Washington (D.C.): The United States is determined to 'eliminate' the highest adjudicating body for global trade disputes within next six months to ensure that “economic and other might trumps legal right", says an outgoing judge of the World Trade Organization.
The Appellate Body (AB) is reckoned as the jewel in the WTO's dispute settlement system. It has issued binding rulings on governments in trade disputes involving illegal anti-dumping duties, subsidies and countervailing actions, restrictive trade measures, and environmental concerns. The US, which has won many trade disputes against the European Union, China, and India among others, has also lost some important cases in which Washington was found to have violated core WTO rules.
But successive US administrations waged a fierce war against AB's rulings that are not favorable to Washington. The US has repeatedly accused the WTO’s adjudicating body- called the Appellate Body- on grounds that it had failed to adhere to the WTO’s dispute settlement understanding (DSU).
In response to concerns raised by the US about the functioning of the AB, more than 20 members, including India, along with the European Union and China, made proposals for the reform of the WTO appellate review. The reform proposals are aimed at addressing the US’ concerns relating to the alleged 'overreach' by the WTO’s Appellate Body, the precedential effect of WTO’s case law, the 90-day time frame for issuing the rulings by the Appellate Body, and the AB’s review factual findings, including the findings on the meaning of the domestic law, among others.
So far, the US has refused to engage on any of the reform proposals during the current facilitator-led process that is being chaired by Ambassador David Walker of New Zealand. Even though some of the reform proposals would 'significantly' change essential features of the current system, the US chose not to engage with other members until now.
“It is, however, not clear to me, as I am sure it is not clear to most of you, whether any reform of the current system, short of its virtual elimination, will satisfy the United States," said Peter Van den Bossche, an outgoing judge of the WTO’s Appellate Body, in his farewell speech on 29 May.
Despite sustained efforts by members and the facilitator, “it is ever more likely that the current crisis[in the Appellate Body where the US has blocked the selection process for filling vacancies] by 11 December 2019," the judge said. The AB, which will be reduced to one member from the requisite seven members “will no longer be able to hear and decide new appeals from that day onwards", the outgoing judge opined.
After the Appellate Body is paralyzed after 11 December, said Bossche, “the losing party will in most cases appeal the panel report [which is the first stage for resolution of trade disputes followed by the final Appellate review in the second stage] and thus prevent it from becoming legally binding."
“As from 11 December 2019, it is therefore not only appellate review [conducted by the Appellate Body] but also the entire WTO dispute settlement system that will no longer be fully operational and my progressively shut down," the judge maintained. “While the United States may welcome such an outcome, most other WTO members obviously would not… A return to some kind of pre-WTO dispute settlement system means a return to dispute settlement in which economic and other trumps legal right," Bosche maintained.
India, which hosted a ministerial meeting of developing countries earlier this month, consistently demanded the resolution of the worst crisis at the Appellate Body before addressing reforms to the WTO. “Most WTO members do not want international trade without rules, or to be more precise, the international trade with rules that are whatever the strongest party to a dispute [such as the US] says the rules are," the outgoing judge maintained.