This is from USTR's 2018 Trade Policy Agenda and 2017 Annual Report (p. 28), released yesterday:
v. The Appellate Body claims its reports are entitled to be treated as precedent
Without basis in the DSU, the Appellate Body has asserted its reports effectively serve as precedent and that panels are to follow prior Appellate Body reports absent “cogent reasons.” However, this is not consistent with WTO rules. WTO Members established one and only one means for adopting binding interpretations of the obligations that they agreed to: Article IX:2 of the WTO Agreement. While Appellate Body reports can provide valuable clarification of the covered agreements, Appellate Body reports are not themselves agreed text nor are they a substitute for the text that was actually negotiated and agreed. Indeed, the Appellate Body’s approach means that panels are simply to abdicate their responsibility to conduct an objective assessment of the matters before them and just follow prior Appellate Body reports.
Everyone agrees that Article IX:2 of the WTO Agreement has more authority than an Appellate Body clarification, so let's put that aside.
The issue here is the precise role of Appellate Body reports as precedent for panels. USTR says these reports "provide valuable clarifications of the covered agreements," but says they "are not themselves agreed text nor are they a substitute for the text that was actually negotiated and agreed." I think everyone would agree with this as well.
The disagreement is over this: "the Appellate Body has asserted its reports effectively serve as precedent and that panels are to follow prior Appellate Body reports absent 'cogent reasons.' However, this is not consistent with WTO rules."
On the one hand, we have the U.S. saying that Appellate Body reports "provide valuable clarifications." On the other hand, we have the Appellate Body saying that panels are to follow prior Appellate Body reports absent "cogent reasons."
Are the two approaches really all that different? What is the point of a judicial clarification if it does not serve as precedent?
With the GATT, we had panel reports issuing conflicting clarifications, and that was seen as problematic. The Appellate Body was, in part, a response to the problem of inconsistent panel interpretations. By saying that panels must follow Appellate Body reports absent “cogent reasons,” the jurisprudence becomes more consistent and Members have a clearer understanding of what the rules mean. The U.S. and other Members frequently cite Appellate Body reports in their submissions, presumably because they think these reports have some degree of precedential value.
An alternative approach would be that panels could choose not to follow Appellate Body clarifications for any reasons, whether cogent or not. But that would give Members very little certainty over what WTO rules actually mean. Appellate Body clarifications would not be particularly valuable if panels were not giving them any weight.
Of course, panel interpretations are subject to appeal, so ultimately the Appellate Body can keep the jurisprudence consistent. But having panels go off in their own direction will just add confusion to the process.
I'm sympathetic to some of the other U.S. concerns in the document (which I'll try to blog about later), but on this one, I'm not sure what they have in mind and how it would change the system for the better.
