The Attack on the Appellate Body- Events of 9 December 2019
Steve Charnovitz
Today in Geneva, the US ambassador to the WTO, Dennis Shea delivered a Statement to the General Council that was posted on the US Mission portal.
His Statement is replete with misstatements.
I hope that WTO member governments thoroughly debunked Shea's Statement today at the General Council.
I don't have the time this evening to respond to every falsehood in Shea's new statement. But let me to respond to one aspect of Shea's Statement which has been a persistent element in USTR's false narrative about the Appellate Body and WTO dispute settlement. That is, USTR's assertion that recourse to precedent by the Appellate Body and the panels is improper. For example:
--Shea says that WTO governments "agree that 'precedent' is not created through WTO dispute settlement."
--He objects to the fact that Appellate Body decisions "assert a precedential value for its reports...."
--He claims that regarding its use of precedent, the "Appellate Body has relied on the reference in the DSU to security and predictability to justify its 'cogent reasons” approach."
--He suggests that "some Appellate Body members view themselves as “appellate judges”... serving on a “World Trade Court” that is the “centerpiece” of the WTO dispute settlement system ...rather than one component of it. Such an expansive vision of the Appellate Body is not reflected in the DSU and was not agreed to by the United States."
--He argues that "there has been no discussion of why the Appellate Body has departed from its agreed role."
Let's start with the myth that WTO tribunals are committing legal error by utilizing precedent and that US government expected or wanted WTO jurisprudence to be precedent-free.
Using precedent is a hallmark of any legal system both ancient and modern. Reliance on customary practices was the central feature of transnational Merchant Law beginning in the Middle ages and attention to precedent and caselaw is part of the history of the development of modern commercial and maritime law.
In the United States, domestic courts regularly make use of the precedential value of previous cases. In its very first case in 1791, West v. Barnes, the US Supreme Court's (unreported) opinion is said to have taken note of the caselaw of state courts and English courts. In its very first case in 1980, the US Court of International Trade (American Schack Co. v. United States) cites numerous prior customs court and appellate decisions.
International courts also use and rely upon precedent. For example, early decisions of the Permanent Court of International Justice (PCIJ) cited previous decisions in the same court. For example, in the Mavrommatis Jerusalem Concessions case (1925), the PCIJ refers to a previous PCIJ decision (see pages 21, 26). In the Factory at Chorzów case (1927), the PCIJ refers to two of its previous decisions (see pages 5, 9, 12, 20, 24, 26, 27, 28, 30, and 31). The same judicial practices unabashedly continued into the International Court of Justice (ICJ). For example, in its first case in Corfu Channel (1948), the ICJ cited a PCIJ decision on the same point (see page 28).
Given the longtime use of precedent in other international law tribunals, the use of caselaw became a hallmark of the dispute system of the General Agreement on Tariffs and Trade (GATT). This did not occur immediately, but got into full swing by the mid-1970s. For example, in 1976, the GATT panels adjudicating four tax cases involving the United States as either a plaintiff or defendant considered previous GATT caselaw. In all four of these cases (involving defendants Belgium, France, the Netherlands, and the United States), at the end of the panel's analysis, the panel stated: "In the light of the above, and bearing in mind the precedent set by the Uruguayan case (BISD 11 Supp. p. 100), the panel found...." All four of these decisions were adopted with USTR approval by the GATT Council in 1981 subject to an Understanding. (In my view, the Appellate Body in February 2000 gave short shrift to this 1981 Understanding; while I have criticized that Appellate Body decision over the years, there is a world of conceptual difference between criticizing a particular judicial ruling and accusing the court of overreach or underreach. For the USTR of today, losing a WTO claim is never because USTR argued it poorly or because it was a bad claim; rather for USTR, losing a WTO claim is to be blamed on misbehavior by the WTO tribunal.)
When the WTO dispute settlement began in 1995, WTO panels continued the customary practice of GATT panels of utilizing prior caselaw. In my view, WTO tribunals acted in this way not just to achieve the DSU Article 3.2 goals of "security and predictability." Rather, WTO panels were also following the mandate set by consensus by the GATT member governments who wrote the WTO Agreement. To wit, Article XVI:1 of the WTO Agreement calls for the WTO be "guided by the decisions, procedures, and customary practices" followed in the GATT. In the false narrative purveyed by the Trump Administration, it is said that the US government never agreed to a "vision" that caselaw should have "precedential value" for WTO panelists or appellators. Neither Ambassador Shea nor USTR, to my knowledge, has ever offered any evidence for this ridiculous assertion.
In fact, all of the evidence is on the other side of the argument. If WTO panels were not supposed to consider prior caselaw, then why did USTR in the very first WTO case, US - Gasoline (1996), seek to buttress its arguments by citing a previous GATT panel ruling (see para. 3.62). Why did USTR in lodging the US v. Japan Alcohol case (1996) cite prior caselaw in making its arguments (see paras. 4.7, 4.18, 4.27, 4.29). And when it argued before the Appellate Body in Japan - Alcohol, why did USTR cite a GATT panel case as authority (see pages 4-5). And when it argued as plaintiff before the Appellate Body in Canada - Periodicals, why did USTR cite three previous Appellate Body reports (see pages 12-13) as authority? The answer is that the United States in 1995-97 was comfortable with asking WTO tribunals to hand down decisions based on prior caselaw.
Today, the Trump Administration is uncomfortable with the way that judicial precedent is being used in domestic and international courts to find violations of law by the Trump Administration and the United States. I can understand their embarrassment that so many domestic and international judges are properly ruling against them. But losing cases at the Appellate Body does not in any way justify the shameful and cowardly attack by the Trump Administration on the Appellate Body. The truth is that if the Trump Administration were not engaging in so many protectionist, mercantilist, and other abusive non-market practices, then it would not be losing so many WTO cases against the United States.
To be sure, there can be valid differences in the ways that various legal systems and various courts use their own caselaw and the caselaw of other courts. One can debate in what circumstances judicial precedent is, or should be, binding upon a court. With respect to the WTO, the Appellate Body has never held its own precedent to be legally binding on it or on WTO panels. In my understanding of the Appellate Body's (quite limited) "cogent reasons" jurisprudence, the Appellate Body is suggesting that its caselaw is not legally binding on panels and that panels have a right to fail to follow Appellate Body precedent if the panel has a cogent reason for doing so. Of course, the Appellate Body would then have the authority to reverse the panel for a legal error if the Appellate Body did not agree with the cogent reason.
At the General Council, Shea lamented that there "has been no discussion of why the Appellate Body has departed from its agreed role." The truth is that the Appellate Body has not departed from the role assigned to it in the DSU. For years now the Trump Administration has intentionally perpetrated a myth that the Appellate Body has operated outside the lines of what governments expected in 1994 when the Appellate Body was written into the DSU. Contrary to that myth, the creation of the Appellate Body was such a novel and innovative achievement in international law that WTO member governments did not express and could not have had any precise legitimate expectations as to how the legal experiment would play out. The very essence of an appellate court is to exercise supervision over a lower court. In such uncharted waters, the Appellate Body had to write its rules and establish its customary practices by drawing on analogies from national law systems and from other international courts that act as agents of governments. As I wrote in my 2005 article The World Trade Organization in 2020, the early Appellate Body did a darn good job in helping the WTO achieve the hopes of many generations of trade supporters for a better international rule of law in trade.
In my scholarly writings and in my teaching of trade law, I do sometimes refer to the WTO dispute settlement system as a "World Trade Court." I know that USTR does not like that term, but their problem with it is more the first two words than the third.
When it was established in 1995, the WTO was endowed with the best architecture for compliance review and enforcement of any international organization. The Trump Administration's attack on the Appellate Body has now disabled the extraordinary achievement in the WTO to have operated a cutting edge and effective dispute and implementation system for the past 25 years. In looking at the havoc that USTR has wreaked on the WTO, I am reminded of the adage of longtime U.S. Speaker of the House Sam Rayburn: "Any jackass can kick a barn down, but it takes a good carpenter to build one." The WTO dispute system was built by good carpenters from around the world including in USTR in the early 1990s as led by Ambassador Carla Hills and Ambassador Mickey Kantor. For US trade policy today, sadly, the good carpenters are gone.
