Has it struck you that, so far, WTO Members and most dispute settlement commentators keep their focus almost exclusively on the WTO Appellate Body (AB)? Be it criticizing or defending the AB, trying to save or reform it, or thinking of possible alternatives for “appellate review” (such as Article 25 arbitration).
Though more WTO panels are pending than ever before, panels have, surprisingly, been spared from (even US) criticism. Little attention is paid also to what will happen with panels and panel reports as of 11 December 2019, when (as most predict) the Appellate Body has only one member and (again, quite likely) no alternative for appellate review is hammered out (i.e., "under the status quo") …
Firstly, WTO dispute panels will still be automatically established and composed, and publicly circulate their final reports. Again, not even the United States has, to date, signaled that it wants to end WTO dispute settlement altogether; their critique is focused solely on the Appellate Body (AB), not panels.
Secondly, the question remains, however, whether, without an AB, panel reports will continue to be automatically adopted by the DSB, following the negative consensus rule. Could either party still “appeal” the panel report (to "nowhere") so as to block its DSB adoption, knowing that there is no AB to “complete” the appeal in the first place?
Will the AB (or the remaining AB member), the AB/WTO Secretariat (or its Director General) or the DSB chair find a way to “complete” appeals in some fashion and thereby preserve automatic adoption of panel reports? Or will “appeal as de facto veto” quickly establish itself as an available option? If so, will losing WTO Members (be allowed to) resort to it in only exceptional circumstances (using some “good faith” test) or will this become the “new normal”. Members may also renounce their right to appeal (be it ex ante or ex post; bilaterally or as a group, with or without a condition of reciprocity) or agree on other fixes so that in some (or even most?) cases panel reports may still get adopted by the DSB, following the traditional negative consensus rule, thereby preserving a core feature of today's rules-based dispute settlement.
Thirdly, assuming that the Appellate Body “disappears” (albeit temporarily) but assuming further that at least some (or even most) panel reports continue to get adopted by the DSB (a big “if”), what would this mean for panels, and how they are composed and operate, and for the broader system of WTO dispute settlement?
A couple of things immediately come to mind (I am sure there are many more) …
- Without an Appellate Body, will a different type of panelists be appointed (e.g. more lawyers, more experienced/repeat appointments?)
- With the role of panelists becoming more prominent, will the current division of labor between panelists and the WTO Secretariat staff supporting them, shift?
- Without an Appellate Body, on which the EU and the US had a de facto seat, will the EU and the US continue to accept that, as a result of the nationality rule for panels (and the fact that the EU and the US are involved in most cases, as party or third party), few EU/US nationals sit on panels (the same will be true for China)?
- Without an Appellate Body “breathing in their neck”, that is, without the risk of reversal on appeal, how will panels approach their task? Will they shorten their analysis, be more to the point? Will they be more (or less) creative or daring? Will they focus less on legal detail, and more on settling the dispute? Or will they dodge issues, provide less reasoning and thereby become less convincing?
- Without an Appellate Body, will panels continue to rely heavily on past AB jurisprudence (which, over time, may age) or will panels slowly develop a new autonomy and start to explore alternative interpretations?
- Without an Appellate Body, how will panels and WTO Members react to discrepancies between panel reports? Will “a thousand flowers bloom”, will some degree of consistency emerge over time (through trial and error) or will the system break when WTO Members realize that compliance or breach depends less on the facts of the case, and more on who sits on the panel …
- If, indeed, the question of “who sits on the panel” becomes more important, will parties ever agree on panel composition and will the DG when appointing panelists as fallback manage to appoint individuals that remain acceptable to both parties?
- If the ultimate check on panels is not risk of AB reversal, but the threat that the losing party blocks DSB adoption (assuming the option of “appeal as de facto veto” becomes available), how will that influence the analysis and approach of panels (more diplomatic, less legal)? Will panels be able to stay neutral?
- Will panel reports (adopted or unadopted; consistent with or deviating from previous panel or AB reports) have the same “compliance pull” as today’s AB reports; if not, will their “compliance pull” be enough to maintain the credibility of the system?
The AB was originally (and pretty much as an “afterthought”) set up with two core functions in mind: control “rogue panels”, and offer a degree of consistency. For some, it is now the AB that has "gone rogue” and, on this view, the AB may be consistent but, at least on some issues, "consistently wrong”. Leaving aside whether this critique is justified, can the AB’s function of “control” be replaced by a renewed back-and-forth between a series of WTO panels and/or the Membership? Can the AB’s “consistency” task be fulfilled by WTO panels piecemeal coalescing around agreed lines of interpretation, with some kind of Membership input along the way? Or is, in today's context (where diversity runs high, and trust low) neither possible without some system of appellate review?
What happens in the immediate aftermath of December 10 will be crucial: not so much whether Members will be able to agree on a new type of appellate review, or to resuscitate the AB (this will probably take time, if it happens at all), but rather how WTO Members (individually and collectively), the lawyers advising them, the remaining AB member, AB/WTO Secretariat, DG and DSB chair will deal with potential "appeals to nowhere", the adoption of panel reports, and the composition and operation of panels, and, crucially, how parties and panelists themselves will behave with the AB gone.
It is one thing to lose the AB, quite another for rules-based settlement of trade disputes to end altogether. If little can be done, in the near term, to save the former (and I hope I’m wrong!), saving the latter may not be too late.
We will discuss some of these questions, and more, at a workshop this Friday, organized by the WTI. Please tune in and share your ideas …
