TWN Info Service on WTO and Trade Issues (Jul19/04)
1 July 2019
Third World Network

African Group tables proposal on ending AB impasse

Published in SUNS #8935 dated 28 June 2019

Geneva, 27 Jun (Kanaga Raja) – The African Group at the World Trade Organisation (WTO) has tabled a proposal aimed at overcoming the ongoing impasse in the appointment of Appellate Body (AB) members.

The ongoing crisis in the Appellate Body was precipitated by the United States which has been continuously blocking, at various meetings of the Dispute Settlement Body (DSB), the launch of the selection processes to fill four current vacancies as well as two upcoming vacancies this December in the seven-member adjudicating body.

Unless this ongoing impasse is quickly resolved, the AB will become non-functional from 11 December 2019 when the second terms of AB members Ujal Singh Bhatia and Thomas Graham expire on 10 December 2019, leaving the Appellate Body with only one member left.

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

The proposal (WT/GC/W/776) circulated by Benin on behalf of African Group on 26 June, is the latest in this effort to overcoming the impasse in the AB.

In its communication to the General Council, the African Group has proposed amendments to certain provisions of the Dispute Settlement Understanding (DSU), aimed at “strengthening the functioning of the Appellate Body based on concerns raised about its functioning.”

The African Group said that with the looming paralysis of the Appellate Body come 10 December 2019, there will be no credible enforcement mechanism of the rules-based multilateral trading system.

Existing rules will be unenforceable and discussions or negotiations on new rules will be redundant, it cautioned.

According to the African Group, the dispute settlement system is recognized in Article 3.2 of the Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU) as a central element in providing security and predictability to the multilateral trading system.

For almost two decades in the DSU negotiations, the African Group sought to address the structural defects in the functioning of this central part of the WTO’s legal and jurisdictional instruments.

The Group said that it submitted a number of communications and proposals “aimed at increasing our access to make use of the WTO dispute settlement mechanism and obtain favourable rules in the DSU to safeguard and promote our interests in the multilateral trading system.”

These remain an important priority for the African Group, it said.

In the last year, the African Group noted with alarming concern the systemic risks facing the WTO’s Appellate Body.

“The WTO derives its credibility from its mandated function to enforce the commitments entered into by its Members,” it underlined.

The African Group also said that it is acutely aware that an urgent solution is required to ensure the effective functioning of the WTO’s Appellate Body as a legitimate forum where all Members can exercise equal opportunity in enforcing their rights.

It is critical that all Members contribute to the strengthening of the dispute settlement system in order to enhance predictability in the functioning of the Appellate Body.

The African Group recalled that the African Union Ministers of Trade had urged that “priority attention is given to resolving the impasse and commit to work with all WTO Members to find mutually acceptable solutions, while preserving the essential features and integrity of the system”.

Taking note of all the proposals and submissions on DSU reform to date, the African Group urged Members to ensure that any reform should facilitate the participation of African countries in the dispute settlement system, thereby alleviating the difficulties African countries face in using the system.

With respect to DSU reform, the African Group emphasised that it is not in favour of making any linkages to resolving the urgent crisis in the Appellate Body with the broader WTO reform agenda.

The Group reaffirmed paragraph 47 of the Doha Ministerial Declaration which specifically excludes the DSU negotiations from the single undertaking.

The African Group encouraged all Members to engage constructively to resolve the Appellate Body impasse.

“Any agreed procedures and timelines should not compromise the effective functioning of the dispute settlement system.”

The African Group urged Members to engage in a solution-based approach. It also called on Members to fill the vacancies on the Appellate Body immediately.

In its proposal, the African Group addresses the following issues: transitional rules for outgoing AB members; composition of AB members; term of office for AB members; duration of examination of cases before the Appellate Body; and the application of obiter dicta during disputes.

On transitional rules for outgoing AB members, the African Group has proposed that the Appellate Body selection process be launched automatically no later than three (3) months before expiry of the term of office.

Rule 15 (of the Working Procedures for Appellate Review) should be maintained to allow outgoing Appellate Body Members to discharge their duties until the position has been filled but not longer than a period of two (2) years following the expiry of the term of office.

[Rule 15 states: “A person who ceases to be a Member of the Appellate Body may, with the authorization of the Appellate Body and upon notification to the DSB, complete the disposition of any appeal to which that person was assigned while a Member, and that person shall, for that purpose only, be deemed to continue to be a Member of the Appellate Body.”]

On composition of AB members, the African Group has proposed increasing the number of the Appellate Body Members from seven (7) to nine (9) Members.

According to the African Group, in the composition of the Appellate Body, factors such as regional balance, gender representivity and multilingualism may be considered.

This provision will amend paragraph 1 of Article 17 of the DSU, said the African Group.

On the term of office for Appellate Body members, the African Group has proposed that the maximum term of office of Members of the WTO Appellate Body shall be seven (7) years, which is non-renewable.

This provision will amend paragraph 2 of Article 17 of the DSU, it said.

On the duration of cases before the Appellate Body, the African Group said that the duration of ninety (90) days for the examination of cases submitted to the Appellate Body and the presentation of reports should be maintained.

However, in exceptional circumstances, the Appellate Body may exceed the ninety (90) day time limit but not more than one hundred and twenty (120) days for the examination of cases referred to the Appellate Body, and for the submission of expected reports.

Days not worked (weekends and public holidays) should not be counted. This provision will amend paragraph 5 of Article 17 of the DSU.

The Group also said the volume of documentation of parties’ submissions should not exceed thirty (30) pages.

On the issue of obiter dicta, the African Group said that findings unnecessary and unrelated to resolving of a dispute may affect the rights and obligations of Members.

The Appellate Body should limit itself to the issues raised by the parties to the dispute. Under no circumstance should it pronounce on issues not raised by any parties to the dispute, said the African Group.

[It remains to be seen whether the US will react to this proposal, and engage with the WTO membership in resolving the impasse, or continue on its present course to make the Dispute Settlement system dysfunctional, and enable power equations to prevail in international trade.

[The reality is that the US wants to bring about drastic changes to the multilateral trading system to ensure that its own markets can be kept closed while that of other Members, in particular those of developing countries, are opened up to US exports of goods and services.

[In his testimony to the US Senate Finance Committee (on 12 March), the USTR Ambassador Robert Lighthizer has spelt out these intentions clearly. The US, he said, will continue to block appointments to the World Trade Organization’s Appellate Body “in order to force members to deal with much-needed WTO reforms … It’s the only way to get countries’ attention.” See SUNS #8873 dated 25 March 2019. SUNS]