|
||
|
TWN
Info Service on WTO and Trade Issues (Dec24/05) New Delhi, 12 Dec (D. Ravi Kanth) — The United States on 11 December said that “litigating matters of essential security at the WTO undermines the foundations of the WTO by dragging the Organization into debating inherently political matters.” After making the World Trade Organization’s Appellate Body dysfunctional since December 2019, which Washington now says should not be restored at all, the US has tabled another controversial proposal. It states: “Adjudicating questions of national security in the WTO is not only incompatible with the purpose of the WTO, a trade organization, but will not advance WTO Members’ shared interests in the WTO as a forum for discussion and negotiation.” Effectively, the US appears determined to push its proposal for doing away with the litigation of trade disputes at the WTO involving the alleged illegal use of the security exceptions to advance its unilateral goals. During its first term, the Trump administration in 2018 had imposed tariffs on steel and aluminum products. Subsequently, several countries, particularly China, challenged the US measures under Article XXI(b) of the GATT 1994 (relating to security exceptions). The panel, in its ruling, dismissed the US use of the security exceptions, stating that an “emergency in international relations” under Article XXI(b)(iii) refers to situations of a certain gravity or severity and international tensions that are of a critical or serious nature in terms of their impact on the conduct of international relations. The panel said that “having considered the evidence and arguments submitted in this dispute, the Panel did not find that the measures at issue were “taken in time of war or other emergency in international relations” within the meaning of Article XXI(b)(iii) of the GATT 1994.” The Panel therefore found that the inconsistencies of the measures at issue with certain provisions of the GATT 1994 were not justified under Article XXI(b)(iii) of the GATT 1994. On 26 January 2023, the United States notified the Dispute Settlement Body (DSB) of its decision to appeal to the Appellate Body certain issues of law and legal interpretations developed in the panel report. The US action seemed somewhat paradoxical given the fact that it had paralyzed the functioning of the Appellate Body since December 2019. Consequently, the US challenge remains “frozen for eternity”, said people familiar with the development. Even at the DSB meeting last month, the US blocked a proposal by Colombia on behalf of 130 countries to expeditiously fill the seven vacancies at the Appellate Body. “Now, the US wants to dissuade members from raising trade disputes that could involve illegal use of national security exceptions to justify its growing unilateral measures,” said a legal analyst who asked not to be quoted. US PROPOSAL In its proposal (Job/DSB/10), circulated on 11 December, Washington is now advancing a seemingly controversial new narrative, said people who asked not to be quoted. The US said “since the international trading system was re-created after World War II, the United States and our trading partners have shared the view that every WTO Member has the right – and responsibility – to protect its essential security interests. WTO Members recognize the sovereign obligation of each Member to protect its people – a core task for every government.” It said that Washington “firmly believes that litigating matters of essential security at the WTO undermines the foundations of the WTO by dragging the Organization into debating inherently political matters.” However, the Dispute Settlement Understanding (DSU) was negotiated to provide certain security exceptions to members, but it did not envisage that WTO members would use it to justify their unilateral measures under these exceptions, said people familiar with the development. According to the US, “adjudicating questions of national security in the WTO is not only incompatible with the purpose of the WTO, a trade organization, but will not advance WTO Members’ shared interests in the WTO as a forum for discussion and negotiation.” Further, the US argued, “the WTO Agreement reflects an understanding among trading partners that judgments on matters of essential security are to be left to governments, and not adjudicators.” It claimed that “numerous regional trade agreements reflect the same understanding between many Members, and even when those Members are close political or military allies.” “We must acknowledge that dispute settlement findings will not alter a Member’s views on the fundamental importance of an essential security measure,” the US said. This amounts to saying that the adjudication process should permanently stay out of adjudicating on essential national security measures, the legal analyst said. The US said that “no Member would or can be expected to withdraw a measure that it considers to be necessary to protect its essential security interests.” The US maintained that “WTO Members designed a system for the settlement of disputes where re-balancing can take place without interfering with a Member’s assessment and sovereign responsibilities for its essential security.” It said that “if a Member is impacted by an essential security measure, and the Member wishes the assistance of WTO Members in defining an appropriate re-balancing, the appropriate response is to bring a non-violation nullification or impairment claim pursuant to the General Agreement on Tariffs and Trade 1994 (GATT 1994), the General Agreement on Trade in Services (GATS), or the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement), or the Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU).” According to the US, “a non-violation nullification or impairment claim may be used to challenge any measure applied by another Member, whether or not the measure breaches the WTO Agreement, provided that the measure nullifies or impairs a benefit, or impedes the attainment of an objective, of the Agreement.” However, it is not clear whether non-violation complaints can be raised in trade disputes involving the provisions of the TRIPS Agreement. In its proposal, the US argued that the consistency of the measure with the WTO Agreement is not in dispute and is not assessed by an adjudicator; instead, the claim rests on the assertion that a Member’s benefits have been nullified or impaired by the measure, with the objective of ensuring that the negotiated balance of concessions is maintained. For dealing with essential security measures, the US said that “such disputes should proceed in accordance with the following guidelines: * Members agree to pursue arbitration under DSU Article 25 to determine the level of suspension equivalent to the level of nullification or impairment based on a claim of non-violation nullification or impairment with respect to an essential security measure; * A complaining party Member agrees not to challenge the invocation of the essential security exception; * A responding party Member agrees not to contest the claim of non-violation nullification or impairment provided the complaining party Member has not resorted to countermeasures; and * The parties agree the complaining party Member may suspend the application of tariff concessions at the level equivalent to the level of nullification or impairment determined by the Arbitrator.” The US said that “WTO Members should also agree, pursuant to Article IX of the WTO Agreement, to an authoritative interpretation of Article XXI of the GATT 1994, Article XIV bis of the GATS, and Article 73 of the TRIPS Agreement, to clarify the understanding of the essential security exception.” It illustrated with an example: “Under GATT 1994 Article XXI(b), GATS Article XIV bis:1(b), and TRIPS Agreement Article 73(b), each Member determines for itself whether an action it takes is necessary for the protection of its own essential security interests and whether one or more of the circumstances set out in the subparagraph endings are present.” “Therefore, in any dispute in which a responding party Member invokes GATT 1994 Article XXI(b), GATS Article XIV bis:1(b), or TRIPS Agreement Article 73(b), a WTO adjudicator shall not review a Member’s invocation of GATT 1994 Article XXI(b), GATS Article XIV bis:1(b), or TRIPS Agreement Article 73(b), and shall instead limit its report to the DSB to note that invocation,” the US said. At a recent meeting of heads of delegations at the WTO, the US said that members need to be clear: “We are not here to restore the Appellate Body as it was. The task is to work towards a “fully and well-functioning dispute settlement system”. We will continue to work towards achieving that. To do that, we have to stop having the same binary conversation and instead be creative – there are creative ideas on the table that we need to continue to explore.” “At the end of the day, we are not going to roll over and accept any outcome – this issue is critically important to us. But we want to stress that we remain committed to working towards an outcome.” In short, the US has almost declared the “death knell” of the Appellate Body as well as the binding enforcement function, leaving trade disputes to be resolved through the proverbial “might is right” framework, said people familiar with the development. +
|
||
