US Continues To Block Progress On WTO Appeals Body, While Rapidly Adding Cases To The System

The United States is piling up dispute settlement cases against its trading partners at the World Trade Organization while at the same time ironically blocking any progress on the selection of panellists for appeals in the WTO dispute settlement process.

For the last 18 months, the work of the WTO Appellate Body which is responsible for dealing with appeals against a ruling in WTO disputes has been hindered by the United States. The US has been blocking the selection of new members to the appellate body, while some of them are reaching the end of their term. In addition, a proposal by a group of 67 WTO members was refused by the US today, and Honduras suggested a number of options to try to find a way out of deadlock. Separately, the US today initiated additional disputes with China, the European Union, Canada, Mexico and Turkey over their retaliatory tariffs on steel and aluminum.

No solutions were found today during the regular meeting of the WTO Dispute Settlement Body, according to a Geneva trade official. A group of countries represented by Mexico introduced a proposal for the establishment of a selection committee for the appointment of new Appellate Body members, and Honduras produced an informal document to unlock the situation.

The WTO Appellate Body is “an independent seven-person body that considers appeals in WTO disputes. When one or more parties to the dispute appeals, the Appellate Body reviews the findings in panel reports,” according to the WTO. There are currently three vacant seats at the WTO Appellate Body.

According to the trade official, Mexico on behalf of 67 WTO members presented a proposal suggesting that the three selection processes be started, one to replace Ricardo Ramírez-Hernández, whose second term expired on 30 June 2017, one to replace Hyun Chong Kim, who resigned on 1 August 2017, and one to replace Peter Van den Bossche, whose second term expired on 11 December 2017.

Furthermore, according to the proposal, a selection committee should be established, a 30-day deadline should be set for the submission of candidacies, and the selection committee should issue its recommendation within 60 days after the deadline for nominations of candidates.

The 67 WTO members are: Argentina, Australia, Bolivia, Brazil, Canada, Chile, China, Colombia, Costa Rica, Dominican Republic, Ecuador, El Salvador, the European Union, Guatemala, Honduras, Hong Kong, China, Iceland, India, Indonesia, Israel, Kazakhstan, South Korea, Mexico, New Zealand, Nicaragua, Norway, Pakistan, Panama, Paraguay, Peru, Russia, Singapore, Switzerland, Taiwan, Turkey, Ukraine, Venezuela, and Viet Nam.

According to the trade official, a number of countries supported the proposal, including South Africa for the African Group, Japan, Switzerland, Uruguay, Egypt, and Turkey, and voiced concern about the impasse.

In its statement, the Group of Latin American and Caribbean countries (GRULAC) voiced “deep concern about the situation we have reached, which affects the good functioning of one of the central bodies of the WTO.” If the problem were to continue, it would lead in the short term “practically the paralysis of the Appellate Body, putting the entire dispute settlement system at risk,” it said.

The inability to replace three Appellate Body members is a bad precedent, the statement said, and “affects the image and credibility of the WTO, particularly taking into account the complex international scenario that today adversely affects trade multilateralism.”

The US, meanwhile, said in its statement that it is not in a position to support the proposal, claiming that the systemic concerns it has voiced remain unaddressed. The main concern of the US has been that members who are no longer members of the Appellate Body should not be able to serve on an appeal.

According to the trade official, the US maintains that the Dispute Settlement Body has the authority to decide whether a person who is no longer an Appellate Body member can continue to serve on an appeal, not the Appellate Body itself.

The DSB chair, Thailand Ambassador Sunanta Kangvalkulkij, said she is consulting members on whether Appellate Body member Shree Baboo Chekitan Servansing of Mauritius should be given a second term. Servansing’s first term ends on 30 September, and his departure would leave the Appellate Body with only three serving members.

Honduras put forward an informal paper suggesting to address the issues regarding Rule 15 of the Appellate Body Working Procedures for Appellate Review.

Rule 15 provides that:
“A person who ceases to be a member of the Appellate Body may, with the authorization of the Appellate Body and upon notification to the DSB, complete the disposition of any appeal to which that person was assigned while a member, and that person shall, for that purpose only, be deemed to continue to be a Member of the Appellate Body.”

The Honduras paper specifies that there are no current criteria for determining when an Appellate Body member should continue to serve on an appeal under Rule 15. The paper also indicates options and criteria to be considered, such as “an Appellate Body member shall be able to continue to serve on cases where the oral hearing has occurred or started,” and that “no member of the Appellate Body shall be assigned to a new appeal later than 60 days before the final date of his/her appointment.”

US Launches Disputes Against Five Members Over Tariffs

Meanwhile, the United States this week initiated five more separate disputes at the WTO against China, the European Union, Canada, Mexico and Turkey. According to a US Trade Representative office press release, these disputes follow those countries applying tariffs in response to President Trump’s actions on trade in aluminium and steel “to protect the United States’ national security interests.”

“Retaliatory duties on US exports imposed by China, the EU, Canada, Mexico and Turkey are completely without justification under international rules,” the release said.

“These tariffs appear to breach each WTO Member’s commitments under the WTO Agreement. The United States will take all necessary actions to protect our interests, and we urge our trading partners to work constructively with us on the problems created by massive and persistent excess capacity in the steel and aluminum sectors,” said USTR Robert Lighthizer in the release.

One of the new cases filed by the US at the WTO is related to China’s alleged forced transfers of intellectual property and technology for US companies doing business there (IPW, WTO/TRIPS, 15 June 2018). This has contributed to the escalation of trade tensions and a tariff war between the two countries.

China on 16 July submitted an second addendum to its earlier 4 April request for WTO dispute settlement consultations with the US regarding tariff measures implemented through Section 301 of the US Trade Act.  According to a WTO official, the addendum now includes, as part of the consultations request, the publication by the US on 10 July of a list of 6031 Chinese products which would be subject to additional tariffs of 10 percent.  The addendum is available here.

 

Image Credits: WTO