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TWN Info Service on WTO and Trade Issues (Nov18/03)
5 November 2018
Third World Network

       
US continues blockage of AB appointments
Published in SUNS #8786 dated 1 November 2018


Geneva, 31 Oct (Kanaga Raja) - The ongoing impasse over the appointment of Appellate Body (AB) members continues with the United States once again blocking the consensus to launch the selection processes to fill four vacancies on the seven-member adjudicative body.

At a meeting of the WTO Dispute Settlement Body (DSB) on Monday, the US again said it was not in a position to agree to a joint proposal sponsored by some 68 WTO Members that called for the simultaneous launch of the selection processes to fill these four vacancies 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 Bossche.

Mr Ramirez-Hernandez's second term expired on 30 June 2017, while that of Mr 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.

The fourth vacancy concerns Mr Shree Baboo Chekitan Servansing, whose first term ended on 30 September 2018.

A proposal on Appellate Body appointments was introduced by Mexico, on behalf of the 68 co-sponsors, at the DSB meeting.

The co-sponsors of the joint proposal included Argentina; Australia; Bolivia; Brazil; Canada; Chile; China; Colombia; Costa Rica; Dominican Republic; Ecuador; Egypt; El Salvador; the European Union (28 member states); 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 joint proposal (WT/DSB/W/609/Rev.5), 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 68 co-sponsoring delegations proposed 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;

(iii) a third selection process to replace Mr. Peter Van den Bossche, whose second four year term of office expired on 11 December 2017; and

(iv) a fourth selection process to replace Mr. Shree Baboo Chekitan Servansing, whose four-year term of office expired on 30 September 2018;

(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 four new Appellate Body members as soon as possible.

Mexico 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 and the multilateral trading systems.

Mexico urged all Members to support the joint proposal in the interest of the multilateral trade and the dispute settlement systems.

According to trade officials, the US again declared that it was not in a position to agree to the joint proposal.

Repeating the same arguments as at earlier meetings, the US maintained that the systemic concerns raised by it at previous meetings regarding the Appellate Body have not been addressed.

According to trade officials, some twenty members took the floor, with most of them reiterating their concerns over the continued impasse regarding the appointment of new Appellate Body members.

They urged all members to show flexibility in order to resolve the impasse as soon as possible.

Many members repeated statements that they had made at previous DSB meetings on this issue.

According to trade officials, Brazil said that there was nothing in the DSU requiring consensus from members to launch the AB selection process and thus no legal basis for the US to block the process.

It asked whether it was legally justified for one member to cause such disruption for the entire membership.

The scope and breadth of the consequences caused by the current impasse were having concrete effects on the trade and systemic interests of all members wishing to exercise their rights to resolve disputes, Brazil said.

Russia expressed grave concerns that the US has managed to create chaos in the multilateral rules under the pretense of securing these rules.

One member keeps the blockage of the Appellate Body for over a year, even though there is no legal ground for such action, it said.

It supported Brazil's intervention and urged the US to clarify its concerns and define the proposals which could address them.

Otherwise, in the absence of such proposals, it believed that in fact these concerns do not exist. And thus the selection process should be launched.

The Group of Latin American and Caribbean Countries (GRULAC) expressed deep concern over the situation reached, which it said affects the good functioning of one of the central bodies of the WTO and implies a flagrant breach of a legal obligation emanating from a covered agreement.

It said that a proper interpretation of Article 17.2 of the DSU, read together with Article 2, does not warrant the view that positive consensus is necessary to launch the selection processes.

Mexico, on behalf of the co-sponsors, expressed regret that for the seventeenth occasion we have still not been able to start the selection processes for the vacancies of the Appellate Body and have thus continuously failed to fulfil our duty as Members of this organisation.

The US maintained that contrary to Brazil's claims, the DSU clearly required consensus to launch the selection process for new Appellate Body members.

US STATEMENT ON ISSUANCE OF ADVISORY OPINIONS

The US made a long statement at the DSB meeting concerning the issuance of "advisory opinions" by WTO panels and the Appellate Body on issues not necessary to resolve a dispute.

According to trade officials, the US pointed to the concern it has with the WTO's dispute settlement system, namely the practice by WTO panels and the Appellate Body of issuing "advisory opinions".

The issuance of these advisory opinions was yet another example of a failure by the Appellate Body to follow the rules set out by members, it maintained.

In this context, the US pointed to five issues:

(1) the relevant text of the WTO agreements and the Dispute Settlement Understanding (DSU) make clear that the purpose of the dispute settlement system is to help members resolve a dispute, not produce interpretations or make law in the abstract;

(2) the current DSU rules were drawn from the dispute settlement procedures of the GATT, which did not provide for advisory opinions;

(3) WTO members have not given panels or the Appellate Body powers to issue advisory opinions;

(4) there have been troubling instances of advisory opinions issued by the Appellate Body, an approach which has been criticized by some members; and

(5) there are serious consequences for the WTO dispute settlement system from the failure of panels and the Appellate Body to only make findings necessary to resolve disputes.

The US said that these advisory opinions add time to proceedings, add to the complexity of rulings, risk adding to or diminishing members' rights under the covered WTO agreements, and risk not taking into account all the facets of an issue.

Ultimately, the failure of WTO adjudicators to follow DSU rules risks further eroding support for the dispute settlement system and the WTO as a whole, the US claimed.

According to trade officials, the EU said that it did not necessarily agree with the US characterization of some Appellate Body findings as advisory opinions.

It said that addressing the issues raised by the parties in a dispute does not mean that they cannot provide clarity regarding the existing WTO provisions, as permitted under Article 3.2 of the DSU.

Brazil pointed out that the US concerns regarding the Appellate Body and the dispute settlement system did not justify "hostage taking" with regards to the filling of the current vacancies on the Appellate Body.

It said that Article 3.2 provided some leeway to provide clarity regarding existing provisions of the WTO agreements.

Japan noted that members have different views on what constitutes an advisory opinion and that constructive dialogue was needed among members on the issue.

China said there was no reason to criticize panels and the Appellate Body for "unnecessary rulings" as long as they addressed all the issues raised by the parties.

According to trade officials, Canada, New Zealand, Chile and India also commented on the matter.

STATEMENT BY HONDURAS ON FUNCTIONING OF AB

According to trade officials, members continued their discussions on a Honduran proposal that was presented at the last meeting of the DSB in September on fostering a discussion on the functioning of the Appellate Body.

At that DSB meeting, Honduras had outlined some ideas on addressing one of the concerns raised by the US regarding the Appellate Body, namely the practice of allowing Appellate Body members whose terms have expired to continue working on cases without the approval of the DSB.

This practice is set out in Rule 15 of the Working Procedures for Appellate Review.

In its non-paper (JOB/DSB/2), Honduras had outlined a number of options for "objective and reasonable criteria" to be considered.

Regarding the issue of when an Appellate Body member can continue to serve beyond the four-year term for the purpose of completion of duties on an appeal:

a. An Appellate Body member shall be able to continue to serve on cases where the oral hearing has occurred or started. [On a case where a hearing has not been set, the outgoing Appellate Body member should be replaced with an alternate Appellate Body member.]; or,

b. No member of the Appellate Body shall be assigned to a new appeal later than 60 days before the final date of his/her appointment.

Regarding the issue of who decides if an Appellate Body member should serve after his/her four-year term has expired:

a. The Appellate Body can continue to apply Rule 15 of the Working Procedures which allows an Appellate Body member to complete his/her work on ongoing appeals subject to approval by the Appellate Body and upon notification to the DSB;

b. In the event WTO Members alternatively decide that the DSB should approve the continuation of an Appellate Body member under Rule 15, the reverse consensus rule could apply.

This would avoid a situation where an Appellate Body member who meets the relevant criteria could be blocked by a single WTO Member;

c. In the event WTO Members decide that the DSB should approve the continuation of an Appellate Body member under Rule 15, an alternate approach could be that the positive consensus or positive consensus minus the parties of the dispute could apply. (See SUNS #8765 dated 3 October 2018).

At the DSB meeting on Monday, Honduras said that it was consulting with members on how to proceed with its initiative.

Honduras said it was aware that other WTO members were putting forward proposals on this issue, and that its suggestion for an open-ended meeting to discuss its proposal had been postponed as a result.

Honduras said it welcomed all proposals and was ready to engage.

According to trade officials, the US said that it looked forward to hearing the views of other members on the options set out in the paper by Honduras and other possible approaches that members are considering.

It however cautioned against continuing to allow the Appellate Body to perm it continued service by members whose terms have expired.

Other members expressed support for the initiative by Honduras and on the need to resolve the concerns raised by the US over the practice of allowing Appellate Body members whose terms have expired to continue working on cases without the approval of the DSB.

 


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