TWN Info Service on WTO and Trade Issues (Mar19/01)
1 March 2019
Third World Network

US continues to block appointment of AB members

Published in SUNS #8856 dated 28 February 2019

Geneva, 27 Feb (Kanaga Raja) – The longstanding impasse at the World Trade Organisation (WTO) over the appointment of Appellate Body (AB) members continues, with the United States once again blocking launch of the selection process to fill four current vacancies on the seven-member adjudicative body.

Unless the impasse is quickly resolved, before end-2019, the AB will be non-functional, with only one member left.

At the meeting of the WTO Dispute Settlement Body (DSB) on Monday (25 February), the US again said it was not in a position to agree to the joint proposal sponsored by some 73 Members that called for the simultaneous launch of the selection processes.

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, and his re-appointment for a second term was blocked by the US.

A proposal on Appellate Body appointments was introduced by Mexico, on behalf of the 73 co-sponsors, at the DSB meeting.

The co-sponsors of the joint proposal are Argentina; Australia; Benin; the Plurinational State of Bolivia; Brazil; Canada; Chile; China; Colombia; Costa Rica; Cuba; 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; the Bolivarian Republic of Venezuela; and Viet Nam.

According to the joint proposal (WT/DSB/W/609/Rev.8), 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 73 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 welcomed Benin as a new co-sponsor of the joint proposal as well as Rwanda which has expressed its intention to be a co-sponsor.

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.

It said that WTO Members have a responsibility to safeguard and preserve the Appellate Body, the dispute settlement and the multilateral trading systems.

“Thus, 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:

(1) start four 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; a third process to replace Mr Peter Van den Bossche, whose second term expired on 11 December 2017; and a fourth 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;

(3) to set a deadline of 30 days for the submission of candidacies; and

(4) 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 consider the urgency of the situation.

“We continue to urge all Members to support this proposal in the interest of the multilateral trade and the dispute settlement systems,” it added.

According to trade officials, the European Union noted that the issue of appointing new AB members was first raised two years ago. It said members had a duty to resolve this matter as soon as possible.

It pointed out that concrete proposals for resolving the impasse over the selection of AB members have now been submitted by the EU and other members as part of the informal process headed by Ambassador David Walker of New Zealand to overcome this impasse.

According to the EU, these constitute serious efforts to address the concerns voiced in relation to the functioning of the Appellate Body.

Ukraine expressed its willingness to contribute to solutions. It said members were drawing closer to the day when the WTO’s dispute settlement system is paralysed.

It suggested dividing the discussions on the Appellate Body from other discussions related to broader WTO reform.

The US said as it has 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 the “systemic concerns that we have identified remain unaddressed.”

According to trade officials, Australia, New Zealand, India, Cuba, Brazil, China, Hong Kong-China, Switzerland, Nigeria, Norway, Thailand, Singapore, Chinese Taipei, Canada, Korea, Japan, Afghanistan and Mexico took the floor to speak on this issue.

These members largely reiterated their concerns voiced in previous DSB meetings, namely that the impasse in the AB was of growing concern, particularly given that the second terms for two of the three remaining AB members will expire in December, essentially rendering the Appellate Body inoperative.

[The two AB members in question are Mr Ujal Singh Bhatia and Mr Thomas Graham.]

These members also underlined that members had an obligation under Article 17.2 of the DSU to fill the Appellate Body vacancies as they arise.

They also pointed out that while they were ready to engage in discussions to end the impasse, the question of filling vacancies and the question of how to address the US concerns regarding the Appellate Body were two different issues which should not be linked together.

Many welcomed the informal process being facilitated by Ambassador Walker as well as the discussions that have taken place so far. They encouraged other members to take an active part in the deliberations.

Referring to its statements on this matter at previous DSB meetings, Thailand supported the launch of the AB selection processes as soon as possible.

It said that the discussions of any systemic concerns which have been raised, including at the informal process under the auspices of the General Council, can be worked separately and should not prevent the start of the Appellate Body selection processes.

It said that it remains committed to working constructively with all Members to resolve the Appellate Body impasse as a priority.

Mexico, on behalf of the 73 co-sponsors, expressed regret that for the twenty-first 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 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, it said.

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 as 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,” said Mexico.

In a second intervention, the US noted that several Members, including Mexico, the EU, Canada, and China, have referenced the “shall” in the third sentence of Article 17.2 of the DSU.

The US asked these Members to share their views on the “shall” in the first sentence of that article. That sentence reads, in part, that “[t]he DSB shall appoint persons to serve on the Appellate Body…”.

Do these Members agree that this provision makes clear that it is the DSB that has the authority to appoint and reappoint members of the Appellate Body?

And that the DSB – not the Appellate Body – has the responsibility to decide whether a person whose term of appointment has expired should continue serving, as if a member of the Appellate Body, on any pending appeals?

Can these Members share their views on the “shall” in Article 17.5 of the DSU? As the text of Article 17.5 provides that “[i]n no case shall the proceedings exceed 90 days”, do these Members agree that the Appellate Body breaches this provision when it issues a report beyond the 90-day deadline?

What are these Members’ views on the “shall” in Article 17.6? This article provides that “[a]n appeal shall be limited to issues of law covered in the panel report and legal interpretations developed by the panel.”

Do these Members agree that the Appellate Body does not respect this text when it engages in review of panel findings of fact?

The US said it looked forward to hearing these Members’ views on these questions.

The US also noted that at least one Member has said that the United States should table its own proposal.

The United States has made its views on these issues very clear: if WTO Members say that we support a rules-based trading system, then the WTO Appellate Body must follow the rules agreed to in 1995, it maintained.

And so, for instance, the Appellate Body must circulate its reports within 90 days of an appeal.

A person who has ceased to be an Appellate Body member may not continue deciding appeals as if his term had been extended by the Dispute Settlement Body.

The Appellate Body may not make findings on issues of fact, including but not limited to those relating to domestic law.

The Appellate Body may not give advisory opinions on issues that will not assist the DSB in making a recommendation to bring a WTO-inconsistent measure into compliance with WTO rules.

The Appellate Body may not assert that its reports serve as precedent or provide authoritative interpretations.

And the Appellate Body may not change Members’ substantive rights or obligations as set out in the text of the WTO agreements, the US maintained .

Rather than seeking to make revisions to the text of the Dispute Settlement Understanding to permit what is now prohibited, the United States said it believes it is necessary for Members to engage in a deeper discussion of the concerns raised, to consider why the Appellate Body has felt free to depart from what WTO Members agreed to, and to discuss how best to ensure that the system adhere s to WTO rules as written.

According to trade officials, the Chair of the DSB, Ambassador Sunanta Kangvalkulkij of Thailand, reiterated that this matter requires political engagement on the part of all WTO members.

Taking note of the process that is being facilitated by Ambassador Walker, the Chair said Ambassador Walker held an open-ended meeting with WTO members on 18 February to report on the result of his discussions so far.

He will also provide a report to members at the 28 February meeting of the General Council, she said.