TWN Info Service on WTO and Trade Issues (May18/15)
23 May 2018
Third World Network

AB member Servansing seeking second term
Published in SUNS #8684 dated 22 May 2018

Geneva, 18 May (D. Ravi Kanth) - The World Trade Organization Appellate Body member Shree Baboo Chekitan Servansing is seeking a second term after his current four-year tenure expires in September, a development that could prove to be a litmus test for the future of the highest adjudicating body given the intransigent positions adopted by the United States, several trade envoys t old SUNS.

The US has repeatedly blocked an expeditious selection process for filling the three current vacancies on the Appellate Body on extraneous grounds.

At the last General Council (GC) meeting on 8 May, the US trade envoy Ambassador Dennis Shea castigated the Appellate Body on grounds that it has "rewritten our agreements to impose new substantive rules we Members never negotiated or agreed."

The AB also resorted to "rewriting the rules governing the dispute settlement system, expanding its own capacity to write and impose new rules," Ambassad or Shea charged.

Against this backdrop, "it is not clear what the US will do, particularly in the backdrop of blocking process filling vacancies at the AB," said a trade envoy who asked not to be quoted.

Servansing, who was the former trade envoy of Mauritius, has informed the WTO Dispute Settlement Body chair, Ambassador Ms Sunanta Kangvalkulkij of Thailand, that he would like to continue for a second term, according to people familiar with the development.

The Mauritius government has apparently approved his candidature for the second term.

Mauritius has also been holding back-channel discussions with Washington to secure its support for Servansing's second term, said a person who asked not to be identified.

The chair is expected to hold consultations with key members to take the issue forward, said another trade envoy who asked not to be identified.

Clearly, Servansing's second term would depend on just one member - "the United States" - and whether it would give its nod, said a European trade envoy, who asked not to be identified.

Brussels is ready to join any effort to strengthen the Appellate Body, the envoy suggested.

After consistently blocking the expeditious selection process for filling three vacancies in the AB, the US now faces a litmus test in the case of Servansing, said an African trade envoy.

If "the US blocks the extension of a second term for a sitting member then it would be shooting in its foot," the envoy said, preferring anonymity.

At the last DSB meeting on 27 April, the US blocked a proposal from 66 WTO members for establishing an expeditious selection process to fill three vacancies for the AB.

The US, however, maintained that it is not in a position to agree to the proposal for an expeditious selection process on grounds that its concerns have not been addressed until now.

The US Trade Representative Ambassador Robert Lighthizer last year said publicly that the US would like to go back to the old GATT practice of negotiating trade disputes.

In response to China's criticism at the General Council meeting on 8 May about the damage done by the US to the dispute settlement system (see SUNS #8679 dated 14 May 2018), the US trade envoy Ambassador Shea said "this unapproved rule-breaking and rule-making [by the Appellate Body] is obvious to anyone who looks honestly at how the system operates."

The US trade envoy said "rules that we, as WTO Members, negotiated and approved domestically stipulate that the Appellate Body must render its decisions within 90 days - there are no exceptions given."

But this charge by the US is wrong, said a trade envoy, suggesting that the AB works with limited members and a large workload arising from complex trade disputes raised by members.

"And yet the AB now almost never meets that deadline, breaking the rules without authorization from its bosses - namely, us, the Members of this Council and of the DSB," said Ambassador Shea.

"Similarly, the AB has decided that it can deem a person who "ceases to be a member of the Appellate Body" to continue to be a member, despite there being no basis whatsoever in the DSU for such actions," the deputy USTR said, adding that he could go on with more examples as to how the AB failed in its tasks over the years.

"Beyond this flaunting (sic - flouting?) of rules meant to govern its own activity, the Appellate Body has compiled a troubling track record of expansive interpretations that effectively create new WTO law, a function clearly reserved to Members through the process of negotiation," said Ambassador Shea, suggesting that "our lack of progress in negotiations bears a strong relationship to this culture in which many Members consider that certain outcomes can be most easily achieved through litigation rather than through the hard work of negotiation."

"If the United States is now taking actions that some consider to be disruptive, it is important to understand that this comes only after many years of unheeded warnings," Amb. Shea emphasized.

"It is important to understand that a dispute settlement system that ignore s existing rules and writes new rules undermines the WTO as a forum for negotiation and discussion," Ambassador Shea argued.

"It is important to understand that dispute settlement that goes beyond existing rules has not been approved by Members and does not have democratic legitimacy or support," he maintained.

"We do not see how perpetuating the existing dysfunctions through a complacent approach to the filling of Appellate Body vacancies can advance that objective," the US charged.

[Ironically, it was the then Quad (Canada, EU, Japan and the US), that in Feb 1994, after the UR negotiations had been concluded at the official level, when legal scrutiny of adopted texts was taken up, and discrepancies in use of terms for same purpose in different accords was brought up by developing countries like India, that, at the instance of Canada, the Quad resisted reconciliation of the textual language on the ground that the process could unravel compromises reached, suggesting that the problems could be left to be resolved by the dispute settlement process, and rulings by panels and the Appellate Body.

[Early in the WTO, when the panels (instructed under the guise of servicing by the Legal division of the secretariat, headed by a US national) and the AB, whose secretariat was headed by a Canadian, began handing down rulings against developing countries like India and Indonesia, disregarding even the genera l interpretative note to multilateral trade agreements in goods in Annex IA ( p20 of Legal Texts), it was the same US, under an earlier US President and USTR, that cheerleaded the AB! - SUNS]

But many WTO members sharply disagreed with the US assessment at the GC meeting.

If anything, an overwhelming majority of members supported the AB and its functioning, particularly in the recent period despite paucity of resources.

In conclusion, Servansing's application for a second term will crucially te st the US resolve in perpetuating its obstructionist and stonewalling positions, said trade envoys.