate selection process.

The four points include:

(1) to launch: (a) one selection process to replace Mr. Ricardo Ramirez Hernandez, whose second four-year term of office expired on 30 June 2017; (b) a second selection process to replace Mr. Hyun Chong Kim, who resigned from the Appellate Body as of 1 August 2017; and (c) a third selection process to replace Mr. Peter Van den Bossche, whose second four-year term of office expired on 11 December 2017;

(2) to establish a Selection Committee, consistent with the procedures set out in document WT/DSB/1 and with previous selection processes, composed of the Director-General and the Chairpersons of the General Council, the Goods Council, the Services Council, the TRIPS Council and the DSB, to be Chaired by the DSB Chair;

(3) to set a deadline of a 30-day period after the date of its decision, for Members to submit nominations of candidates; and

(4) to request the Selection Committee to carry out its work in order to make recommendations to the DSB within 60 days after the deadline for submitting nominations of candidates, so that the DSB can take a decision to appoint three new Appellate Body members as soon as possible.

But the US is not in any mood to relent from its decision to undermine the Appellate Body permanently so as to ensure that it can settle trade disputes through bilateral negotiations as was the case in the old-GATT (General Agreement on Tariffs and Trade) system, said a trade envoy who asked not to be quoted.

Given the consistent US stand against any rapid selection process, the issue of filling the vacancies will remain unaddressed, the trade envoy said.

Clearly the time has come for voting on this issue, according to people familiar with the development.

In 2014, Kenya had suggested voting when the former Dispute Settlement Body chair Ambassador Jonathan Fried decided to reopen the selection process for a vacant position at the Appellate Body after the US blocked the Kenyan candidate for the AB.

Kenya had said if consensus cannot be found around the four candidates interviewed for the post, members can take a decision through "voting".

In a letter to the DSB chair Ambassador Jonathan Fried, Kenya had offered a detailed explanation as to why it cannot agree to "reopening" the selection process.

Nairobi said it is "unprecedented" not to have an appointment made in the DSB when the selection committee found that all the four nominees are "very qualified" to be appointed, according to the contents of the letter in 2014.

The selection committee chaired by Ambassador Fried "should keep building and embracing on the positive spirit emerging out of Bali to overcome ten years of stalemate in the Doha round," Kenya suggested.

The committee's other members then included WTO Director-General Roberto Azevedo, General Council chair Ambassador Shahid Bashir of Pakistan, chairman of the Goods Council Ambassador Pierre-Andre Dunbar from Haiti, chair for Services Council Ambassador Abdolazeez Al-Otaibi from Saudi Arabia, and chair for the TRIPS (trade-related aspects of intellectual property rights) Council Ambassador Alfredo Suescum from Panama.

As a last resort in the absence of consensus, the selection committee must take recourse to voting under Article IX:1 of the WTO Agreement, Kenya had said.

"Kenya views the current situation on appointment of an Appellate Body member to be very unique and voting ought to be adopted as a one-time only decision because of the very special reasons that apply in this instance," Nairobi had argued.

It pointed out that "another selection process would question the legitimacy of the WTO system as a system mandated to resolve disputes amongst Member states, if the selection of candidate amongst 4 highly qualified candidates is a challenge."

"Therefore, consensus or voting on the four candidates is necessary," Nairobi emphasized.

The four candidates in the race then included Kenya's James Thuo Gathii, a professor of international law at Loyola University in Chicago, Cameroon's Yenkong Ngangjoh Hodu, a senior lecturer in law at the University of Manchester, Egypt's Abdel-Hamid Mamdouh, who is the director of the services division at the WTO, and Australia's Joan Fitzhenry, a trade lawyer.

The US had blocked the Kenyan candidate even though he secured maximum support from countries that conveyed their decision.

The only way to break the stalemate in the face of the US decision to block the selection process is to go for voting, some members argue citing this.

Clearly, if the DG can indicate that voting is a better option as he knows that things are not going to change given the current USTR's stated positions against the AB, it will end the deadlock, the source said.

[Independent observers said the legal situation about voting to resolve this issue is rather murky, but whether the filling of the vacancies by voting is in accord with the WTO and the DSU or not, is a matter to be decided by the AB. SUNS]