AB tries to mollify by offering consultations, but on its own terms

Geneva, 24 Oct (Chakravarthi Raghavan) - Members of the DSB, at a meeting Wednesday, in commenting on a communication from the AB seeking to meet with the DSB chair (Ambassador Carlos Perez del Castillo of Uruguay) before the end of the year to discuss issues of mutual interest, raised some specific questions, with many more being flagged and talked about in private.

The changes to the working procedures decided by the AB, and communicated to the DSB chair on 27 September, has been controversial as it is - both over what members felt had been the lack of consultations with the DSB members through the DSB chair, and the substance of the rule changes.

Both the AB offer to meet with the DSB chair and suggesting names of some officials and members, whom the AB wanted to invite and others which the DSB chair could bring along appears to be introducing more problems - systemic and procedural and may result in the AB claiming more rights.

The changes in the working procedures, purportedly after an earlier consultation with the DSB chair (on 9 September) and at an unspecified time with the WTO DG, were communicated to the DSB chair and members on 27 September. First listed as an item to be mentioned under any other business, later as an issue on which the DSB chair would make a statement, it was taken off the agenda; and the chair since then has been conducting some informal consultations.

His explanations of what happened on 9 September, when Perez del Castillo was ‘consulted’ by the AB on the rule changes, was provided by him at informal consultations (see SUNS #5212). Perez del Castillo’s personal relationships with other ambassadors is such that most members decided not to dwell on what happened, (there has been much private speculation, and not too flattering to the AB or the DSB chair) but focus on substance and future in terms of rule changes.

This has been going on in informal consultations of the DSB.

In the DSU review process, the chair of the special session, Amb. Balas of Hungary, broached the subject of getting inputs from the AB on the review process. There were differing views and, at the end, it was made clear that there was no consensus to seek the AB’s inputs.

And several members made clear that the issues of AB’s working procedures, its right to make changes and how, should be dealt with separately in the DSB, and not in any other way.

The 21 October communication may be reopening some of the issues. The communication from the AB’s presiding member (Mr. Bacchus) addressed to the DSB chair was circulated as an official WTO document and was discussed Wednesday afternoon (at the meeting chaired by Amb.Bryn), with comments from a few members including Japan, Canada, US, the EU, Australia and India.

The WTO media briefing was rather sparse on this hot issue.

Several members privately said that the communication was such, and given to them without adequate time to consult capitals and react, that it would figure in the informal DSB informal consultations, before the offer is taken up or accepted.

The communication says:

“As you know, in the past, the AB Members have met from time to time with those who have chaired the DSB to discuss issues of mutual interest and to maintain a dialogue in dispute settlement matters. As I mentioned to you in our recent telephone conversations, I would like to arrange another such meeting before the end of the year, and would appreciate it if you could let me know when you would be available. I propose also TO INVITE AMBASSADOR BALAS (emphasis added), Chairman of the Special Session of the DSB on Improvements and Clarification to the DSU, as well as Rufus Yerxa and Bruce Wilson. You may wish to invite others as well.”

The communication then reiterates the willingness of the AB presiding member to be at the disposal of the DSB chair to discuss and explain further the amendments to the working procedures - presumably changes communicated on 19 September as the decision of the AB). The AB chair also talks about the AB always keeping working procedures under review, with a view to improving them in the light of experience. “We understand that WTO members will be offering views on the recent amendments at the meeting scheduled for 23 October. Any views that WTO members have on how these amendments - or any of our Working Procedures - might be improved would, of course, be welcome. We would be willing to provide any additional explanations of the recent amendments in writing, for distribution to Members, should Members consider it useful.”

While seemingly an olive branch, in fact it raises more questions than answers.

The WTO’s DSU Art 17.9 calls for consultations by the AB with the D.G. and the DSB chair. That the latter meant consultations with DSB members through the DSB chair was clarified when the original working procedures were framed, and in the November 2000 discussions it was brought out and confirmed that the ‘consultations with the DSB chair’ was as an institutional chair of the DSB, and it meant consultations with DSB members through the DSB chair.

Clearly the changes to the working procedures, communicated on 19 September, appear to be an attempt to get over the problems created for itself by the AB in the Sardines dispute, by accepting an amicus curiae brief from Morocco, while refusing to allow Colombia to make any oral representations.

There is a reference to the AB chair’s “telephone conversations” with Perez del Castillo, without clarifying when or why. And while any consultations for changes in procedures have to be with the DSB members (through the DSB chair), and disregarding the lack of consensus at the Special DSU review negotiations to get inputs from the Chair of that session, the AB has said it was planning to invite Amb. Balas for the proposed meeting!

Some members privately hope that this time at least Mr. Perez del Castillo will be aware of the major concerns and the views of several key important countries, that the DSU review or changes is one for negotiations among Members, and not for others (whether secretariat or the AB) to intervene.

On the new rule changes effected and communicated, the few participants who spoke all raised the contradictions in the proposed rules, particularly creating a new class of third parties, third participants, and the differences in rights and obligations, of one group of members who could appear and participate as of right, and others allowed at the discretion of the AB bench, and the fact that the parties to a dispute may find themselves having to answer issues and questions of which they were not aware.

The US said that the rule change raised several questions, which though perhaps technical, deserved consideration. The AB had communicated on 19 September the amendments, but without stating the effective date for the amendments or any transition provisions. This would create uncertainty. Also, the new rule would permit at the discretion of the AB division, a third party to appear at the oral hearings, if it had neither filed written submissions nor notified its intention. While the AB could require a third party to notify the AB secretariat in advance of its intention, and it was not burdensome, it was not clear how and when the discretionary interventions would be invoked. If a third party arrived at a hearing and sought a decision to participate and wanted a ruling on the spot, would it be distracting the appeal and further reduce the time available?  The definition of a third participant would not include a third party appearing at the discretion of the division. This had implications for the scope of other working rules, including notice for special procedures for the haring; bans on ex parte communication would not also apply to them. There could be odd and presumably unintended results.

These and other views of members, showed that the amendments could have benefited from additional review before being adopted, the US said, in what could be seen as a mild rebuke to the hasty decisions of the AB in effecting the rule changes without proper consultations.

Japan, while viewing these rule changes, as a step in the right direction, compared to the present practice of ‘passive observers’, there were several technical questions needing to be clarified, including, while a third party had to go through a particular procedure to intervene, and notify and make available the issues it wants to address, those permitted by the AB at its discretion, could still participate actively in the hearing, and rights of third parties who had only notified intention to be present. The amended rules already seem to be in effect, but it was clear from what case or appeal before the AB this would apply.

The EC and Canada also raised some seemingly procedural and technical questions, but which, in fact, appear to be more substantial,including Canada’s concerns about the ‘due process’ rights of the disputing parties as to what would be presented at the oral hearings, particularly by the new class of ‘third participants’, at the ‘discretion’ of the AB that dispute parties would have to answer.

The EC addressed itself to the contradictions, and new classes of membership in proceedings before the AB suggested by the change in working procedures (parties to a dispute and third parties who have notified the DSB and get some contractual rights under the DSU, and ‘third participants’ a class created by the AB who may be third parties, or other members who notify the secretariat that it intends to appear at the oral hearing).

The new change, in one para, (24.1) enables any third party to file a written submission within 25 days. The next para (24.2) requires a third party to a dispute, not filing written submissions (within 25 days of lodging of appeal), “shall within the same period of 25 days, notify the Secretariat in writing if it intends to appear at the oral hearing and, if so, whether it intends to make an oral statement.”

The next para (24.3) merely encourages third parties to file written submissions to facilitate their positions being taken fully into account by the division hearing the appeal. Then comes the para (24.4) by which the AB has created a new class: “Any third party that has neither filed a written submission in accordance with paragraph (1), nor notified.... (under) para 2, may at the discretion of the division hearing an appeal, make an oral statement at the oral hearing, respond to questions posed by the division, and comment on resonses given by others.”

The EC welcomed the information provided by the AB about the change in working procedures, “putting an end to the controversial practice of a ‘passive observer’ and reflect a correct interpretation of the DSU provisions on third party rights, notably Art. 17 of the DSU.

The EC then pointed to the anamolies that could arise, as a result of rule 24.4, and asked for explanations (presumably by the AB). The EC wanted to know whether it ‘could be confirmed that when AB exercises its discretion to allow a third party to participate under this new rule, that third party will be treated as any other participant i.e. will have all the rights listed in the rule to make an oral statement at the oral hearing, respond to questions posed by the division and comments on responses given by others?

Or could the division limit its authorization to only some of these rights? And could it be explained in what circumstances the division would exercise its discretion under new rule 24.4? Would the third party need to provide a reason why it did not make a request within 25 days? What other reason would be relevant?

India, without addressing these technical questions which, it suggested were before the informal DSB consultation process, argued that it was a fundamental principle that when a rule-making body seeks to change the rules, it should explain what were the problems that it was seeking to resolve by the change in rules, and why? In this case, the 17 September communication, merely annexed the rule changes without explaining the reasons. It would look like that the AB had changed the working procedures because of the difficulties created by its position in the Sardines case, India commented.

Amb. Bryn said the he would convey the views expressed presumably to the DSB chair. Or is it to the AB? – SUNS5220

[c] 2002, SUNS - All rights reserved. May not be reproduced, reprinted or posted to any system or service without specific permission from SUNS. This limitation includes incorporation into a database, distribution via Usenet News, bulletin board systems, mailing lists, print media or broadcast. For information about reproduction or multi-user subscriptions please contact: