This is from Inside US Trade:
The “why question,” according to two sources, is directed at the European Union. The EU has said it does not agree with the U.S. view on the Appellate Body but is willing to work with the U.S. to resolve the issue. The U.S. and EU have fundamentally different view about the function and nature of the Appellate Body. For the EU, an international court providing interpretations on law and precedential jurisprudence is an appropriate evolution for the Appellate Body, sources said. The U.S., however, is loath to surrender its sovereignty to an international body, especially one it argues was created in such a way to prevent that from happening.
The gap between the U.S. and the EU on the nature of the Appellate Body is unbridgeable, several sources said. Some believe the conversation the U.S. is seeking would not be useful because there are members -- particularly the EU -- that automatically disagree with the premise of the “why question.” Other sources suggest the conversation could be worth having, but say members first need more guidance on the U.S.’ ultimate goals.
I've heard a fair amount of talk recently about the different visions of the U.S. and the EU in relation to WTO dispute settlement and the Appellate Body, but I'm not convinced there is as much to it as people think. In my view, a lot of the distinction comes down to semantics. Are trade agreements contracts or are they governance through treaties (a distinction Lighthizer once drew)? Does the adjudication system involve courts or merely quasi-judicial bodies? Have we created a supra-national institution or just an international agreement? Should Appellate Body reports constitute "precedent" or should they have "persuasive value"?
Words do matter, but perhaps not always as much as it may seem. In reality, both the U.S. and the EU have areas where they worry about their sovereignty/domestic policy being infringed (e.g., for the EU, hormone-treated beef; and for the US, steel safeguard measure). And both the U.S. and the EU have areas where they push for expansive interpretations from courts/judicial bodies that will open up foreign markets by encroaching on domestic policy/sovereignty (e.g., for the U.S., hormone-treated beef; and for the EU, steel safeguard measure). As you can see from the examples I provided, this is kind of just two sides of the same coin.
There is a lot of agonizing about what words to use to describe the WTO dispute settlement system, and maybe they do matter a bit. But I don't think we should get too caught up in the labelling. The key is how the system operates. In my view, the basic operating vision supported by both the U.S. and the EU delegates about the same small amount of power to the dispute settlement system. It's certainly worth debating the specific parameters (deference in anti-dumping/margin of appreciation, scope of appeal, etc.) of the system, but the two sides really aren't that far apart in terms of how much power they want the system to have. Both sides want a flexible system that allows them to press offensive claims while avoiding politically sensitive defensive cases. In my view, that's what we have right now. If the current problems with the system result from finding the right words to describe it, we should be able to work that out.
It's also worth noting that neither the EU nor the U.S. is a single entity, as there are various views within each government. Perhaps it is the case that someone in the Commission has a very different vision than someone at USTR. But overall, I think everyone is more on the same page than they realize. Anyway, that's my impression from talking to the handful of people I know in each government. But maybe I haven't talked to enough people and things are much worse than I realize!
