Bryce Baschuk of Bloomberg has posted a European Commission document with some WTO modernization proposals. This is from the part on dispute settlement:
EU position:
Without prejudice to EU position on whether the concerns formulated by the United States are well founded, this paper explores avenues in which addressing these concerns could lead to the improvement of the system, while preserving and further strengthening its main features and principles.
In order to achieve balance, this paper also explores other potential improvements. In particular, in 2016, following the US' veto against the re-appointment of one Appellate Body member, there was a wide recognition that a systemic solution was needed in order to preserve the independence and impartiality of Appellate Body members. Indeed, the non-reappointment of an Appellate Body member for reasons related to the content of particular rulings has created a situation in which there may be doubts as to whether decisions of particular Appellate Body members are influenced by such threat of non-reappointment. This situation is not tenable and needs to be addressed systemically.
These various solutions should be seen as part of one package. In particular, the strengthening of the independence of the Appellate Body and its members allows for introducing an additional mechanism for their interaction with the WTO Members without fear that such interaction may unduly influence their decisions.
Future proposals
The EU should put forward a comprehensive proposal to address the concerns raised by the WTO Member blocking the Appellate Body appointments, where this may improve the functioning of the system, while preserving and further strengthening the main features and principles of the WTO dispute settlement system. This proposal will - in a first stage, and in order to unblock the appointments - aim at improving the efficiency of procedures, at creating conditions for a better interaction between the Appellate Body and the WTO Members while at the same time strengthening the independence of the Appellate Body. In a second stage, substantive issues concerning the application of WTO rules would be addressed.
I. First stage: comprehensive amendment of the provisions of the DSU relating to the functioning of the Appellate Body addressing all points of concern with the "approach" of the Appellate Body
This amendment could include the following elements. A deeper reflection would be needed to define the exact scope and nature of these amendments:
i) Article 17.5 of the DSU and the issue of 90 days
Changing the 90-days rule in Article 17.5 of the DSU by providing an enhanced transparency and consultation obligation for the Appellate Body. In particular, Article 17.5 could be amended to provide that "In no case shall the proceedings exceed 90 days, unless the parties agree otherwise".
The Appellate Body would need to consult with the parties early in appellate proceedings (or even before the appeal is filed) if it estimates that the report will be circulated outside 90 days. If there is no agreement of the parties on the exceeding of this timeframe there could be a mechanism pursuant to which the procedure or working arrangements for the particular appeal could be adapted to ensure the meeting of the 90-day timeframe. For example, the Appellate Body could propose to the parties to voluntarily focus the scope of the appeal, set an indicative page limit on the parties' submissions or it could take appropriate measures to reduce the length of its report. This could also include the publication of the report in the language of the appeal only, for the purposes of meeting the 90-day timeframe (the translation to the other WTO languages and formal circulation and adoption would come later).
It should however be clear that those changes - such as the consultation obligation -- cannot impact on the (negative consensus) adoption procedure in Article 17.14 of the DSU nor on the validity of late Appellate Body reports.
In addition, the following changes would have a positive impact on the timeframes of appellate review:
- Increasing the number of Appellate Body members from 7 to 9. This would help increasing the efficiency of the Appellate Body while improving the geographical balance on the Appellate Body after the accession of important Members since 1995. Also, the internal
organisation of the Appellate Body could be improved (for instance three divisions of three members could hear an appeal at any time, without overlaps with regard to the membership of these divisions).- Providing that the membership of the Appellate Body is a full time job (currently, de jure, pursuant to the DSB decision WT/DSB/1, it is a part time job). This would improve the efficiency of the Appellate Body. This would need to be accompanied with appropriate changes in the employment conditions (remuneration, pension etc.).
- Expansion of the resources of the Appellate Body Secretariat could also be considered as an accompanying measure (this would not require any change in the DSU).
ii) Transitional rules for outgoing Appellate Body members
Codifying Rule 15 (or similar) in the DSU, thereby addressing head on the US concern that this Rule was not approved by WTO Members. For example the D5U could provide that an outgoing Appellate Body member shall complete the disposition of a pending appeal in which a hearing has already taken place during that member's term.
iii) Findings unnecessary for the resolution of the dispute
Modifying Article 17.12 of the DSU, according to which the Appellate Body "shall address each of the issues raised" on appeal. For instance, it could be added "to the extent this is necessary for the resolution of the dispute". This would address concerns about Appellate Body making long "advisory opinions", or "obiter dicta", not necessary to resolve the dispute. Indirectly, this would also address the concern related to Article 17.5 DSU (90 days).
iv) The meaning of municipal law as the issue of fact
It could be clarified that "'issues of law covered in the panel report and legal interpretations developed by the panel" do not include the meaning of the municipal measures (even though they do and should include their legal characterisation under the WTO law). To that end, a footnote could be added to Article 17.6 of the DSU "For greater certainty [... j"
v) The issue of precedent
Providing for regular exchanges between the Appellate Body and WTO Members (e.g. annual meetings), on top of the Members' right, in Article 17.14 of the DSU, to express views on Appellate Body reports when they are adopted. This would provide an additional "channel of communication" where concerns with regard to some Appellate Body approaches could be voiced (for example treating previous rulings as precedents, no evolution of case-law). Indeed, the WTO Membership would have a chance to comment on more systemic issues or on trends in the jurisprudence in meetings unrelated to the adoption of particular Appellate Body reports. At the same time, this change would not be inconsistent with the independence of the Appellate Body members, especially if they were not, in any event, eligible for re-appointment (see below the proposal for one but longer term). Adequate transparency and "ground ruies" for such meetings could also be put in place, in order to avoid undue pressure on Appellate Body members.
vi) independence of Appellate Body members
Providing for one single but longer (6-8 years) term for Appellate Body members. This would address the EU concern (and that of the vast majority of the WTO Membership) with respect to the independence of the Appellate Body. It would also improve the efficiency of the Appellate Body (there would be certainty about the length of one's term and a longer term would allow to benefit from the experience on the job).
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The amendments envisaged above would all concern Article 17 of the DSU.
It is not the intention to pursue other matters, such as these that are being pursued in the context of the DSU review negotiations. Indeed, the approach would be to proceed with the amendments swiftly, so issues that are known to be controversial should be avoided.
Such amendments could be made pursuant to the applicable (simpler) amendment procedure in Article X:8 of the WTO Agreement, according to which amendments to the DSU can be decided by the Ministerial Conference, on a proposal from any WTO Member. The decision is taken by
consensus and amendments would take effect upon approval by the Ministerial Conference. In the intervals between meetings of the Ministerial Conference, amendments could be approved by the General Council (see Article IV:2 of the Marrakech Agreement).At EU level, a Council decision pursuant to Article 218(9) TFEU would be required for joining such consensus. The Council would act by qualified majority (Article 16(3) TEU), on a proposal from the Commission.
II. Second stage: addressing substantive issues
As set out above, the US takes issue with the interpretations developed by the Appellate Body ("overreach") especially, but not exclusively, in the trade defence field.
Without prejudice to the EU position on the alleged "overreach" by the Appellate Body, it is pointed out that the substantive rules as such can be modified or interpreted by the WTO Membership in accordance with the relevant procedures.
In the second stage, once the AB appointment process has been unblocked, WTO Members would engage in discussions on such possible changes or authoritative interpretations.
