Info Service on WTO and Trade Issues (May18/09)
14 May 2018
Third World Network
US under fire at GC over AB blockage, unilateral actions
Published in SUNS #8679 dated 14 May 2018
Geneva, 9 May (Kanaga Raja) - The United States came under widespread
criticism from both developing and developed countries at a meeting
of the WTO's General Council on 8 May over its continued blockage
of appointments to fill vacancies in the WTO's Appellate Body as well
as its recent unilateral actions under both Section 232 and Section
301 of its trade laws.
The criticism of US actions came during discussions on three separate
items that had been put on the agenda of the General Council (GC)
meeting at the request of China.
These items are: Selection of new Appellate Body members; United States
- Section 232 investigations and measures on steel and aluminium products;
and United States - Investigations and Measures under Section 301
of the Trade Act of 1974.
On the selection of new Appellate Body members, many countries made
clear that no linkage should be made between the concerns raised by
the US on procedural issues and the launch of selection processes
to fill three current vacancies on the seven-member Appellate Body.
They also warned that the ongoing impasse over this issue at the WTO
is undermining the multilateral trading system.
Many countries also expressed concerns over the unilateral nature
of US act ions under Section 232 of the Trade Expansion Act of 1962
imposing additional du ties on imports of steel and aluminium products
(purportedly on national security grounds) as well as the US Section
301 investigations over China's intellectual property policy regime
(see separate story).
Summarising the discussions on these three agenda items at a press
briefing on 8 May, WTO spokesman Keith Rockwell characterized the
General Council meeting as being "extraordinary in its intensity",
and said that many members who do not normally take the floor had
views on these issues.
"Despite the intensity of this discussion," he said, "I
think this was a discussion that we had to have. We had to have this
discussion here and it was a very good thing that it took place in
the General Council. It showed that this is a p lace where these concerns
can be raised and it showed as well the importance of having all of
these members stating their views on this."
"It was quite unusual to see these two very prominent members
[the US and China] really laying it all on the line in terms of what
they think," said Rockwell, in reference to the discussions on
the US Section 301 measures.
On the agenda item of selection of new Appellate Body members, China
(represented by Ambassador Zhang Xiangchen) explained why it was putting
three items on the agenda of the General Council meeting.
According to participants at the GC meeting, China said that the WTO
is going through grave challenges and the rationale for adding these
three items on the agenda is simple.
Twenty-three years after the WTO was established, it is going through
unparalleled challenges, it said.
We need to discuss how to respond to "unilateral and protectionist
measures ", it said, noting that at the end of the Uruguay Round,
the GATT gave way to the WTO and the reason for that agreement was
that people were concerned about unilateral actions and protectionism.
One of the most important elements of that Uruguay Round deal was
the agreement on the settlement of disputes, and this was the means
for which t o deal with actions. This became the bedrock of the system.
According to China, what is now very dangerous is that the United
States is challenging the fundamental principles of the WTO and its
dispute settlement system.
With its action under Section 232 and the $50 billion (in additional
tariff s) that the US is threatening to levy on China with respect
to its Section 301 case, the US is further undermining the WTO, China
The WTO is confronting three hard blows and we are ready to discuss
this with all members today, China added.
We expect that all members should defend the system as appropriate,
China underlined. Collectively we can improve on our organisation
but unilateral and protectionist measures are damaging the WTO and
international trade, it said.
China pointed out that the dispute settlement system is the crown
jewel and it is losing its brilliance.
Since 1995, there have been several hundred disputes that have been
settled and it is one of the most successful systems for settling
disputes in history, China argued.
The Appellate Body has an important role to play but today, only four
of the seven Appellate Body members are in place.
Without the dispute settlement system, the WTO would find its effectiveness
reduced, it said.
China said that it would like to see the system strengthened so that
we could effectively control unilateral and protectionist measures.
It noted that the US has concerns about the system, and the US has
certainly a right to raise matters that they find difficult to accept,
but decisions an d discussions should be held here.
China said it is ready to discuss this in the WTO, but it cannot discuss
these issues if there is a linkage between discussion of these issues
and the selection process for Appellate Body members.
China charged that the US is abusing the decision-making process of
The European Union said it very much regrets what is happening to
the Dispute Settlement Body.
The EU said it has been signing onto a variety of different proposals
(for filling the vacancies on the Appellate Body). It asserted that
the WTO members have a shared responsibility to resolve this issue
as soon as possible.
The EU pointed to Article 17 (on Appellate Review) of the Dispute
Settlement Understanding (DSU). It also noted that the US has problems
with Rule 15 (of the Working Procedures for Appellate Review).
[Rule 15 states: "A person who ceases to be a Member of the Appellate
Body may, with the authorisation of the Appellate Body and upon notification
to the DSB, complete the disposition of any appeal to which that person
was assign ed while a Member, and that person shall, for that purpose
only, be deemed to continue to be a Member of the Appellate Body."]
The EU emphasised that it does not want a linkage to be made between
Rule 1 5 and the AB appointments. It sees no reason for blocking the
appointment process at the Appellate Body.
The EU is ready to discuss and try and find appropriate solutions.
Mexico said that the current situation at the Appellate Body is unprecedented.
It noted that seven of ten cases in the WTO go to the Appellate Body.
Eighty members of the organisation have used the Appellate Body. There
are eight cases under appeal and another five this year that are likely
to be appealed.
Mexico said that if Ambassador Servansing, whose (first) term at the
Appellate Body expires this September, is not reappointed, things
will get even worse.
This is particularly alarming given the serious trade tensions that
we are now experiencing, Mexico pointed out.
Cambodia expressed support for China's statement, and said we need
to fill the vacancies on the Appellate Body quickly.
Zimbabwe said that the subliminal message being received is why should
we negotiate rules if existing rules may not be adjudicated.
For a rules-based organisation, this is indeed a perilous road to
take, it added.
The Russian Federation said it had serious concerns, and that the
Sword of Damocles is now hanging over the dispute settlement system.
The Appellate Body is close to collapse because we only have four
members, and as we get closer the situation will become even more
difficult, it added.
Russia also stressed that it does not want a linkage between discussions
of the US concerns and appointments to the Appellate Body.
Honduras, on behalf of the informal group of developing countries
except Israel, said it seeks a prompt solution to this issue.
It wants to see proposals coming out and it should be addressed in
a normal way independent of the AB selection process.
Uganda said that the rules are in place for all members. Are some
members above the rules, it asked.
Japan said that it is concerned about the situation in the Appellate
Body. It does not deny that this is worthy of being taken up in the
However, under the terms of the WTO agreement, it is the responsibility
of the DSB and not the General Council.
Japan said that it has made its case very clear (on the situation
in the Appellate Body). It is the responsibility of the entire membership
to make progress t o find a solution to ensure the proper functioning
of the dispute settlement system.
Bolivia raised the question as to why the joint proposal from 65 WTO
member s (on the launch of the selection processes to fill the three
current vacancies on the Appellate Body as soon as possible) has not
been accepted. It pointed out that it has been blocked by one member.
Tanzania also expressed concern, saying that it did not think that
the AB appointment process should be held hostage.
Qatar also expressed concerns, saying that the WTO members have the
responsibility to safeguard the Appellate Body and the system as well.
Benin said the work of the WTO and the credibility of the multilateral
trading system hinges on its ability to deal with disputes, and all
members, large and small, must continue to support the dispute settlement
Guinea said that the dispute settlement system and the multilateral
trading system more generally are of great importance to developing
countries. The dispute settlement system is a fundamental pillar of
Turkey said that it is one of the co-sponsors of the proposal on the
AB appointment process. It has been going on for one year now and
it would like to see this issue resolved.
Norway said that it is in the essential interest of Norway that this
be fix ed. Expressing deep concern, it said that it is open and willing
to discuss the grievances with the system, including the Appellate
Body, but it does not w ant this issue to drag on and cause further
concern and damage to the system itself.
Hong Kong-China also expressed deep concern.
Brazil pointed out that this has been a matter of concern since 2017.
It is heading for a serious crisis because we are close to the risk
of paralysis. This deadlock is undermining the rules-based multilateral
It warned that the rights of members are being nullified and impaired
under the DSU. It noted that 65 members have co-sponsored a proposal
to address this issue.
Brazil said it is ready to sit down with any member but it does not
find linkages acceptable.
Venezuela said that unilateral measures by the US and the ongoing
blockage of the Appellate Body process are undermining the multilateral
Canada said that while it understands that the US has concerns, it
does not want this to be linked to the AB selection process.
Pakistan expressed deep concern, while Maldives supported the issues
that China had raised. It does not want to see the dispute settlement
system rendered ineffective.
Switzerland said that dispute settlement system is a key element of
what the WTO does and it encouraged members to overcome the impasse
in the Appellate Bod y as soon as possible.
Australia had serious concerns, saying that all present and future
Appellate Body positions must be filled without delay.
It has heard that the US has concerns. It is for all members to try
and fin d a solution. With goodwill and hard work, a solution can
be found. Australia i s willing to explore ways forward in a solution-based
Myanmar said it is concerned about the unilateral and protectionist
measures, while Liberia expressed support for China's statement.
Ecuador said what is happening now runs contrary to the Dispute Settlement
It said there should be no linkage between the AB appointment process
with the procedural issues. These should be discussed independently.
Kazakhstan said that it took a very long time (almost two decades)
for the country to enter into the WTO, and now that it is a member,
they are facing a system in crisis.
According to participants at the meeting, India said that it is extremely
concerned. It is unhappy with the rise in unilateral actions, and
that makes the dispute settlement system even more important to them.
India is also concerned that it would be a serious blow if the dispute
settlement system were to lapse into ineffectiveness.
It urged all members to find a solution to the impasse. It does not
want a linkage either between concerns of a procedural nature and
the AB selection process.
Sri Lanka said that the DSB is one of the key pillars of the house.
It is the responsibility for all of us to find a solution.
Guatemala said that most members have expressed a willingness to sit
down and discuss concerns but we have not had a serious discussion
yet on this issue. We need to move from expressions of concern to
a more solution-oriented approach, it said.
Korea expressed concurrence, while Egypt expressed deep concerns.
It is worried about the threat to the proper functioning of the WTO's
dispute settlement system.
According to participants at the meeting, the United States (represented
by Ambassador Dennis Shea) said it took note of the concerns expressed
and loo ked forward to explaining the concerns that the US has.
The US said it is worried that the credibility of the WTO will be
threatened by the process of dispute settlement that has been ongoing
for some time.
Ambassador Shea said that this is something that has been mentioned
by the US for many years, and not something that is new with the Trump
The US maintained that the way in which the Appellate Body is working,
they are re-writing agreements and putting in place rules that have
not been agreed by members.
They are putting in jeopardy the dispute settlement system. They are
guilty of rule-breaking and rule-making, it claimed.
The Appellate Body never reaches its target of 90 days to deliver
its reports, said the US.
Mentioning its concerns about Rule 15, the US said the AB on their
own have decided who can be a member and for how long. They have expanded
their role in terms of what the DSU says their role should be.
There are now many people in the WTO who believe their objectives
can be more easily obtained through litigation than through the hard
work of negotiation, it claimed.
The US wants to improve existing rules and it wants to see new rules
in the WTO but they have to be rules that are agreed by the members.
The US does not plan to see a continuation of the existing dysfunction
through complacency. The US said it is ready to work with others who
share their concerns on how to make the WTO better.