TWN Info Service on WTO and Trade Issues (Nov18/18)
27 November 2018
Third World Network

US continues to block AB appointments
Published in  SUNS #8803 dated 26 November 2018

Geneva, 23 Nov (Kanaga Raja) - The United States, at a meeting of the Dispute Settlement Body (DSB) of the World Trade Organisation on 21 November, again blocked the consensus to launch the selection processes to fill four vacancies on the seven-member Appellate Body (AB).

At the DSB meeting on Wednesday, the US again said that it was not in a position to agree to a joint proposal sponsored by some 71 WTO Members that called for the simultaneous launch of the selection processes to fill the 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, his re-appointment for a second term having been blocked by the US.

A proposal on Appellate Body appointments was introduced by Mexico, on behalf of the 71 co-sponsors, at the DSB meeting.

The co-sponsors of the joint proposal are 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; Liechtenstein; Mexico; New Zealand; Nicaragua; Norway; Pakistan; Panama; Paraguay; Peru; the Russian Federation; Singapore; Switzerland; the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu; the Former Yugoslav Republic of Macedonia; Turkey; Ukraine; Uruguay; Venezuela; and Viet Nam.

According to the joint proposal (WT/DSB/W/609/Rev.6), 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 71 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, it said.

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

The US said as it had explained in prior meetings, "we are not in a position to support the proposed decision".

Repeating the same arguments that it had made in previous DSB meetings, the US said that the systemic concerns that it has identified remain unaddressed.

According to trade officials, some 20 members took the floor, once again voicing their concerns over the continued impasse concerning the appointment of new AB members.

They called on all members to show flexibility in order to resolve the deadlock as soon as possible.

Echoing the statement made by Mexico on behalf of the 71 Members, China said that it is disappointed that the efforts of these Members to initiate the selection process was once again frustrated by the US persistent blockage based on its self-interests without any legitimacy.

The Appellate Body is the irreplaceable component of the WTO dispute settlement mechanism.

It greatly contributes to the effective resolution of disputes, and the stability and predictability of the rules-based multilateral trading system.

Therefore, said China, ensuring the integrity and functioning of the Appellate Body serves the common interests of all Members of this organisation.

According to China, Article 17.2 of the DSU clearly states that "vacancies shall be filled as they arise".

The prompt initiation of the selection process is the responsibility and obligation that shall be shouldered by all Members.

China recalled that the US (in other instances) is very keen to distinguish the legal effects of the specific wording "shall" and "should" by indicating the mandatory nature of the former.

It encouraged the US to employ the same treaty interpretation methodology when it comes to Article 17.2.

In fact, the "shall" is more than adequate to suggest the automatic nature of the selection process.

While the appointment of any particular Appellate Body Member does require the positive consensus among Members, such consensus is not necessary for the launch of the selection process, China underlined.

It believes when Members have different views on any specific concern, discussion and negotiation is the only way to move forward.

Nevertheless, it is unjustified for any Member to attach its own pre-condition to the initiation of the selection process at the expense of the whole membership, said China.

The Appellate Body has already been in crisis. As we all know, there are only three Appellate Body members in office.

If nothing changes, even the status quo cannot be sustained after the end of next year, China pointed out.

There is no doubt that the standstill of the selection process has already jeopardised the appellate mechanism and the functioning of the multilateral trading system.

Given that the aftermath will be borne by each and every Member, we need to launch the selection process as soon as possible so that the well-functioning of the Appellate Body can be restored.

China said it is regretful that the US persistently refuses to engage in meaningful discussion after raising multiple concerns with respect to the functioning of the Appellate Body.

"Again, we urge the US to faithfully carry out its commitments under the WTO agreements and interpret all WTO rules in a consistent manner," said China.

Russia expressed deep concern over the current situation with the Appellate Body that immediately affects the dispute settlement mechanism and the functioning of the WTO.

The US still has no legal grounds to keep the impasse over the launch of the selection process to the Appellate Body.

Russia said that it is open to discuss solutions with interested counterparts in a constructive manner.

The entire membership may invest all their resources in finding the answer to the issue we are facing today.

All these efforts will be in vain as it is impossible to find a correct answer, not knowing what the question is.

The US, however, still keeps everyone in the dark, said Russia.

We have heard various concerns from the US, but have not heard views on how to proceed with these issues.

The logical conclusion would be that in fact the alleged problems posed by the US are non-existent, Russia maintained.

For the self-imposed guardian of the rules, the US seems to be acting now in a manner that nullifies and impairs the benefits under the WTO Agreement, it said.

According to trade officials, Singapore pointed out that it has now been exactly one year since the joint proposal was first issued calling for the launch of the selection process.

The new panels established today means the workload of the WTO dispute settlement system is increasing while the number of Appellate Body members is decreasing, it said.

The EU reminded members that with each passing month, the gravity and urgency of the situation increases.

Mexico, on behalf of the 71 co-sponsors, said the fact that a Member may have concerns about certain aspects of the functioning of the Appellate Body cannot serve as a pretext to impair and disrupt the work of this body.

There is no legal justification for the current blocking of the selection process, which is causing concrete nullification and impairment for many Members.

It pointed out that Article 17.2 of the DSU clearly states, "vacancies shall be filled as they arise."

By failing to act today, "we will maintain the current situation which is seriously affecting the workings of the Appellate Body against the best interest of all its Members," Mexico said.