This is a guest post from law professor Wolfgang Weiss
The Appellate Body is dead - long live the WTO! What will happen with the enforcement of WTO law after the Appellate Body's ability to work has ceased - hopefully not permanently -?
The end of the Appellate Body's ability to function immediately triggers the question of how compliance with WTO law can now be enforced, since all future panel decisions can now be made void by lodging an appeal ("appealed into the void"). The Director General of the WTO has asked the members not to use this situation to introduce new protectionist measures. But such call alone is not enough to ensure compliance with WTO law. The New Green Deal just announced by the EU and its implications for trade law could be a first sign that Brussels could seize the opportunity to take measures against imports that offset their competitive advantages resulting from lower environmental standards in their home country, but whose WTO compliance is uncertain, at least controversial, in order to facilitate the implementation and enforcement of an undoubtedly laudable objective. You might think that you do not have to worry about this as much as before.
In this post, I would therefore like to consider a few alternative ways - especially within existing structures - of strengthening compliance with WTO law even after the AB´s impasse.
First of all, there is the path already taken by some to replace the AB with an arbitration procedure pursuant to Article 25 DSU by bilateral agreements. This requires an abundance of bilateral agreements between WTO members. Second, within the framework of bilateral trade agreements, specific dispute settlement mechanisms are available which can now be used more often by the states, as the EU is already doing. In principle, these mechanisms are perfectly suitable as a substitute for WTO dispute settlement. Very rarely do these agreements give priority to WTO dispute settlement, and even then the parties can deviate from it. The use of the FTA DSM could become difficult if a WTO dispute settlement procedure is already in place with regard to substantially equivalent obligations. But the AB's dysfunctionality could be referred to in order to lift the ban caused by such a fork in the road clause in this instance. Formally, the panels provided for in the FTA DSM do not decide on WTO law but on the FTA rules, but in the area of trade in goods in particular the basic lines of these rules are very close to the WTO basic principles in the GATT and in TBT and SPS, so that ultimately obligations are enforced which could also have been the subject of WTO dispute settlement. However, this only helps those trade relations that fall under trade agreements.
Another way to be contemplated would then be to consider whether the Trade Policy Review Mechanism offers a suitable structure for reminding states of their obligations under WTO law more stringently than before. The TPRM's task was not - and cannot be in the future - to examine individual measures of states for their WTO conformity. However, the criticism of some state regulations with regard to the relevant WTO requirements could be clearer in the future. However, this approach does not achieve much, since the TPRM only carries out the examination in a fixed cycle and in a fixed order, so that it cannot be carried out on a case-by-case basis and cannot respond to most recent challenges to WTO rules.
Other ways of institutionally strengthening compliance with WTO law therefore may seem much more promising:
Since the WTO members now know about the possibility of an "appeal into the void", they could agree by agreement at the beginning of a WTO dispute settlement procedure to dispense with an appeal. Such procedural rules already were sued with regard to the sequencing problem. This figure could also serve to define from the outset the recognition of a panel report as the final one. However, many will not be prepared to agree to this, even if it does have a certain incentive effect for both sides at the beginning, i.e. at a time when neither party knows what the outcome of the procedure will be.
Another recommended course of action for WTO members could be to make greater use of the path of good offices, conciliation and mediation provided for in Article 5 DSU. Towards the end of the consultation phase, a complainant may consider, instead of pursuing a panel procedure that would ultimately lead to nothing, to go down this path in order to bring the other party into a permanent dialogue on the issues at stake. But that also requires the willingness of the other side. Institutionally, the attractiveness could be strengthened by using the possibility for the Director General to offer his services (Art. 5 para. 6 DSU) as a rule (already provided for in Art. 24 para. 2 DSU for the LDCs) and by the WTO coming up with more suitable structures than previously provided for in communications by the Director General in order to stimulate this function, in particular by abandoning the previous renunciation of any legal conclusions. The conciliation and mediation could at least contribute to clarifying which regulations are relevant and what the line of the WTO dispute settlement has been so far in this respect, in the sense of a legal stock-taking. However, it must be acknowledged that the greater use of Art 5 DSU may promote the settlement of disputes, but admittedly not automatically compliance with WTO law. The stimulation of this way would shift the WTO dispute settlement again somewhat more in the direction of diplomatic negotiations, as under the GATT 1947.
However, the central question seems to me to be what repercussions the inability to work of the AB has on the decisions of the panels, beyond the fact that the parties are likely to become even more demanding in their selection of panelists. For the panels, it is to be expected that they may and should try to further develop their reports in a way that resolves the dispute in a mutually acceptable, if not convincing way. The reasoning of the reports may deal with the arguments of the parties in even more detail and make much greater efforts to present and explain the panel´s position convincingly to the parties. Compliance with AB decisions on relevant issues may no longer play the central role it has played so far. Panels can now move more freely. It will be much more important to appease the parties than to adopt the AB's opinion. In substantive terms, this may imply exploring more thoroughly the room for manoeuvre that WTO law offers for respecting national policy decisions and, for example, softening the very strict requirements when examining the justification of Art XX GATT´s chapeau. Procedurally, the interim review phase might become even more important, and the duration of panel proceedings longer. In this way, compliance with WTO law could be strengthened, but WTO law could also be developed in a way that widens the scope for national action. This would perhaps help address some criticism of the AB, but carries the risk of a more inconsistent jurisprudence which we will see anyway. The panels are not well-advised to apply a somehow petrified WTO law, frozen at the state of play (i.e. standard of interpretation developed by the AB) at 10th December 2019.
