Commerce, Economy / Finance

The Appellate Body Crisis: What Needs To Happen Now?

Feb 27 2019

Posted by Simon LesterInternational Economic Law and Policy Blog

This is from the U.S. statement at the February 25 DSB meeting:

  • We also note that at least one Member has said that the United States should table its own proposal. The United States has made its views on these issues very clear: if WTO Members say that we support a rules-based trading system, then the WTO Appellate Body must follow the rules we agreed to in 1995.
  • And so, for instance, the Appellate Body must circulate its reports within 90 days of an appeal.
  • A person who has ceased to be an Appellate Body member may not continue deciding appeals as if his term had been extended by the Dispute Settlement Body.
  • The Appellate Body may not make findings on issues of fact, including but not limited to those relating to domestic law.
  • The Appellate Body may not give advisory opinions on issues that will not assist the DSB in making a recommendation to bring a WTO-inconsistent measure into compliance with WTO rules.
  • The Appellate Body may not assert that its reports serve as precedent or provide authoritative interpretations.
  • And the Appellate Body may not change Members’ substantive rights or obligations as set out in the text of the WTO agreements.
  • Rather than seeking to make revisions to the text of the Dispute Settlement Understanding to permit what is now prohibited, the United States believes it is necessary for Members to engage in a deeper discussion of the concerns raised, to consider why the Appellate Body has felt free to depart from what WTO Members agreed to, and to discuss how best to ensure that the system adheres to WTO rules as written.

I agree with the last bullet point here, and I think it would be helpful for the U.S. to offer its thoughts on those questions.

In terms of the substantive issues and how to “adhere to the WTO rules as written,” some of these seem relatively easy to me, while some are more difficult. Here are two examples.

On the 90 day issue, I would recommend that the Appellate Body issue its reports within 90 days, but it should then explain all the problems that arise from doing so. Members can then decide what they think of 90 day reports, and whether they want to give the Appellate Body more time, or establish rules (such as page limits on submissions) that will make the 90 day requirement more workable.

In terms of the role of precedent, the U.S. talks about following the rules agreed to in 1995, but what were those rules in relation to precedent? And what should those rules be? And how do the current rules differ from what the U.S. says it wants the rules to be?

The U.S. seems reluctant to propose revisions to the DSU text. I’m not really sure why, but if that’s the case, what alternative do they have in mind to make things change? Is their idea that if they put on enough political pressure, the Appellate Body will change course on its own? It is possible that this could happen on some of the issues. Of course, on one of those — the 90 day issue — it would be a lot easier for the Appellate Body to hurry up if there were seven Appellate Body Members.


Peter Gallagher said…

This statement seems to be the first time the US has summed up its complaint for the DSB (although they’ve said some, or all, of this before). Maybe that’s a good sign.

But, the AB is about to break. The US still doesn’t say how it would like to fix what it sees as problems, other than making sure it breaks first. This is rouguish behavior. Not the sort of thing the rest of the world hopes to see from the USA.

Also, these complaints (apart from the procedural ones: 90 days & former Members etc) strike me as a bit naive.^ The US (& CAN as I recall) led the G8’s campaign for a “judicial” process of appeal in 1994. They got it: judge-like appointments, curial processes. But now they complain about judges “making law”? Is there any superior court where they don’t?

I want to add that I am inclined share the apparent irritation of the USA at judicial ‘creativity’ although I believe the AB kept a tight hold on this tendency after some early criticism. I suspect other WTO members, too, will have some appreciation of the US position, even if they’re losing patience with US behavior.

But if the USA now wants to walk-back the judicial character of the AB then they should say what they want instead. A return to ‘diplomatic’ review? That would no doubt ensure more “elbow room” for the USA when cases go against them; but at a high price for the treaties and consistent international law.

Unfortunately, I think the rest of the world should wait this out, even at the risk of the system (temporarily, I trust) breaking. It would be futile to try to just make up ‘solutions’ in hope that the USA will acccept something. It’s past time for the USA to actually ‘engage’ in some change process. (“MAGA”, by the way).
^ Not a characteristic of USTR officials, in my experience. ReplyFebruary 26, 2019 at 06:16 PM

Raghavan said in reply to Peter Gallagher…

Most of the present US complaints against the AB, are those which the US applauded the AB for in early days when they ruled against india, indonesia, brazil et al. When the AB totally ignored the “general interpretative note” to Annex 1A (in dispute against indonesia), and distinguished between the actual wording and provisions of TRIMS and the “substance”, the US applauded the AB. Nor did it protest when the AB made “clarification” in DSU, and “interpretation” in WTO IX:2 to be same, in effect making IX:2 a nullity, and the WTO amendment provisions irrelevant and superflous. In the final stages of the UR, it was the US that wanted adoption of panel and AB report by negative consensus. The EU then insisted on appeal on legal grounds, and hence the AB.
The current US stance on AB and DSU is just part of its salami tactics to dismantle postwar multilateralism. ReplyFebruary 27, 2019 at 10:13 AM

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