By an odd coincidence, it seems that we have actually returned to the situation that prevailed in the previous GATT 1947 system. Recall that this system was characterized by a strange feature that allowed a veto by the losing party as soon as it communicated that it wanted to explore the feasibility of a mutually acceptable solution.
The only difference is that the previous veto is now replaced by lodging an appeal "in the void" by the losing party and communicating at the same time its intention to explore the possibility of a mutually acceptable solution. This is exactly what the United States did recently in DSC/436 when it communicated that "at this time, no division of the Appellate Body can be established to hear this appeal in accordance with DSU Article 17.1. The United States will confer with India so the parties may determine the way forward in this dispute, including whether the matters at issue may be resolved at this stage or to consider alternatives to the appellate process."
This return to the past is paradoxical since the WTO was precisely created to address the issue of the veto by the losing party in the GATT 1947 system. In this system, according to Davey, the losers "had to agree to lose before they can lose."
I would like here to add a note of hope that this (hopefully temporary) return to the past does not mean that the WTO is presently dead.The Panel stages stays alive and is not worthless. This is because, even in the GATT 1947 system, a vetoed Panel Report did not necessarily mean that the it was worthless. As noted by Hudec who was an expert of "commercial diplomacy" in the GATT 1947 system, most vetoed disputes eventually found a “solution” negotiated at a bilateral level where the conclusions of the Panel Report played a certain role. In fact, during negotiations for such a bilateral “solution”, the losing party was in a position of weakness since its interpretation had already been rejected by a neutral panel. Conversely, the party whose position had prevailed in the Panel’s Report would insist on the fact that the negotiated “solution” had to take account of the Panel’s conclusions.
The previous conclusion means that WTO Members should not fall into the trap of thinking that activating a claim before a panel is now worthless due the paralysis of the Appellate Body. WTO Members should remember that even in the context of the GATT 1947 system, a negotiated “solution” had to take account of the Panel’s conclusions.
