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TWN
Info Service on WTO and Trade Issues (Sept24/03) Geneva, 3 Sep (D. Ravi Kanth) — A confidential draft on “Appeal/Review tables” issued by the facilitator overseeing the World Trade Organization’s dispute settlement system reform process appears to fundamentally alter the two-tier system while making it “palatable” for a major industrialized country that does not want a binding Appellate Body because it ruled against several trade measures adopted by that country over the last two decades, said several people familiar with the development. In her email sent to members on 23 August, the facilitator, Ambassador Usha Dwarka-Canabady of Mauritius, wrote: “At the request of Members, the co-convenors on Appeal/Review have prepared draft tables (attached) to document several important aspects of the discussions held on each of the sub-topics: scope of review; standard of review; form of the mechanism; reducing/changing incentives to appeal; clarifying Members’ expectations of adjudicators; and access to the mechanism.” She said that “the draft tables have been prepared with the following caveats in mind: * They are not negotiating texts but have been designed to aid Members in their ongoing discussions. * The co-convenors will update the tables as the discussions progress which will allow Members to gauge the progress being made through the technical discussions. * The tables do not exhaustively capture each point made by Members but do highlight some of the main points based on the discussions held. * There is yet to be a detailed discussion on some of the sub-topics and elements within those sub-topics and, as such, the observations linked to them may not yet reflect all points of view held by Members. * Since the reform ideas are not exhaustive, new ideas and contributions are encouraged from Members. * It is not the intention of the co-convenors to convey that all sub-topics or all elements under those sub-topics require reform. * The tables are not final, and Members will have an opportunity to comment on the document on 9 September 2024 during the dedicated expert-level session on appeal/review (see below). The co-convenors also remain open to meeting with Members, on request, to discuss the tables.” The facilitator, who was appointed after the WTO’s 13th ministerial conference (MC13) that ended in Abu Dhabi on 2 March this year, is tasked with overseeing the dispute settlement reform process to finalize/agree on reforms by the end of December 2024. The mandate (WT/MIN(24)/37) agreed by trade ministers at MC13 states: “Recalling our commitment made at our Twelfth Session to conduct discussions with the view to having a fully and well-functioning dispute settlement system accessible to all Members by 2024, we take note of the works done thus far. * We recognize the progress made through this work as a valuable contribution to fulfilling our commitment. We welcome all submissions from Members that help advance our work. * We instruct officials to accelerate discussions in an inclusive and transparent manner, build on the progress already made, and work on unresolved issues, including issues regarding appeal/review and accessibility to achieve the objective by 2024 as we set forth at MC12.” Against this backdrop, the 14-page “WTO Confidential” draft, seen by the SUNS, contains the following tables: (A) “Scope of review”; (B) “Standard of review”; ( C) “Form of the mechanism”; (D) “Reducing/Changing incentives to appeal”; (E) “Clarifying Members’ expectations of adjudicator”; and (F) “Access to the mechanism”. While all the tables seem to have considerable bearing on fundamentally altering the dispute settlement system, the crucial table on the “Form of the Mechanism” is the one that is likely to replace the Appellate Body, said people familiar with the provisions. FORM OF THE MECHANISM Before the Appellate Body was made dysfunctional by the United States in December 2019, it comprised 7 persons/adjudicators with a four-year term, including the provision to re-appoint them once, as per Article 17.2 of the Dispute Settlement Understanding (DSU). As part of the reform ideas in the tables in the WTO confidential draft, it is being suggested that there will be “ad hoc adjudicators.” It contains a provision to “increase the number of standing adjudicators.” Another reform idea in the table states, “In lieu of a separate appeal/review stage, add additional adjudicators (from a pool or through a process similar to panel composition) at the interim review stage of the panel proceedings to review and test the panel’s conclusions.” It is also stated, “in lieu of appeal/review by adjudicators, review of the panel’s conclusions by a committee of WTO members.” On the face of it, the above reform ideas seem to be aimed at undermining the binding Appellate Body as agreed to at the end of the Uruguay Round of trade negotiations that led to the establishment of the WTO in 1995. The reform ideas appear to go against the original goals of the two-tier dispute settlement system that undergirds the WTO’s enforcement function. OBSERVATIONS In response to the above reform ideas, the tables contain observations by members, though they do not name the countries that made these observations. For example, terms like “most members” or “some members” are employed, which are neither named nor quantified. According to the tables, “most Members consider that a standing body supports their interests, which include correctness, predictability, consistency, coherence, legitimacy, transparency and accountability. Some Members have indicated a willingness to explore a form of standing body that differs in some respects to the current system (such as reform idea 2 dealing with increasing the number of standard adjudicators).” Further, members’ observations on “Reform ideas 1, 3 and 4 are intended to address several interests and concerns, including a concern that a standing body (with a limited number of adjudicators) may be perceived as having greater authority and legitimacy than other adjudicators, and also does not guarantee correct decisions.” Finally, as per the observations listed in the tables, “many Members have said that ad hoc adjudicators would not meet their interests.” SELECTION OF ADJUDICATORS Under the current system, according to the table on the form of the mechanism, “Adjudicators [are] appointed by the DSB (DSU Art. 17.1) on the basis of a proposal formulated jointly, after consultations, by the DG, DSB Chair, and the Chairs of the Goods, Services, TRIPS and General Councils (Preparatory Committee Recommendations, para. 13).” The reform idea on the selection of adjudicators seems to make a fundamental break with the current practice by suggesting the “appointment of adjudicators via a mechanism agreed by the disputing parties (on a bilateral or plurilateral basis).” This idea may have come from the US, said a person familiar with the discussions. As regards the observations made by members, it is suggested that: “This Element is linked to the previous Element (“Nature of the body”). While reform idea 1 relates to the selection of adjudicators, it also presupposes that there would be no standing body. Reform idea 1 is intended to address several interests and concerns, including a concern that adjudicators appointed by the Membership (through the DSB) are perceived to speak on behalf of all Members, which may add to the weight that is accorded to their decisions. “Noting that many Members wish to see adherence to timeframes in a reformed system, there is a need to consider how to ensure the availability of adjudicators at short notice. See “Adherence to timeframes”, under Table E, “Clarifying Members’ expectations of adjudicators”. “As per expertise requirements of the adjudicators, in the current system of the Appellate Body, it is clearly stated that “Adjudicators shall be persons of recognized authority, with demonstrated expertise in law, international trade and the subject matter of the covered agreements generally (DSU Article 17.3). The expertise should be of a type that allows adjudicators to fulfil their duties”.” As per the table, members observed that they “have a shared interest in ensuring adjudicators have a high level of expertise.” REPRESENTATIVE BALANCE As regards the “representative balance”, the current Appellate Body “shall be broadly representative of the Membership (DSU Article 17.3).” Further, “factors such as different geographical areas, levels of development, and legal systems shall be taken into account.” Surprisingly, there are no reform ideas on the issue of representative balance. Without naming the members, the table states that “some members have expressed interest in gender balance.” According to the table, on the issue of adjudicators’ ability to make their own working conditions, “it is well known that the Appellate Body adjudicators shall draw up working procedures in consultation with the DSB Chair and the DG, and communicate them to Members for their information (DSU Article 17.9).” However, one member expressed concern that “adjudicators can, through the Working Procedures, make decisions that alter Members’ rights without Members’ consent.” ADJUDICATORS’ DECISION-MAKING Under the current Appellate Body working procedures, it is clearly stated that “decisions relating to an appeal shall be taken solely by the three adjudicators assigned (DSU Art. 17.1; Working Procedures, para. 3(1)). Collegiality Adjudicators shall (a) convene on a regular basis to discuss matters of policy, practice and procedures; (b) stay abreast of dispute settlement activities and, in particular, receive all appeal documents. A division shall exchange views with other adjudicators before finalizing a report. (Working Procedures, para. 4). Consensus Adjudicators shall make every effort to make their decisions by consensus. Where a decision cannot be arrived at by consensus, it shall be decided by majority vote. (Working Procedures, para. 3(2)).” The proposed reform idea that radically changes the current practice calls for “apply(ing) different decision- making rules such as requiring all adjudicators to agree that a panel decision should be modified or reversed.” According to the observations on the above reform idea in the table, “it has been suggested that reform idea 1 could go towards addressing a concern that collegiality and consensus emphasize consistency above correctness. Another view is that this idea would raise the threshold for the reversal of a panel decision and that majority decision-making should be preserved.” Significantly, “many Members have expressed that they have an interest in a system that delivers consistent and predictable decision-making by adjudicators.” ADJUDICATORS’ IMPARTIALITY & INDEPENDENCE In the current provisions as regards adjudicators’ impartiality and independence, it is stated that “Adjudicators shall be unaffiliated with any government and shall not participate in the consideration of any disputes that would create a direct or indirect conflict of interest (DSU Art. 17.3). Adjudicators shall be independent and impartial (Rules of Conduct, para. 1).” The observations from members, as stated in the table, include: “Most Members consider that it is essential to maintain the independence and neutrality of adjudicators, which supports interests including legitimacy, accountability, and transparency. To consider the link between this element and (i) the nature of the body, (ii) the selection of adjudicators and (iii) conditions of employment (including remuneration). This element is also relevant to Table E, “Clarifying Members’ expectations of adjudicators”.” CONDITIONS OF EMPLOYMENT At present, as regards the conditions of employment for Appellate Body members/adjudicators, their “expenses are met from the WTO budget (DSU Article 17.8).” It has been observed: “Note the link to decision-making (e.g. a collegiality requirement may support payment of a retainer).” Lastly, on the role of the Secretariat and its assistance, the current practice as regards the Appellate Body is to provide “appropriate administrative and legal support as they require (DSU Art. 17.7)”. As a response to this practice involving the Secretariat’s support, the table contains a concern by one member who said that “the Secretariat supporting the adjudicators previously had too much institutional independence from the rest of the Secretariat.” In short, the tables prepared by the co-convenors on the Appeal/Review mechanism seem like the proverbial “red herring” for allegedly undermining the Appellate Body that has been touted all these years as the “Jewel in the Crown” of the WTO. The one member that has called for the end of the Appellate Body seems to be pulling all the strings in the so- called dispute settlement reform process, said people familiar with the development. +
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