In July, I mentioned that the the WTO Dispute Settlement Reform Process was underway, with one of the key topics being a fix for the Appellate Body crisis. People can follow the discussions in limited detail as WTO news summaries are released, or in somewhat greater detail a few weeks behind the actual developments, as meeting minutes are derestricted. The Minutes of the Heads of Delegation meeting from October 11 are now available. (In addition, a November 21 meeting happened as well, and you can read the WTO's short news summary here.)
With regard to the October meeting, here's an excerpt of the report provided by Jessica Dickerson (Australia), focusing on the work being done on the issue of appeal/review:
2.1. Ms. Jessica Dickerson (Australia), speaking on behalf of the Co-Convenors, made the following report:
"Since to recall, the technical work on Appeal/Review is organised around six sub-topics, which are set out in the Transparency Note. There are many overlaps and connections between these subtopics but they are nevertheless useful to structure our discussions. Since the beginning of expert-level work in this formal process, we have discussed each of the six sub-topics at least twice.
We have had detailed exchanges of perspectives on the sub-topics of Access to the Mechanism and the Form of the Mechanism. In view of their close relationship, we have begun to discuss these subtopics together and will continue to do so. We do not have any breakthroughs to report to you today, but we are having very good conversations that deepen our understanding of each other's interests and concerns. Similarly, discussions are continuing on the Standard of Review that adjudicators should apply in reviewing a panel's decision, but Members have different views regarding whether the existing standard should be clarified or changed and, if so, how."
So, no breakthroughs, but good conversations, and different views on the standard of review. Here's more:
"At this point in time, my fellow Co-Convenor on Appeal/Review, Joël Richards, from the delegation of Saint Vincent and the Grenadines, and I have identified four potential reforms that show promise in terms of their potential to address some interests and concerns of Members. These are listed at the top of page 3 of the Transparency Note and relate to the sub-topics of Scope of Review, Reducing/Changing Incentives to Appeal and Clarifying Members' Expectations of Adjudicators. However, we would like to emphasize that there are also other reform ideas under both Scope of Review and Reviewing/Changing Incentives to Appeal that experts are continuing to discuss.
Regarding the four possible reform ideas in the Transparency Note, as deeper engagement on these ideas is needed to make further progress, we have organised a workshop for experts next Friday, 18 October, that will focus on the three ideas in paragraphs a to c in the Note.
The purpose of the workshop is to deepen experts' understanding of the ideas, to develop the ideas further, if necessary, and for the participating experts to exchange questions and answers regarding the ideas. We strongly encourage your delegation to attend, in person or virtually, but are also available to brief any experts that cannot."
Still not a lot of specificity yet, and as far as I know the Transparency Note is not publicly available, but here's something:
"With respect to the fourth reform idea identified in the Transparency Note as showing promise at this stage of the discussions, which is to Clarify Members' Expectations of Adjudicators, experts have expressed general support for maintaining the current 60 or 90-day timeframes for appeal/review proceedings, with some advocating for a higher upper limit, such as 120 days, and some also seeking flexibility in complex disputes. We will continue our discussions and, in response to a request from experts, we will consider data provided by the Secretariat regarding Appellate Body timeframes.
Another aspect of our work is clarifying Members' expectations of adjudicators in relation to making appeal/review proceedings more efficient, which links to our discussions on timeframes. While there is considerable support for enhancing efficiency through reforms such as word limits for submissions, many capacity-constrained Members hold concerns that such reforms could make their engagement in the system more difficult. Experts intend to begin discussing in more detail what potential streamlining reforms might look like and, in so doing, see if concerns regarding capacity can be addressed.Regarding the output or reports produced by adjudicators, experts generally support the following three reforms:
a. Ensuring that adjudicators exercise judicial economy to focus on what is necessary to resolve the parties' dispute.
b. Clarifying that adjudicators' reports do not have precedential value.
c. Clarifying adjudicators' responsibilities for decision-making and drafting reports.
Each of these possible reforms is addressed in the Informal Consolidated Text so, at an appropriate time, experts should consider whether the draft text regarding those reforms reflects their interests and addresses their concerns.
As the Co-Convenors for Appeal/Review, our assessment is that the four potential reform ideas I have just described – as set out in the Transparency Note – may soon be ready to be reflected in draft text. This would not signal that any Member has agreed to the ideas or that consensus has been reached. It would simply enable experts to continue to develop the ideas in more detail and therefore to assess in a more fulsome way whether such reforms would meet their interests. We would ask for your support to move some ideas to drafting in the near future.
It is important to clarify that, if some potential reform ideas move to a drafting phase, we will ensure that experts also continue to discuss the sub-topics and ideas on which, so far, less progress has been made.As you know from the Transparency Note, Joël and I have recently held informal consultations with interested Members to hear their views regarding the process, the reform ideas under discussion and how to advance our work. There was considerable support for holding more meetings, including in different configurations, provided that transparency and inclusiveness were maintained. Many delegations also said that discussions on some reform ideas were now sufficiently mature to be reflected in draft text. We would like to thank delegations for their time to meet with us and remain available for further consultations with any Member.
To assist our ongoing technical work, Joël and I will circulate today an updated draft of the document known as the Appeal/Review Tables, which will reflect the progress made in the discussions since the summer break in Geneva. We hope your experts here and in capitals will continue to find this document useful."
This overview is helpful, although there is obviously a lot that we on the outside are not able to see. On the substance, I'll just note briefly that with regard to precedent, I'm not sure what everyone thinks "Clarifying that adjudicators' reports do not have precedential value" means. I assume that going forward, parties to disputes will continue to cite to prior reports as persuasive authorities, which means they have some precedential value. It may be that we just end up with a slight change in culture, under which parties can argue a bit more about whether a particular prior report should be followed, and panels and any appeals body have more flexibility in whether to follow those reports.
WTO Members also weighed in on these issues. Here is a sampling:
3.4. The representative of China made the following statement:
"First, we reaffirm our strong commitment to delivering the reform mandate by 2024. Second, we praise the substantial progress made by our experts under the leadership of the Facilitator and the Co-Conveners, and the swift change of gear after the summer break. Third, we fully agree with the next steps outlined in the HOD Transparency Note, in particular to start drafting for mature elements on a rolling basis, while developing further convergence on unresolved elements. We count on our experts to have a full set of drafts ready by the end of November for political consideration and accelerate the discussions to meet that end. Again, do not let perfect be the enemy of good."...
3.9. The representative of India made the following statement:
"It is heartening to note the progress that has been made across various difficult issues. For India, the primary motivation for involvement in this process is an early restoration of the Appellate Body. India asserts that it is necessary, and critical, to restore the two-tier structure and balance that was envisaged under the Marrakesh Agreement. To this end, it is important for us that any reform in the system preserves the balance of interests. Changes such as reworking the scope of interim review or introducing novel concepts like 'materially significant impact' should be undertaken with extreme caution. ... We look forward to continuing to engage in these discussions with a view to speedy restoration of the Appellate Body."...
3.15. The representative of Brazil made the following statement:
"The dispute settlement mechanism of the WTO is an absolute priority for Brazil. In its current dire condition, it negatively impacts on the work and functioning of the organization, thereby weakening the multilateral rules-based trading system. Since 2017, the dispute settlement mechanism experienced an increase in demand by Members while being challenged with a fall in membership. A final blow was given in 2019. Since then, Members do not have a fully and well-functioning dispute settlement mechanism. How much longer can the organization endure without one of its main pillars? This is a question we should be asking ourselves as the deadline of 2024 approaches. We keep repeating the need to 'restore a legally binding two-tier system', but these words do not appear as such in the mandates given by the Ministerial Conference. The Ministerial mandate, on which we are working informally since April 2022, directs us to 'conduct discussions with the view to having a fully and well-functioning dispute settlement system accessible to all Members by 2024'. There is no mention of 'restoring', no specificity on how 'binding' it should be, nor on the number of 'tiers'. But there is a commitment to have a system that is 'fully and well-functioning by 2024', and the current one is not. In spite of all efforts, good work performed, and the enhanced inhouse inclusiveness and transparency since March, discussions on the dispute settlement mechanism remain mostly invisible to the outside world. We cannot maintain this process below the radar any longer, lest we give the impression nothing is happening. The paradox of an inclusive and transparent process being confidential cannot be lost on us. We cannot work to the detriment of the institution, whose existence has a global and multistakeholder reach. Little information so far on progress achieved, or the lack thereof, has been shared with the outside world. After a year and a half, what we have are incomplete informal documents of unclear levels of stability, and less still of general acceptance. We invested a lot of time on accessibility, an important issue that should be less controversial and easier to agree on; but has proven equally difficult to tackle. And within the topic of accessibility, efforts have now been diverted to lengthy and inconclusive discussions on a 'litigation fund'. We must bear in mind that accessibility and the funding of litigation for developing countries require a functional dispute system to begin with, not the other way around. Discussing access to a dysfunctional system beats the purposes of our efforts. The focus of discussions should be on appeal/review, the fundamental second tier of the mechanism that provides a final outcome to disputes, without which trade disagreements within the WTO linger endlessly as Members appeal to the void. Having a system that delivers a final decision, including the possibility of retaliatory measures, is essential to ensure WTO rules and discipline are respected and enforced. At this juncture, the perspective of fulfilling the mandate on DS Reform is rather dim. It is difficult to believe we are in a position to start drafting only one month prior to the 'by 2024' deadline, and that we can decide on a meaningful outcome by the last General Council in mid-December. Facilitators for drafting under each topic would still have to volunteer and self-guide, under a methodology of work and with goals that would be agreeable to Members. Perhaps it would be more realistic to work towards a common understanding on fundamental issues, such as: 'can we have a credible and enforceable mechanism by the set deadline?'; 'can we agree on a system that effectively delivers final decisions?'; 'does this require a standing appeal body with fixed membership, etc.?'. Brazil believes time is running out and we should be focusing on what can be achieved on the fundamental substantive issues."3.16. The representative of the European Union made the following statement:
"We agree that experts have had good discussions in those past few weeks, as reflected in the Transparency Note circulated ahead of today's meeting. We want to underline in particular the efforts that have been made to ensure transparency and inclusiveness of the discussions. The fundamental issue of appeal/review is still unresolved, and our efforts must focus on finding concrete solutions that meet the interests of all Members, building on the progress made so far. At this stage, the Transparency Note identifies four reforms that have that potential, and we agree. We also agree that, where we can, we should start legal drafting with respect to such reforms that show promise. We want to stress that it is not our task to come up with reforms on each of the six sub-topics under the topic of 'appeal/review'. These were identified by the Co-Conveners merely to structure the discussions, but they are not a checklist. Our task is to find solutions that will deliver a fully and well-functioning system. To achieve that goal, we have to find the right combination of reforms that meet the interests of all Members. That assessment must take into account the cross-cutting reforms contained in the draft consolidated text which ultimately will be part of the single reform package. ... To conclude, we look forward to continuing our engagement on appeal/review and on accessibility, in order to identify concrete solutions to these priority issues as soon as possible. As soon as those solutions are identified, we should look again at the entire package of reforms, including those contained in the draft consolidated text."...
3.36. The representative of the United States made the following statement:
3.37. "On next steps, we are generally okay with the process that you have laid out. On drafting, we have heard various comments. We agree that we should not rush to drafting on items that are not ripe. The working methodology used during the informal process and suggested here – thoroughly developing the contours of ideas before shifting to drafting groups – is one that worked well and that we should utilize. The Ambassador of Brazil asked how much longer we can continue to work under this posture. We cannot identify this issue as the most important, and then put in obstacles to doing the work needed. We understand the fast pace may be difficult for small delegations, but we need to find a way to move it forward. On substance, we need to be clear: We are not here to restore the Appellate Body as it was. The task is to work towards a 'fully and well-functioning dispute settlement system'. We will continue to work towards achieving that. To do that, we have to stop having the same binary conversation and instead be creative – there are creative ideas on the table that we need to continue to explore. At the end of the day, we are not going to roll over and accept any outcome – this issue is critically important to us. But we want to stress that we remain committed to working towards an outcome."
My read of the situation at this point is that the likelihood of success in the short-term is not great, and things are about to get more difficult. But I'm not on the ground in Geneva, so maybe don't put too much stock in what I have to say on this.
Recent Comments