Info Service on WTO and Trade Issues (Jun18/02)
4 June 2018
Third World Network
US again blocks consensus over AB appointments
Published in SUNS # 8691 dated 31 May 2018
Geneva, 30 May (Kanaga Raja) - The United States has once again blocked
at the World Trade Organisation (WTO) the launch of the selection
processes to fil l three current vacancies on the seven-member Appellate
With the US repeatedly blocking consensus - for the twelfth time now
- to begin the selection processes to fill these three vacancies,
it has prolonged the impasse over this issue which has been before
the Dispute Settlement Body (DSB) for more than 17 months now.
At a meeting of the DSB on Monday (28 May), the US once again informed
Members that it was not in a position to agree to a joint proposal
sponsored by some 67 WTO Members that called for the simultaneous
launch of the selection processes to fill the three vacancies on the
Appellate Body as soon as possible.
Two Appellate Body members whose second and final four-year terms
have expired are Mr Ricardo Ramirez- Hernandez and Mr Peter Van den
Mr Ramirez-Hernandez's second term expired on 30 June 2017, while
that of M r Van den Bossche expired on 11 December 2017.
Another vacancy pertains to Mr Hyun Chong Kim from South Korea who
had tendered his resignation with immediate effect on 1 August 2017,
prior to taking up his appointment as a minister in the Korean government.
Meanwhile, a farewell ceremony was held for departing AB member Mr
Ramirez-Hernandez at the WTO also on Monday.
In his farewell speech, Mr Ramirez-Hernandez said the crisis being
faced by the dispute settlement mechanism and in particular, the Appellate
Body could have been avoided if it had been addressed face-on, as
it began to escalate.
"You, the Members, need to ask yourselves, what is the contribution
of the AB to the international rule of law? What does this paralysis
do to the WTO Dispute Settlement System as a whole?" said Mr
"This institution does not deserve to die through asphyxiation.
You have an obligation to decide whether you want to kill it or keep
it alive," he added. (See separate story).
In a related development, the Chair of the DSB, Ambassador Sunanta
Kangvalkulkij of Thailand, also informed Members at the DSB meeting
on Monday that she had received a communication indicating that Appellate
Body Member Shree Baboo Chekitan Servansing was interested in serving
a second term. His first four-year term expires on 30 September.
The Chair said that she would begin consultations with Members on
the matte r and report back at the next meeting of the DSB on 22 June.
[The seven-member AB is now functioning with only four members, one
of whom (Mr. Servansing) is due for reappointment at the end of his
current term in September, and the DSB Chair has started consultations
on his reappointment .
[Two more of the current AB members are due to retire next year, and
if the US continues with its consensus-blocking approach, the AB will
no longer be able to function, lacking the minimum of three members
to hear appeals.
[While dispute settlement can function, with disputes referred to
panels automatically on a second request, and the panels can hear
parties and third parties and hand down rulings, when one of the parties
notifies that it was appealing, until the AB is able to hear and give
a ruling on points of law being appealed, the panel report cannot
be adopted. Thus from next year, in practical terms, the DSB will
not be able to complete its task on disputes, paralysing the system.
According to trade officials, South Africa, on behalf of the African
Group, told the DSB meeting that the group was increasingly concerned
by the recent developments with respect to the appointment of AB members.
It believed that some of the issues raised may be amenable to solutions
in the short term while others would require more discussion.
The African Group was of the view that consultations on the reappointment
of Mr Servansing should begin immediately so that the DSB is in a
position to decide in September (see SUNS #8690 dated 30 May 2018).
On the filling of the three current vacancies on the AB, a joint proposal
on AB appointments was tabled at the DSB meeting by Argentina; Australia;
Bolivia ; Brazil; Canada; Chile; China; Colombia; Costa Rica; Dominican
Republic; Ecuador; El Salvador; the European Union; Guatemala; Honduras;
Hong Kong-China; Iceland; India; Indonesia; Israel; Kazakhstan; Korea;
Mexico; New Zealand; Nicaragua; Norway; Pakistan; Panama; Paraguay;
Peru; the Russian Federation; Singapore; Switzerland; Chinese Taipei;
Turkey; Ukraine; Uruguay; Venezuela; and Viet Nam.
According to the proposal (WT/DSB/W/609/Rev.4), given the urgency
and importance of filling the vacancies in the Appellate Body, in
compliance with the DSU and so that it can carry on its functions
properly, the delegations ref erred to above, propose that, at its
meeting, the DSB takes a decision with regard to the following:
(1) to launch: (i) one selection process to replace Mr. Ricardo Ramirez
Hernandez, whose second four-year term of office expired on 30 June
2017, ( ii) a second selection process to replace Mr. Hyun Chong Kim,
who resigned from the Appellate Body as of 1 August 2017, and (iii)
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
Mexico, speaking on behalf of the 67 co-sponsors of the joint proposal,
said that the considerable number of Members submitting this joint
proposal reflects a common concern with the current situation in the
Appellate Body that is seriously affecting its workings and the overall
dispute settlement system against the best interest of its Members.
WTO Members have a responsibility to safeguard and preserve the Appellate
Body, the dispute settlement process and the multilateral trading
Thus, said Mexico, it is our duty to proceed with the launching of
the selection processes for the Appellate Body members, as submitted
today to the DSB.
According to Mexico, the proposal seeks to:
(i) start three selection processes: one process to replace Mr Ricardo
Ramirez-Hernandez, whose second term expired on 30 June 2017; a second
process to fill the vacancy occurred with the resignation of Mr Hyun
Chong Kim with effect from 1 August 2017; and a third process to replace
Mr Peter Van den Bossche, whose second term expired on 11 December
(ii) to establish a Selection Committee;
(iii) to set a deadline of 30 days for the submission of candidacies;
(iv) to request that the Selection Committee issues its recommendation
within 60 days after the deadline for nominations of candidates.
Mexico said that the proponents are flexible in the determination
of the deadlines for the selection processes but they should take
into account the urgency of the situation.
It continued to urge all Members to support the proposal in the interest
of the multilateral trade and the dispute settlement systems.
In its statement, the US said that as it has explained in prior meetings,
“we are not in a position to support the proposed decision."
According to the US, for at least the past 8 months, it has been raising
an d explaining the systemic concerns that arise from the Appellate
Body's decisions that purport to "deem" as an Appellate
Body member someone whose term of office has expired and thus is no
longer an Appellate Body member, pursuant to its Woking Procedures
for Appellate Review (Rule 15).
During that period of time, the DSB has adopted by "positive"
consensus four reports signed by someone no longer an Appellate Body
member, and there currently remain two ongoing appeals where the term
of one of the persons appointed to the division has expired.
[The US claim that the reports have been adopted by "positive
consensus", however, appears questionable, since in terms of
Article 17.14 of the DSU, the question of "positive consensus"
arises only for non-adoption. The US attempt at the DSB meeting to
have the DSB adopt the AB report on the Airbus compliance panel ruling
by "positive consensus", namely unanimous consent of members,
failed when the EU and Brazil among others made clear that the adoption
was by the normal negative consensus. See SUNS #8690 dated 30 May
2018 - SUNS]
However, the US claimed, the Dispute Settlement Body has not yet addressed
the problem of persons continuing to hear appeals well after their
terms have expired.
Repeating the arguments it has made at previous DSB meetings, the
US maintained that under the Dispute Settlement Understanding, it
is the DSB that has the authority to appoint Appellate Body members
and to decide when their term in office expires, and so it is up to
the DSB to decide whether a person who is no longer an Appellate Body
member can continue to serve on an appeal.
Last month, the US said it repeated concerns with the Background Note
circulated by the Appellate Body on Rule 15 and asked for Members
to be provided additional information.
The US said to recall, it pointed out that, unlike other international
tribunals cited in the Background Note, Rule 15 is not set out in
the constitutive text of the WTO dispute settlement system - that
is, the DSU. It has therefore not been agreed to by WTO Members, the
"We therefore asked to be informed by the Appellate Body why
this basic difference between the DSU and "some international
tribunals" was not reflected in what was purported to be a background
document," it said.
The US said it also called Members' attention again to a misleading,
at best, statement that appeared to have been very carefully crafted
to avoid mentioning that Rule 15 was, in fact, "criticized by
[a WTO] Member in the DSB" and was "called into question"
at the time of its adoption, contrary to assertions in the Background
The US maintained that the criticism of Rule 15 in the DSB by a WTO
Member at the time of its adoption is the type of basic information
one would expect to be included in a document with the intention to
make an objective presentation of the issue.
"We therefore asked to be informed by the Appellate Body why
India's intervention was not drawn to the attention of WTO Members
in the Background Note and further asked why the Appellate Body's
statement was drafted in the manner it was," it said.
"We have yet to receive information in response to either of
these inquiries," the US added.
[When Rule 15 was notified to the DSB by the AB as a working procedure,
India had voiced its systemic concerns, but the US at that time had
remained silent. SUNS]
The US said it appreciated the recognition by Members at the last
meeting of the fact that addressing this issue is a joint responsibility
of all Members, and it appreciates the willingness they expressed
to engage on this issue.
The US said that it remains resolute in its view that Members need
to resolve that issue as a priority.
A number of ideas have been mentioned in the context of informal discussion
s in which the US has participated, representing a diversity of views
on possible solutions.
"We therefore will continue our efforts and our discussions with
Members and with the Chair to seek a solution on this important issue,"
the US concluded.
CONCERNS VOICED BY MEMBERS
Colombia (for the GRULAC group), Canada, Australia, Chinese Taipei,
Thailand, Singapore, India, Norway, Pakistan, Russia, Switzerland,
Brazil, Korea, Ukraine, Hong Kong-China, China, Japan, Mexico (on
behalf of itself), Uruguay, Guatemala, Ecuador, Turkey, Costa Rica
and New Zealand all took the floor on this issue.
According to trade officials, these members reiterated their concerns
over the continued impasse with respect to the appointment of new
Appellate Body members. They urged all members to show flexibility
in order to resolve the deadlock as soon as possible.
Several members pointed to the dangers that the continued impasse
pose not only to the dispute settlement system but also the WTO as
a whole, and said that members had an obligation under the WTO rules
to initiate the selection process to fill the vacancies on the Appellate
Other Members underlined that the US concerns and the issue of AB
appointments should be treated separately.
Several members also called on the US to share its views and develop
ideas on how to resolve its problem.
According to trade officials, Russia, Switzerland, Brazil, Korea,
China, Guatemala, and Turkey criticised the US directly or indirectly
for failing to put forward any proposals over the past half year for
resolving the problem and /or failing to engage in any meaningful
discussion on its concerns.
Canada expressed deep regret that the DSB has been unable to fulfil
its leg al obligation under DSU Article 17.2 to appoint AB members
as vacancies arise. Canada agreed that it is time to start a process
or, if necessary, several processes to select new AB members for the
three current vacancies.
Like other members, Canada said it is disappointed that the US has
linked the start of the AB selection processes to the resolution of
certain procedural concerns it has shared with members. Canada invited
the US to engage in discussions with interested Members with a view
to expeditiously developing a solution to the concerns that it has
Japan said that it is the responsibility of the entire membership,
acting a s the Dispute Settlement Body, to ensure the proper functioning
of the WTO dispute settlement system in a manner consistent with the
DSU. It welcomed the readiness expressed by many Members to engage
and it looks forward to working with ot her interested Members in
this common endeavour.
Colombia, on behalf of the Group of Latin American and Caribbean countries
(GRULAC), expressed the group's deep concern about the situation we
have reached, which it said affects the good performance of one of
the central bodies of the WTO. If this problem continues without being
solved, it will imply, in the short term, practically the paralysis
of the Appellate Body, putting the entire dispute settlement system
Colombia noted that the delay in launching the replacement process,
having already arisen with three vacancies, means the failure to comply
with an existing mandate, and involves a flagrant breach of a legal
obligation emanating from a covered agreement.
This has systemic consequences and is a bad precedent for the organisation.
It inflicts damage and affects the image and credibility of the WTO,
particularly taking into account the complex international scenario
that today adversely affects trade multilateralism, said Colombia.
It said that it has heard of concerns expressed in relation to the
functioning of the dispute settlement system and specific issues regarding
decision-making, which would be causing the impediment to launch the
"We cannot validate that these concerns prevent a legal obligation
from being fulfilled and are linked to the replacement of the vacancies
already arisen or to arise."
Colombia pointed out that the operation of the system cannot be stopped,
while the concerns of some of the members have not been resolved.
It called attention to the seriousness of keeping blocked the replacement
of vacancies. It also considers that the selection process should
not be conditioned to a different process, which must be addressed
on its own merits.
In this regard, Colombia urged the membership to find a solution that
allows us to advance as soon as possible in the fulfilment of the
legal obligation that it has mentioned.
The Russian Federation said it is deeply concerned about the continuing
US blockage of the selection process and the fact that the US links
it with the resolution of the "problem".
Russia said that for the past half a year, the US has neither put
forward the concrete problem nor the possible ways to resolve it.
This leads to the inability of the WTO Members to engage in a meaningful
discussion and move towards the resolution of this issue.
According to Russia, such unilateral actions kill the trust in the
multilateral process and contributes to the chaos in multilateral
rules even though they are taken under the pretense of compliance
with the existing rules.
There is always room for improvement. But such improvement should
not be contrary to the well-functioning of the dispute settlement
mechanism and of the WTO system as a whole.
Russia called on the US to provide a clear picture of the problem
at issue and its potential solutions or stop the blockage.
According to trade officials, the Chair of the DSB said it was regrettable
that members were still not in a position to launch the selection
process and that the matter required political engagement by members.
She asked members to share their views on how to proceed and said
she was ready to hear from delegations on their ideas.