Former WTO DDG Andy Stoler has some proposals for changes to WTO DS in response to the Appellate Body crisis. I don't agree with all of them, but they are certainly interesting. Some of them are pretty bold! Here are a few:
Review of facts / treatment of municipal law
Issue:
Contrary to art. 17:6, the Appellate Body has taken the position that it has the right to review panel reports’ factual aspects, and has frequently treated the meaning of municipal law as a matter of WTO law, to be decided by the Appellate Body de novo in an appeal under DSU art. 17:6.
Solutions:
a) Take action to strengthen Members’ direction to the Appellate Body that it’s barred from reviewing panel reports’ factual aspects. On the issue of municipal law, give the Appellate Body further guidance on the line between factual and legal issues.
b) In any case where the Appellate Body, in its report, fails to abide by art. 17:6 requirements, provide for a procedure where a party to the appeal can seek arbitration and modification of the Appellate Body report prior to the DSB adopting it.
Required actions by WTO Members:
a) Add a new fn. 7 bis to art. 17:6 that reads:
For greater certainty, the “issues of law covered in a panel report and legal interpretations developed by the panel” do not include the panel findings with regard to the meaning of the municipal measures of a party, but do include the panel findings with regard to their legal characterisation under the covered agreements. In addition, whether or not a panel has made an objective assessment of the facts before it, as required by DSU Article 11, is not a legal question and does not fall within the scope of appellate review.
Comment: The first sentence of this new footnote is already supported by Australia and a large number of delegations (see annex to document WT/GC/W/752).
b.1) Amend art. 17:14 as follows (new text in italics):
Except in those circumstances where a party to the appeal formally notifies the DSB within 30 days of the circulation of an Appellate Body report that they believe that aspects of the Appellate Body report do not respect the provisions of Article 17:6, 17:12, 17:13 and/or Article 19:2, an Appellate Body report shall be adopted by the DSB and unconditionally accepted by the parties to the dispute unless the DSB decides by consensus not to adopt the Appellate Body report within 30 days following its circulation to the Members. This adoption procedure is without prejudice to the right of Members to express their views on an Appellate Body report. Where aspects of a report are challenged on grounds of Article 17:6, 17:12, 17:13 and/or Article 19:2, the provisions of Article 25:1 bis shall apply.
b.2) Amend art. 25 by adding a new art. 25:1 bis to read:
Where a party to an appeal has notified the DSB that it believes aspects of an Appellate Body report are inconsistent with the provisions of Article 17:6, 17:12, 17:13 and/or Article 19:2, the issues raised shall be submitted to arbitration. The arbitration shall be conducted in a period not to exceed 60 days by a panel composed of the Chairperson of the DSB, the Chairperson of the General Council and the Chairperson of the Trade Policy Review Body. Where the decision of the arbitration panel supports the position of the party requesting the arbitration, the offending aspects of the Appellate Body report shall be deleted from the report and stricken from the record before the Appellate Body report is adopted by the DSB, in accordance with the provisions of Article 17:14. Where the decision of the arbitration panel upholds the original Appellate Body report, the report shall be adopted by the DSB.
b.3) Add a fn. to new art. 25:1 bis to read:
Where one or more of the chairpeople designated to serve on the arbitration are nationals of the parties to the appeal or otherwise conflicted, they shall be replaced by a representative of a WTO Member selected by the Director General in consultation with the Member launching the request for arbitration and a representative of the Appellate Body.
Comment: These proposed DSU modifications are intended to ensure that future Appellate Body reports that don’t respect the provisions of art. 17:6, 17:12, 17:13 and/or 19:2 are not automatically adopted as “WTO law”. Rather than establishing a “third tier” in WTO dispute settlement, it’s expected that such an amendment would: a) serve as a warning to the Appellate Body not to stray from its legitimate role; and b) where invoked in an arbitration, leave the Appellate Body report’s legitimate findings and conclusions intact, resolving the dispute as intended by the provisions’ original drafters.
The first sentence of a) has widespread support I think. The second sentence of a) seems to get rid of DSU Article 11 entirely. My sense is that there would be a good deal of opposition there. I'm curious what the US thinks.
b.1-3) creates a limited appeal mechanism for Appellate Body reports. That's a big deal!
Here are some more:
Overreaching interpretations, “obiter dicta” and stare decisis
Issue:
It’s been argued that the Appellate Body has wrongly dared to venture into uncharted territory by interpreting provisions that WTO Members left unclear in the texts—often intentionally to provide for “constructive ambiguity”—and by delivering opinions on issues not necessary to resolve a dispute. In addition, while it’s agreed that Appellate Body reports can provide valuable clarification of the covered agreements, they aren’t themselves agreed text, nor are they a substitute for the text that was actually negotiated and agreed.
Solutions:a) Amend art. 17:12 to read (new text in italics):
The Appellate Body shall address each of the issues raised in accordance with paragraph 6 during the appellate proceeding, to the extent necessary for the resolution of the dispute.Comment: This proposed amendment to art. 17:12 is already supported by Australia and a large number of delegations (see annex to document WT/GC/W/752).
...
c) Address the stare decisis precedent issue by amending art. 19:2 to read (new language in italics):
In accordance with paragraph 2 of Article 3, in their findings and recommendations, the panel and Appellate Body cannot add to or diminish the rights and obligations provided in 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.
a) seems fine to me. I'm not sure how much c) will change things from the current situation, though. I put forward a suggestion on this here, which adds the following text to DSU Article 3.2: "Clarifications provided by panels and the Appellate Body can have persuasive value, but are of less authority than the interpretations adopted under Article IX:2 of the WTO Agreement." I'm not sure mine will change the current situation either, although perhaps it will offer some additional clarity.
