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Info Service on WTO and Trade Issues (Dec23/13) Geneva, 19 Dec (D. Ravi Kanth) — Several members of the World Trade Organization (WTO) on 18 December apparently sought to know from the facilitator overseeing the reform of the WTO’s dispute settlement system (DSS) as to why he has remained silent on the most crucial pillar of Appellate Review, particularly the Appellate Body, seemingly raising a cloud over the restoration of the two-tier DSS at the upcoming WTO’s 13th ministerial conference (MC13) that commences in Abu Dhabi on 26 February 2024. At the year-end meeting of the WTO’s Dispute Settlement Body (DSB) on 18 December, several developing countries sought to know why the confidential 49-page draft ministerial decision issued by the facilitator, Mr Marco Molina, the deputy trade envoy of Guatemala, did not include language on the crucial appeal review mechanism, particularly the Appellate Body, said people familiar with the discussions. The 49-page confidential draft ministerial decision, seen by the SUNS, in its chapeau, included an item on appellate review but did not contain any language like the other issues in the draft that are replete with substantive provisions and appendixes. There appears to be a gnawing worry among some countries that the facilitator could issue a “make-or-break” text on the appeal review mechanism at the last minute that could tilt the balance in favour of one major industrialized country and to the disadvantage of the rest of the membership on the issue of restoring the two-stage dispute settlement system, without attenuating the Appellate Body, said a person involved in the discussions. At the DSB meeting, India, South Africa, and China among others sought to know why there was no mention of the Appellate Body or appellate review in the 49-page draft ministerial decision, said people familiar with the discussions. Significantly, for the first time, it was countries from the South that pressed for the immediate formalization of the informal discussions on DSS reform, either at the DSB or the General Council. However, countries from the North, especially the industrialized countries, supported the so-called informal process despite serious concerns over the process, said people familiar with the discussions. Notwithstanding the sharp concerns expressed by several members on a range of issues, the facilitator seemed somewhat unfazed and went on to claim that the process is transparent, inclusive, and at the end of the “finishing line”, said people familiar with the discussions. “We are approaching the conclusion of this process, though some issues still warrant further discussion and attention,” Mr. Molina said. Nonetheless, he said that the discussions on these challenging questions have proven fruitful, and members are currently identifying potential solutions that can accommodate the diverse perspectives expressed by members. In the coming weeks, the focus will be on reviewing and refining the third version of the consolidated text, with a first cluster of plenary sessions scheduled for 10-12 January 2024. “The finish line is within reach,” he declared. “We must persevere, for every step brings us closer to achieving our common goal.” Around two dozen members intervened during the DSB meeting expressing conflicting views. Despite the unsettled issues on the process, the facilitator apparently announced that he would open virtual sessions for negotiators in Geneva to participate from 10 January. The same concession was not extended to capital-based officials dealing with dispute settlement issues, said people, who asked not to be quoted. Meanwhile, for the 72nd time at the DSB meeting, the US blocked a request from more than 130 countries for expeditiously filling the vacancies at the Appellate Body. The US, which has made the Appellate Body dysfunctional since December 2019, claimed that its long-pending concerns over the Appellate Body still remain unaddressed. On another issue concerning the unimplemented rulings by Washington in a dispute on “US Measures Affecting the Cross-Border Supply of Gambling and Betting Services”, the complainants Antigua and Barbuda said that for 20 years the US has failed to implement the rulings in the dispute. A large majority of countries, including the ACP (African, Caribbean, and Pacific) group, the Africa Group, India, South Africa, and China supported Antigua and Barbuda, calling for the immediate implementation of the rulings, said people familiar with the discussions. DRAFT MINISTERIAL DECISION ON DSS REFORM The third version of the confidential document issued by the facilitator, titled, “Ministerial decision on dispute settlement – Adopted on [Date],” starts with a chapeau that merely mentions in square brackets “[Appellate/ Review]” but does not include any language, suggesting that the most crucial issue concerning the restoration of the two-tier dispute settlement system, with the Appellate Body at the center of its binding decision-making process, remains unresolved, said people familiar with the discussions. Effectively, the draft ministerial decision seems to “lack a spine” at this juncture, while other procedural issues and time-lines appear to occupy the lion’s share, said a person, who asked not to be quoted. The chapeau of the draft ministerial decision issued on 6 December is as follows: “The Ministerial Conference [[1], Having regard to paragraph 1 of Article IX of the Marrakesh Agreement Establishing the World Trade Organization and, paragraph 4 of the Twelfth Ministerial Conference MC12 Outcome Document (WT/MIN(22)/24), whereby Members committed to conduct discussions with the view to having a fully and well-functioning dispute settlement system accessible to all Members by 2024, Recalling that the aim of the dispute settlement mechanism is to secure a positive solution to a dispute and that a solution mutually acceptable to the parties to a dispute and consistent with the covered agreements is clearly to be preferred, Prompting the objective of meaningfully reform the dispute settlement system so that it operates in a manner consistent with the interests of Members, Desiring to facilitate the settlement or avoidance of disputes via the voluntary use of alternative methods of dispute resolution, Recalling that Article 25 of the Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU) provides for arbitration within the WTO as an alternative means of dispute settlement that can expedite the solution of certain disputes, Considering that the prompt settlement of disputes is essential to the effective functioning of the WTO and the maintenance of a proper balance between the rights and obligations of Members; and that streamlining panel proceedings and strict adherence to time-frames contribute to the prompt settlement of disputes and keeps the focus on what is necessary to resolve them, Acknowledging the importance of selecting highly qualified experts while fostering diversity in the composition of panels, with a specific emphasis on achieving gender balance, geographical representativeness, and a diverse range of legal backgrounds, Bearing in mind that the rights of the parties under the DSU to make factual and legal arguments before the panel through their submissions must be preserved, in particular by adjusting the length of written and oral submissions to the complexity of disputes, Noting that any categorization of a dispute as standard, complex, or exceptionally complex is to be used only for the purposes of procedural management of the dispute and shall not impact the dispute itself, including the analysis, interpretation or the conclusions of the adjudicators or any future disputes, [Appeal/review mechanism] Taking into account that prompt compliance with recommendations or rulings of the DSB is essential in order to ensure effective resolution of disputes to the benefit of all Members, Recognizing the importance of stating Members’ understandings and expectations about how the dispute settlement system should operate, Determined to ensure that these reforms are fully implemented in practice and are long lasting, Reaffirming the responsibility of the membership in the Dispute Settlement Body (DSB) for the administration of the rules and procedures of the DSU, without prejudice to the functions of adjudicators under the DSU, Recognizing the need and importance to facilitate greater accessibility of developing and least developed country Members to the dispute settlement system, including through streamlined proceedings, improved transparency, better and tailor-suited capacity building and technical assistance activities, enhanced legal advisory support and expanded range of options to avoid and settle disputes; and improved compliance procedures, among others, Acknowledging the imperative and significance of promoting increased accessibility for developing and least developed country Members to the dispute settlement system, including through the implementation of streamlined proceedings, enhanced transparency, more effective and tailored capacity-building initiatives, improved provision of legal advisory support, the extension of a broader array of options for preventing and resolving disputes, and the enhancement of compliance procedures, among other considerations, Recognizing the contribution of other organizations, including the Advisory Centre on WTO Law (ACWL), to the accessibility of developing and least developed country Members to the WTO dispute settlement system and noting the importance of supporting their work, Affirming their intention to regularly undertake a meaningful review of the operation of the dispute settlement system, with a focus on the implementation of the reforms to the dispute settlement system made in this Decision (“Reforms”), and to take any action considered necessary, Decides as follows,”] [1] Note: The preamble has been revised following the direction given by the plenary at the meeting that took place on 1 December 2023. The paragraphs in the preamble follow the sequence of the different titles and chapters in this document. Under “Title I – Alternative Dispute Settlement Resolution Proceedings and Arbitration, Good Offices, Conciliation and Mediation”, the draft ministerial decision covers several issues including: (1) Definitions; (2) General Principles; (3) Request for Information; (4) Initiation or Termination of Procedures; (5) Notification to the DSB; (6) Appointment of good officer, conciliator or mediator; (7) Rules of procedure in the Appendices; (8) Secretariat Support; and (9) Relationship between the procedures and other dispute settlement procedures. In the appendix attached to Title I, “Rules of Procedure for Mediation” are further clarified, while Appendix 2 deals with “Rules of Procedure for Conciliation” and Appendix 3 deals with “Supplementary Rules of Procedure for Conciliator or Mediator Assistance during Consultation under Article 4 of the DSU”. In addition, Appendix 4 deals with “Supplementary Rules of Procedure Pursuant to Article 5 of the DSU Undertaken at the Compliance Stage of Dispute Settlement Proceedings.” Chapter II dealing with “Simplified Arbitration Proceedings Pursuant to Article 25 of the DSU” includes an appendix that further clarifies issues like “terms of reference of the arbitrator,” “composition of the arbitrator,” “third parties,” “time-line,” “suspension,” “submission and hearings,” “information before the arbitrator,” “confidentiality,” “mutually agreed solution,” “secretariat support,” and “arbitration award.” The chapter on panel proceedings includes provisions for “establishment of panels,” “panel composition,” “list for appointments made by the Director-General,” and “monitoring mechanism.” It includes an appendix on “Assistance from the Secretariat and the DSB Chairperson in Composing and Decomposing the Indicative list”. Chapter III deals with “Streamlining Panel Process,” while Chapter IV proposes language on “conciseness and time-frame adherence.” The draft ministerial decision, in Title III on “Appeal/Review Mechanism”, merely says in square brackets “[Work in Progress]”, suggesting that the most important pillar of the DSS reform is left open, according to people familiar with the discussions. In short, the non-completion of work on the “Appeal/Review Mechanism”, an alleged battle between one major industrialized country on the one side, and the rest of the membership on the other, is a cause of serious concern, said people involved in the discussions. Without the resolution of the Appeal/Review Mechanism, there can never be the restoration of the two-stage dispute settlement system, said people familiar with the discussions. Given the challenges involved in negotiating an appeal review mechanism, it seems clear that there will not be an outcome at MC13, said people, who asked not to be quoted. The rest of the chapters dealing with “compliance”, “guidelines for adjudicators,” “procedures to discuss and review legal interpretations,” “advisory working group,” and “secretariat support” among others are important, and still several issues remain unsettled, said people familiar with the discussions. The other chapters include “transparency,” “accessibility with respect to technical assistance, capacity building and legal advice,” and an “accountability mechanism” that suggests language on “review of the operation of the dispute settlement system and implementation of reforms” every two years, with the first one to take place in October 2026. +
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