TWN Info Service on WTO and Trade Issues (Mar19/14)
27 March 2019
Third World Network

US derides efforts at addressing its concerns over AB

Published in SUNS #8873 dated 25 March 2019

Geneva, 22 Mar (D. Ravi Kanth) – The United States chose to cock a snook, during a meeting at the World Trade Organization (WTO) on Thursday, for addressing the specific concerns it had raised against the Appellate Body’s overreach or “judicial activism”, trade envoys told SUNS.

At an informal meeting of trade envoys convened by the facilitator Ambassador David Walker of New Zealand on 21 March, members discussed a proposal by Honduras on the numerous criticisms against the Appellate Body’s overreach or judicial activism in different rulings.

The WTO’s General Council has tasked Ambassador Walker to oversee the informal process to overcome the impasse on the selection of Appellate Body (AB) members to fill vacancies and also address the specific concerns/criticisms raised by the US.

So far, the facilitator has held three meetings over the last two months. But the US, which has created the systemic crisis at the AB, was absent during the first meeting, while attending the subsequent two meetings at the level of a delegate instead of its ambassador.

At the meeting on Thursday, for example, the US trade envoy Ambassador Dennis Shea was conspicuously absent even though the meeting was focused on the specific criticism he had made about the AB’s overreach in its rulings.

The US delegate present at the meeting remained silent on specific solutions offered by Honduras in its proposal on overreach.

In its proposal circulated on 28 January, Honduras has identified six areas based on the US concerns where the AB has been said to have engaged in judicial activism.

They include:

1. The AB has been said to have engaged in providing advisory opinions.

2. The AB has been said to have included obiter dicta in its decisions.

3. The AB has been said to have addressed questions that are not necessary to settle a dispute.

4. The AB has been said to have addressed arguments that have not been raised by the parties.

5. The AB has been said to have adopted an erroneous standard of review: it has been said to have gone into issues of fact by “reviewing domestic law” and by “completing the analysis” where the factual record before the panel is insufficient.

6. The AB has been said to have added or diminished the rights and obligations of Members under the DSU and other WTO agreements: it is said that the AB has created rules on questions that were considered by the negotiators and left unsettled.

It is said that the manner in which the AB modifies or interprets the DSU has added or diminished existing procedural rights and obligations.

The indicative list of six areas in which the AB has allegedly exceeded its mandate has resulted “in actions that add or diminish rights and obligations contrary to Articles 3.2 and 19 of the DSU,” Honduras has argued.

Honduras also proposed options to address the specific US concerns.

For example, Honduras suggested “mandatory judicial economy” by modifying Article 17.12 of the Dispute Settlement Understanding that requires the AB to address “each of the issues raised.”

It has suggested that “under mandatory judicial economy, the AB would/could be limited to addressing only appeal claims and legal interpretations developed by the panel, that are necessary and required for the resolution of the specific dispute?”

In its option to address “Obiter Dictum” by the AB, Honduras suggested a general prohibition or an instruction to the AB, to refrain from including in their opinions obiter dicta within the DSU, such that the AB is not permitted to engage in any abstract discussions or provide advisory opinions regarding provisions of WTO law.

On the issue of standard of review for the work of the AB, Honduras asked whether members “could/should add to the DSU an explicit standard of review for the AB that would make clear that the AB’s mandate is to settle only the specific dispute at issue and interpret relevant provisions accordingly?”

Honduras also sought to know whether members “could/should introduce a possible review mechanism to consider whether the AB has, in a particular case, overstepped its mandate and either added or diminished Members’ rights and obligations, engaged in obiter dicta or gone into issues of fact and domestic law of Members?”

Members of the possible review mechanism, according to Honduras, could include “the director-general”; “the Dispute Settlement Body itself”; “a group of three chairpersons of the General Council, Dispute Settlement Body, and trade policy review [body]”; and “a small committee of the General Council or DSB members who, acting in their individual, not representative capacity, provide the AB and DSB with an opinion in extraordinary cases of failure to observe the guidance provided by the DSB” as set out in the options.

“[WTO] Members would also need to discuss the possible consequences of such a body finding that the Appellate Body exceeded its mandate,” Honduras has suggested.

In response to the Honduras proposal on overreach/judicial activism, China suggested that the issues concerning overreach are “complicated” as different members have different definitions, according to a trade envoy, who asked not to be quoted.

Also, addressing overreach could/would take members into different other areas and thereby making it further complicated, it has argued, according to a South American trade envoy, who asked not to be quoted.

According to trade envoys present at the meeting, India expressed sharp alarm over the conspicuous silence of the US to the solutions offered by different members on overreach and other issues.

The European Union said while it is happy to engage in the informal process to find solutions, the process will not serve any purpose if the US is not prepared to engage, said a trade envoy who asked not to be quoted.

In his concluding remarks, Ambassador Walker said he will hold another meeting next week before submitting his report to the General Council.

The US stance would be tantamount to cocking a snook at the specifically convened process for addressing the systemic crisis that Washington has created at the Appellate Body, according to trade envoys, who asked not to be quoted.