Following up on Simon’s last post, I want to raise a few questions on the US appeal. In "U.S. Files 'Preemptive' Appeal Against WTO Ruling on Chinese Rare Earths", BNA WTO Reporter, April 10, 2014, Daniel Pruzin reports:
The U.S. has filed a “preemptive strike” appeal against a World Trade Organization panel ruling that found in favor of a joint complaint filed by the U.S., the European Union and Japan against China's restrictions on rare earths.
A U.S. official speaking on condition of anonymity said that the appeal was filed April 8 to accelerate appeals proceedings in the case. The official said that China has yet to file an appeal against the ruling but is expected to do so.
“This is a preemptive strike to bring urgent relief to American businesses and workers,” said Trevor Kincaid, spokesman for the Office of the U.S. Trade Representative (USTR).
Under Rule 23 of the WTO Appellate Body's working procedures, the U.S. appeal will now obligate China to file an “other appellant” appeal within five days challenging any aspects of the panel's findings which it feels are in error. Had the U.S. not filed its preemptive appeal, China and the other parties in the dispute would have had until May 25 to file a challenge to the panel's findings.
So, the victorious U.S. filed an appeal on minor procedural aspects of the Panel decision to accelerate the appeal process. As a result of the US “preemptive strike”, the time period for China to file its appeal has been shortened by more than 40 days - from 60 days (until May 25) to 18 days (until April 13).
I assume this is the first time such a tactic has been used in WTO litigation history. Here are my questions:
First, is it fair for a winning party to use such a tactic to substantially cut the appeal time of the losing party? All litigators know what a difference 40 days can make for the preparation of a complex case (Rare Earths is such a case as it involves complex systemic issues). It is true that the parties learn the result of the Panel decision long before the Panel report is circulated. But it is the expectation set by the DSU rules that matters. The losing party will plan its appeal according to these rules. If the 60-day period is no longer considered necessary, the rule should be changed through proper procedures.
That brings to my second question: What is the rationale of the 5-day rule for “other appellant” in the AB working procedure (www.wto.org/english/tratop_e/dispu_e/ab_procedures_e.htm)? Is it designed to change the 60-day rule?
Lastly and most curiously, why did the US feel the need to make such a move? The official reason offered by the USTR is to “bring urgent relief to American businesses and workers”. But as I recall - this may surprise many - China’s export quotas on rare earths have never been fully used up in any given year. In 2012, barely over half of the export quotas were used (https://sg.news.yahoo.com/china-sets-rare-earth-export-quota-second-half-044739860.html). And prices for rare earths remain depressed in recent months due to weak demand inside and outside China. (http://www.metal.com/publication/quarterly-report/402_china-rare-earth-quarterly-2013q4). So what is the real reason(s) for the maneuver? Domestic politics? WTO politics? Or simply to undermine China's ability to make an effective appeal? I hope it is not the latter one, as that would raise a serious issue of "good faith".
Hope someone can shed light on the above questions.
