TWN Info Service on WTO and Trade Issues (May19/06)
13 May 2019
Third World Network

WTO GC gets progress report on process to resolve AB crisis

Published in SUNS #8903 dated 9 May 2019

Geneva, 8 May (Kanaga Raja) – The WTO General Council (GC), at its meeting on Tuesday, heard a progress report from Ambassador David Walker of New Zealand, the facilitator of the informal process initiated under the auspices of the WTO General Council to find ways to resolve the current crisis in the Appellate Body (AB).

The United States has been repeatedly blocking, at various meetings of the Dispute Settlement Body (DSB), the selection processes to fill four current vacancies on the AB, arguing that its concerns over the functioning of the AB remain unaddressed.

The US has so far not tabled any proposal of its own, nor engaged meaningfully on any of the proposals tabled by other members in an effort to address its concerns.

In his progress report, the facilitator touched upon the issues of the 90-day rule for appellate review, the question of municipal law, advisory opinions by the AB, binding precedent, and alleged “over-reach” by the AB.

These are some of the concerns that the US had highlighted at various meetings of the Dispute Settlement Body (DSB).

In his report, Ambassador Walker said that he has attempted to capture what has been said by the members. It is clear that the process is not going to be easy, and that there is need to keep trying and to find a way forward, he added.

Ambassador Walker’s remarks came under the agenda item of the informal process on matters related to the functioning of the Appellate Body.

Four proposals were submitted for discussion under this agenda item: a proposal from Brazil, Paraguay and Uruguay on guidelines for the work of panels and the Appellate Body (WT/GC/W/767/Rev.1); proposal from Chinese Taipei on guideline development discussion (WT/GC/W/763/Rev.1); proposal by Japan, Australia and Chile on the informal process on matters related to the functioning of the Appellate Body (WT/GC/W/768/ Rev.1); and a proposal from Thailand on General Council decision on the dispute settlement system of the WTO (WT/GC/W/769).

According to participants at the meeting, in his progress report, Ambassador Walker said a series of meetings were held since February (last meetings of the General Council) including an open-ended meeting that took place on 9 April.

Five other meetings were held in smaller groups, comprising members who have either tabled written proposals, raised concerns or made oral proposals.

He said that there were two objectives to these meetings, namely, to have a constructive review of the concerns that have been raised, and to try and encourage members to put forward more proposals, or raise more concerns or ideas.

This is a solution-oriented spirit, said Ambassador Walker, adding that in the meetings in March, there was a lot of discussion on “over-reach” (by the AB), the issue of precedent, and on the issues and distinctions between law and fact.

In April and May, four proposals have been put forward, and for these five weeks or so those four proposals have been the focus of the discussions.

He said that these proposals are horizontal in nature, and that they are seeking to frame the issues in a way that can produce results.

His assessment is that a great deal of energy has gone into this process.

There is a great deal of understanding about the urgency that is there, and it is clear that this will not be easy.

He said that there needs to be sufficient energy put into this process if things are going to go in a way that results in an outcome.

On the 90-day rule for appellate review, Ambassador Walker said there are no divergences on this issue, in that 90 days means 90 days.

Some of the proposals suggest that if there is a very complex case, that the AB could flag this early on and then could meet with the parties to suggest that there be an extension (of the review), and whether this should be a time-limited extension.

On the question of municipal law, members said that it is very important to ensure that fact-based findings by the dispute panel are not the subject of review.

According to the facilitator, there is a convergence among the members to ensure that there is not going to be any unnecessary appeal of facts by parties to the dispute.

On the issue of advisory opinions by the AB, Ambassador Walker said that there is concern that parties should not be putting forward for appeal anything that in some way might not be relevant to solving the dispute and that the AB needs to focus strictly on those areas that are indeed relevant to solving the dispute.

If they are not issues raised by either of the parties, the AB should not be taking it up, he added.

On the issue of binding precedent, the facilitator agreed that there is nothing in the DSU (Dispute Settlement Understanding) that says the precedent set by other AB rulings is something that should be the basis for future or current rulings.

On the other hand, it is important to have a degree of consistency, he added.

Ambassador Walker said that the issue of “over-reach” (by the AB) is the most complex issue that is facing the members, and the popular notion that has been advanced on how to deal with this issue is to perhaps hold annual meetings of the DSB and AB members, and this might be a useful way to approach this issue.

He said that he has attempted to capture what has been said by the members. It is clear that the process is not going to be easy, and that there is need to keep trying and we need to find a way forward.

Ambassador Walker said that he will continue to report at the next General Council meeting, to which the General Council chair then extended the invitation to the facilitator.

Brazil introduced the proposal by Brazil, Paraguay and Uruguay, and highlighted the vital importance of the dispute settlement mechanism for all members.

It is important not to alter the DSU in any way but to provide guidance, it said. There is a clear pathway ahead but we need engagement now.

Chinese Taipei said that its proposal is a guideline approach. Procedural considerations are something that should be applied in terms of the existing rules.

This is guidance and it is the preferable way to address the problem.

Japan introduced the proposal by Japan, Australia and Chile, saying that their idea is to build on other proposals.

It said the AB should not add to or diminish the rights and obligations of members, and there should be regular meetings of the DSB with AB members.

Thailand introduced its proposal and mentioned amongst others Rule 15 of the Working Procedures for Appellate Review, the 90-day rule, and the issue of precedent.

It also said that regular annual meetings between the DSB and the AB would be important.

Korea, the European Union, Mexico, Canada, Switzerland, Ukraine, Singapore, Colombia, Nigeria, Jamaica (on behalf of the ACP), the Philippines, Argentina, Benin (on behalf of the African Group), Guyana, India, Egypt, China, Chad (on behalf of the LDCs), Malaysia, Peru, Indonesia, Vietnam, Bolivia, Turkey, Honduras and the United States then took the floor under this agenda item.

According to participants at the meeting, the US was called upon by many members to either put forward its specific concerns or put forward a different proposal (than that of the other members).

Korea said the informal process is a good channel for ensuring that the proposals can be discussed. It noted that 11 proposals are now on the table.

It was of the view that the EU proposal (WT/GC/W/752/Rev.2, co-sponsored by the EU, China, Canada, India, Norway, New Zealand, Switzerland, Australia, Republic of Korea, Iceland, Singapore, Mexico, Costa Rica and Montenegro) was the most comprehensive, and the proposal by Thailand is complementary to this.

Now is the time to progress so that we can begin to analyse these proposals and put together a compilation that enables members to get a clear view of what is out there, it said.

The EU expressed support for the informal process, saying that solving the crisis is urgent and should be a matter of the highest priority.

This is why the EU and many others have made sincere efforts to address the concerns of a single member (i.e. the US), it said.

It said that the proposal put forward by the EU (W/752) takes account of all of the concerns raised by this single member.

It is taking these concerns into account and is trying to ensure that this process can move forward.

The EU called on all members, especially the only one that has blocked the selection process (for appointment of new AB members), to engage.

There has to be a common effort to engage if we are to succeed, it said.

Canada said that the engagement of all members is required. It called on the US to either comment on these proposals or to propose solutions.

On the question of the 90-day rule, there has been too much attention focusing on this because there can be other reasons including the complex nature of so many dispute settlement reports.

All stakeholders will be affected if the system becomes paralysed, it added.

Switzerland welcomed the new proposals. Some referred to guidelines while others referred to amendments to the DSU.

We need to take a pragmatic approach. All members must engage constructively, it emphasised.

Singapore was encouraged to see that members have not given up hope. It was important for the members to work together with the facilitator, and that it was important for all members including the US to help find a landing zone.

Jamaica, on behalf of the African, Caribbean and Pacific (ACP) countries, welcomed the report by the facilitator.

It is still considering a number of these proposals. It said that the dispute settlement system is essential to the primacy of the multilateral trading system.

It is very important that the independence and impartiality of the dispute settlement system be respected.

It is very important that no actions by the dispute settlement system add to or diminish rights and obligations of members, it said.

Benin, on behalf of the African Group, said that all these discussions must take up the views of the developing countries. It said that the African Group will be tabling a proposal soon.

Guyana said that there is concern that the discussion might become circular, and will be never-ending without a solution.

There is need to settle the impasse in the AB, and look at the question of reform as well, it said.

India said that it would find it extremely important to find a solution to the AB impasse.

It noted that many members have submitted proposals, and that there are commonalities in these proposals.

The idea of a dialogue between the DSB and the AB has been included (in these proposals) and is something that would be interesting.

The idea that the system should be used to try and find a solution is important. Some issues including the issue of a dialogue seem to be gaining traction, but there should be a system of dialogue that does not in any way threaten the independence of the AB or apply any undue pressure on AB members, it said.

All members must adhere to the commitments to appoint AB jurists, it underlined.

China welcomed the proposals, saying that it is another example of members committing themselves to address common concerns. In this case, they are addressing the US concerns.

The ball is now in the US court. The US would need to meet members halfway by engaging in consultations, making specific comments on the proposals or tabling an alternative proposal, it said.

Chad, on behalf of the least developed countries (LDCs), said that even though the LDCs are not common users of the dispute settlement system, this is very important to them.

The impasse in the AB must be resolved as soon as possible, it said.

There cannot be any solution that calls into question the rights and obligations of members, nor calls into question the independence of the AB, it said.

Repeating what it had said at the December General Council meeting, the US said that the WTO is responsible for upholding the rules-based multilateral trading system.

The Appellate Body must follow the rules that all members agreed to, it said, adding that 90 days (the time-limit for appellate review) is supposed to be 90 days.

The AB has not been able to stick to the rules that have been put forward by the members, the US claimed.

The AB may not change a member’s significant rights and obligations. They cannot add to or diminish members’ rights or obligations.

This issue is not something that the US has been concerned about in 16 days or 16 months, but for 16 years, through multiple administrations.

The US wondered why members are now coming around to seeing that there are these problems (with the AB) and why has not the DSB and other members addressed this.

The US said that it will not negotiate a further weakening of the rules or diminish the accountability of the AB.

Other items on the agenda of the GC meeting that were discussed include a proposal by the US on procedures to strengthen the negotiating function of the WTO (WT/GC/W/757/Rev.1 and WT/GC/W/764), and a proposal from Norway, Iceland, New Zealand, Singapore and Switzerland on pursuing the development dimension in WTO rule-making efforts (WT/GC/W/770/Rev.2) (See separate story).