Chimwembe -1893910- International Trade Law -Group Presentation PDF

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WTO Dispute Settlement Crisis-Appellant Body...

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INTERNATIONAL TRADE LAW GROUP PRESENTATION

By

RICHARD MANJOLI SIMEON CHIMWEMBE (1893910)

Submitted in partial fulfilment of the requirements for the degree Post Graduate Diploma in LAW

In the

SCHOOL OF LAW UNIVERSITY OF SOUTH AFRICA

SUPERVISOR: PROF FRANZISKA SUCKER (CORE RESEARCH ASSIGNMENT ) 2019

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TABLE OF CONTENTS

INTRODUCTION……………………………………………………………..……….3 THE LEGAL ISSUE .......…………………………………..………………………….3 THE CRISIS...……………………………………….…………………………………4. RECOMMENDATION...................................................................................................5 CONCLUSION…………………………………………………………………….…...6 BIBLIOGRAPHY………………………………………………………………….…...7

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I.

INTRODUCTION

The World Trade Organization’s (WTO) Dispute Settlement System is at risk of becoming inoperable by the end of 2019 as the United States continues to block appointments to the Appellate Body over a variety of concerns related to the body’s independence and activism. The US officials have blocked appointments of Appellant members to force WTO to negotiate new rules that address US concerns 1. GATT 1994 Uruguay Round Table created Appellant Body and Article 17 of the Uruguay Round Understanding and Rules and Procedures Governing the Settlement of Disputes (DSU) provides for a right to appeal to the Appellant Body, The Dispute Settlement Body is required to adopt the Appellants Bodys report unless there is consensus not to do so hence the decisions of the Appellant body are binding.2 II.

THE LEGAL ISSUE An essential component of the WTO’s dispute settlement system, the Appellate Body allows WTO members to appeal rulings 3. Generally consisting of seven members, the body is currently down to its last three judges, the minimum number required for it to hear and decide on appeals, the terms of two of those members are set to expire on December 10, 2019. At that point, the Appellate Body will be rendered incapable of operating unless the vacant seats are filled, a scenario that may arrive even earlier if one of the remaining members is forced to recuse himself from a case due to a conflict of interest4. In the event the Appellant Body has less than two members it will have no quorum to sit and hear appeals and this will adversely affect the legal rights of the aggrieved members under the WTO rules5.

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18-5 The Dispute Settlement Crisis in the World Trade Organization: Causes and Cures Tetyana Payosova, Gary Clyde Hufbauer, and Jeffrey J. Schott March 2018 found at https://www.piie.com/publications/policybriefs/dispute-settlement-crisis-world-trade-organization-causes-and-cures 2 Carole Murray et al The Law and Practice of International Trade 12th edition 2012 Sweet and Maxwell p975979 3 Article 17 4 Soumaya Keynes and Chad P. Bown, “Holding the WTO Hostage, Trump Style,” PIIE Trade Talks, Episode 4, September 22, 2017. 5 Article 16 of the DSU provides that if a party to the WTO dispute has notified its decision to appeal, WTO members can consider adopting the panel report through the Dispute Settlement Body only after the appeal is completed.

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The DSB cannot adopt panel reports in the event that an appeal has not been concluded by the Appellant body and any member can just lodge an appeal to the Appellant body in a move to block Panel reports as the appeal will not be held until there is a quorum at the same time the panel report will not be adopted before an appeal is finalised. III.

THE CRISIS The American administration has vetoed the nomination and appointment of Appellant Body members due to variety of criticism levelled against the Body. The Trump administration’s well-known dissatisfaction with trade arrangements has led to US withdrawal from the Trans-Pacific Partnership (TPP) and renegotiations of the North American Free Trade Agreement (NAFTA) and the Korea-US FTA (KORUS). The WTO, the president has said, “was set up for the benefit of everybody but the United States6, The United States has accused the Appellant Body of judicial overreach claiming that the Appellate Body has overstepped its mandate in the DSU in a number of ways. The United States claims that the Appellate Body in its rulings has reversed factual findings of panel reports and created new obligations or reinterpreted existing obligations in a matter not previously agreed upon by WTO members7.

Critics of the Appellate Body claim those practices have made U.S. trade remedies less effective at addressing unfair dumping and subsidies. In addition to the perceived judicial overreach, the United States has criticized the body’s frequent failure to produce reports within the 90-day period provided by WTO members in the DSU8. Recently, the Trump administration has taken issue with the Appellate Body allowing its members to finish working on cases even after the expiration of their terms without prior permission from the WTO membership9.

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John Brinkley, “Trump Is Quietly Trying to Vandalize the WTO,” Forbes, November 27, 2017; Shawn Donnan and Benedict Mander, “Trump Attack on WTO Sparks Backlash from Members,” Financial Times, December 10, 2017; Economist, “As WTO members meet in Argentine, the organization is in trouble,” December 7, 2017. 7 Ibid 8 DSU Article 20 9 Ibid note 6

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Figure 1 Timeline for the Appellate Body composition;10 NAME

DETAILS

PERIOD

NUMBER OF MEMBERS

Hong Zhao

appointed after Yuejiao Zhang completed her term

December 1

7 members

2016

Ricardo Ramírez-

Completed his term. Allowed by

. June 30

6

Hernández

AB fiat to complete his appeals. EU

2017

members

August 1

5 members

blocked appointment of successor Hyun Chong Kim

Resigned. No new appointment followed

Peter Van den Bossche

2017

Completed his term. No new appointment followed

Shree Baboo Chekitan

Will complete his term.

December 11

4

2017

members

September 30 2018

3

Servansing

members

Ujal Singh Bhatia

Will complete his term.

December 10 2019

and Thomas R. Graham

IV.

RECOMMENDATIONS Robert Lighthizer who is Trumps Trade envoy submitted that,”to ensure the proper functioning of the dispute settlement system, there are several paths forward. For example, WTO members could agree on new procedures calling on the Appellate Body to submit issues of legal uncertainty arising on appeal to respective WTO committees for further discussion and negotiation among WTO members. Such “legislative remand” procedures would link the dispute settlement function with the

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Ibid note 1 at 3

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1 member

role of the WTO as a forum for permanent negotiations. When a consensus cannot be reached among all WTO members, the General Council (comprising all WTO members) can use the latent tool of “authoritative interpretations” by a three-fourths majority vote to resolve ambiguities in the WTO text. These steps would return the WTO to its “essential focus on negotiations,” 11

V.

CONCLUSION There is likely to be an incapacitation of the WTO appeal system which will also affect the validity of the Panel reports if the vacant seats for the Appellant members will not be filled by December 2019.This will create a legal crisis in the Dispute settlement system of the WTO since Appeals will remain unresolved and the DSB will not be in apposition to adopt panel reports when there is a pending appeal, hence WTO rules will not be enforceable. The rights and obligations of the concerned members into a dispute will be affected. Other commentators have written that the members might abandon the WTO all together and focus on negotiating bilateral and regional trade agreements. In the absence of a rules-based system to settle disputes, trade conflicts are more likely to trigger unilateral tariffs and other retaliatory measures. Failure to resolve this crisis thus runs the risk of returning the world trading system to a power-based free-forall, allowing big players to act unilaterally and use retaliation to get their way. In such an environment, less powerful players would lose interest in negotiating new rules on trade12

11 Robert Lighthizer, “Opening Plenary Statement of USTR Robert Lighthizer at the WTO Ministerial Conference”, December 2017, https://ustr.gov/about-us/ policy-offices/press-office/pressreleases/2017/december/ opening-plenary-statement-ustr. 12 William Reinsch and Jack Caporal Center for Strategic and International Studies (CSIS)Article25-effective way to avert WTO crisis Washington found on https://www.csis.org/

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VI.

BIBLIOGRAPHY Articles Robert Lighthizer, “Opening Plenary Statement of USTR Robert Lighthizer at the WTO Ministerial Conference”, December 2017, https://ustr.gov/about-us/ policyoffices/press-office/press-releases/2017/december/

opening-plenary-statement-

ustr. Soumaya Keynes and Chad P. Bown, “Holding the WTO Hostage, Trump Style,” PIIE Trade Talks, Episode 4, September 22, 2017. The Dispute Settlement Crisis in the World Trade Organization: Causes and Cures Tetyana Payosova, Gary Clyde Hufbauer, and Jeffrey J. Schott March 2018 found at https://www.piie.com/publications/policy-briefs/dispute-settlement-crisis-worldtrade-organization-causes-and-cures

William Reinsch and Jack Caporal Center for Strategic and International Studies (CSIS) in Washington found on https://www.csis.org/

Books Carole Murray et al The Law and Practice of International Trade 12th edition ( 2012) International Instruments Articles for Rules and Procedures Governing the Settlement of Disputes (DSU)

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