Geneva: India on Monday co-sponsored a joint initiative launched by the European Union (EU) for filling vacancies at the highest adjudicating body for disputes at the World Trade Organization (WTO), following repeated attempts by the US to block the selection process, according to people familiar with the development.

For the past two years, the US has single-handedly blocked a proposal for filling four vacancies at the WTO’s Appellate Body (AB), saying the body went beyond its mandate in its rulings. The US said the AB had failed to adhere to the 90-day limit for issuing rulings and passed judgements on issues that were not part of its mandate.

The AB has been reduced to three members from seven due to the US blocking the selection process. From December 2019, the AB will be reduced to a single member when two more members—Ujal Singh Bhatia of India and Thomas Graham of the US—retire at the end of their second term.

Against this backdrop, India, along with the EU, China, Canada, Norway, New Zealand, Switzerland, Australia, Korea, Iceland, Singapore and Mexico, issued a joint proposal on 26 November, stating unambiguously the “successful contribution of the dispute settlement system to the security and predictability of the multilateral trading system."

Given “the essential role of the Appellate Body within the system that serves to preserve the rights and obligations of members under the covered agreements, and to clarify the existing provisions of those agreements without adding to or diminishing the rights and obligations provided therein," the signatories called on all members, particularly the US, “to fill the vacancies on the Appellate Body and to amend certain provisions of the Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU)."

The US has been blocking the process for past 2 years saying the appellate body went beyond its mandate-

The sponsors also proposed amendments that would improve the dispute settlement understanding based on the concerns raised by the US. The US has all along objected to the continued functioning of an AB member after completing the second four-year term in disputes where the member has already been functioning.

For addressing the US concern, the 12 sponsors proposed a “transitional rule for outgoing Appellate Body members" by amending the provisions of the dispute settlement understanding. “The DSU would provide that an outgoing Appellate Body member shall complete the disposition of a pending appeal in which a hearing has already taken place during that member’s term," according to the amendment proposed by the sponsors.

In order to address the US concern about the delay in the appellate proceedings beyond the 90-day time limit for issuing rulings, the sponsors proposed to amend “the 90-days rule in Article 17.5 of the DSU by providing an enhanced consultation and transparency obligation for the Appellate Body."

The US also expressed concerns with the Appellate Body review of the panel findings as to the meaning of domestic legislation. The sponsors proposed to “clarify, for greater certainty, that issues of law covered in the panel report and legal interpretations developed by the panel, in the meaning of Article 17.6 of the DSU, while they include the legal characterisation of the measures at issue under the WTO rules, and the panel’s objective assessment according to Article 11 of the DSU, they do not include the meaning itself of the municipal measures."

Despite the joint initiative, it is highly unlikely the US will accept the amendments as it seems determined to end the life of the AB by December 2019, said a Geneva-based legal analyst." The US wants to go back to the pre-1995 GATT (General Agreement on Tariffs and Trade) phase so that it can negotiate the rulings of a panel as opposed to mandatory implementation under the Appellate Body process," the analyst said, preferring anonymity.

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