Steve Charnovitz
The WTO community is abuzz about a draft Decision that is slated to be considered by the WTO General Council on Monday. The Decision on "Functioning of the Appellate Body" is posted on the WTO portal.
The Decision is designated as an Article IX:1 decision of the General Council acting between meetings of the Ministerial Conference. Here I might note that contrary to WTO rules, the Ministerial Conference has failed to meet as required in 2019.
The WTO Agreement in Article IX:1 provides for decisions by the Ministerial Conference and General Council that can be taken by a majority vote. The precise scope of the competence to issue such decisions with legal effect is not delineated in the WTO Agreement. Many years ago, I pointed out that there surely is some competence (see Steve Charnovitz, "The Legal Status of the Doha Declarations", JIEL, March 2002). But there are also some limitations. For example, Article IX:1 authority cannot be used to issue authoritative interpretation of the WTO Agreement or to amend the WTO Agreement.
The Draft Decision reads as if it is meant to have legal effect. For example, it starts with "transitional rules" (emphasis added) for outgoing Appellate Body members. The Draft Decision announces a number of policies "to enhance the functioning" of the DSU. In some instances, the announced policy is already reflected in DSU rules. For example, paragraph 18 repeats the rule and mantra that panels, the Appellate Body, and the DSB cannot add to or diminish rights and obligations. In other instances, the Decision seems to assert a new rule. For example, paragraph 5 would preclude the Appellate Body from assigning an appellator to a division if there is less than 60 days remaining in that appellator's term. And in several instances, the Decision simply makes an observation (for example, paragraph 16) that may or may not be true.
The intent of the Decision seems to be to bow to many of the demands of USTR by imposing new limits on the Appellate Body. For example, the Decision (para. 6) limits the ability of an Appellate Body member serving on a division at the time that her term expires from completing work on the appeal. The Decision (paras 7 and 8) limits the Appellate Body from taking more than 90 days to complete an appeal without approval of the parties. The Decision (para. 11) prohibits the Appellate Body from engaging in the "complete the analysis" practice although the Decision does not clearly state what it means by that. The Decision (para. 13) prohibits the Appellate Body from ruling on issues that have not been raised by either party. In my view, these limitations on the Appellate Body are properly viewed as amendments to the DSU or as authoritative interpretations. I find it hard to square these limitations with WTO Article IX:1 authority as it applies to the General Council convened as the DSB.
Despite the goal stated by the Decision to "enhance the functioning" of the DSU, I believe that by dignifying and giving into the invalid criticisms of the US government, the result of the Decision would be the exact opposite. That is, the Decision would undermine the functioning of the DSU. For example, Paragraph 15 declares that "Precedent is not created" through the DSU. If the purpose of this normative statement is to say previous cases have to be irrelevant to panels, arbitrators, and appellators, then this clearly would undermine the functioning of the DSU or any legal system. On the other hand, a statement that previous decisions are not binding precedent would be consistent with WTO jurisprudence.
Thus far, I have identified two problems with the Decision: first, that it may be legislative overreach under Article IX:1 authority and second, that the substance of the actions may undermine the functioning of the Appellate Body. The biggest problem with the Decision, however, is that it is not stylized as a decision of the DSB. If the DSB were to enact this Decision, it would have to do so by consensus (see WTO Agreement footnote 3). So, I think what is going on is that the DSB is being bypassed so that the authors of this Decision can seek to get it enacted by a majority vote rather than consensus. That is the most serious flaw with the Decision. The goal seems to be to enact a Decision responsive to the (bogus) US complaints and to do so through a procedure that does not require US support.
The proponents of this Decision are playing a dangerous game. The never utilized authority in DSU Article IX:1 to proceed with majority voting is a precious constitutional resource that should not be wasted on an unnecessary and ill-considered initiative. Even worse, by using majority voting for the first time on a matter that clearly is ineligible for majority voting (because it falls within the jurisdiction of the DSB rather than the General Council), the WTO would be disregarding the rule of law.
