This blog post was written jointly by Simon Lester and Inu Manak
Here is the relevant text of the Protocol of Amendment to the USMCA (released earlier today) related to panel rosters and composition:
C. In Article 31.8 (Roster and Qualifications of Panelists), replace the text of paragraph 1 with the following text:
“1. The Parties shall establish, by the date of entry into force of this Agreement, and maintain a roster of up to 30 individuals who are willing to serve as panelists. Each Party shall designate up to 10 individuals. The Parties shall endeavor to achieve consensus on the appointments. If the Parties are unable to achieve consensus by one month after the date of entry into force of this Agreement, the roster shall be comprised of the designated individuals. The roster shall remain in effect for a minimum of three years or until the Parties constitute a new roster. If a Party fails to designate its individuals to the roster, the Parties may still request the establishment of panels under Article 31.6 (Establishment of a Panel). The Rules of Procedure, which shall be established by the date of entry into force of this Agreement, shall provide for how to compose a panel in such circumstances. Members of the roster may be reappointed. In the event that an individual is no longer able or willing to serve as a panelist, the relevant Party shall designate a replacement. The Parties shall endeavor to achieve consensus on the appointment. If the Parties are unable to achieve consensus by one month after the date the replacement is designated, the individual shall be added to the roster.”
D. In Article 31.9 (Panel Composition), amend the texts in paragraphs 1 and 2 to read as follows:
“1. If there are two disputing Parties, the following procedures shall apply:
(a) The panel shall comprise five members, unless the disputing Parties agree to a panel comprised of three members.
(b) The disputing Parties shall endeavor to decide on the chair of the panel within 15 days of the delivery of the request for the establishment of the panel. If the disputing Parties are unable to decide on the chair within this period, the disputing Party chosen by lot shall select within five days as chair an individual who is not a citizen of that Party.
(c) If the responding Party refuses to participate in or fails to appear for the choosing by lot procedure, the complaining Party shall select an individual from the roster who is not a citizen of that Party. The complaining Party shall notify the responding Party of the selection no later than the next working day.
(d) Within 15 days of selection of the chair, each disputing Party shall select two panelists who are citizens of the other disputing Party.
(e) If a disputing Party fails to select its panelists within that period, those panelists shall be selected by lot from among the roster members who are citizens of the other disputing Party.
(f) If the responding Party refuses to participate in or fails to appear for the choosing by lot procedure, the complaining Party shall select two individuals from the roster who are citizens of the complaining Party. The complaining Party shall notify the responding Party of the selections no later than the next working day.
With one caveat, our initial take is that the panel blocking problem seems to have been fixed. But these procedures can be difficult to follow in the abstract, so everyone should feel free to point out any potential flaws they see.
There are a couple key points here. First, the new Article 31.8 says: "Each Party shall designate up to 10 individuals. The Parties shall endeavor to achieve consensus on the appointments. If the Parties are unable to achieve consensus by one month after the date of entry into force of this Agreement, the roster shall be comprised of the designated individuals." We interpret this to mean that even if one party does not designate anyone for the roster, the individuals designated by the other parties will constitute the roster. That means as long as one party wants a roster set up, there will be a roster.
Second, in the new Article 31.9, there are clear rules for what happens if the responding party refuses to participate in selecting panelists. For the chair: "If the responding Party refuses to participate in or fails to appear for the choosing by lot procedure, the complaining Party shall select an individual from the roster who is not a citizen of that Party." And for the panelists: "If the responding Party refuses to participate in or fails to appear for the choosing by lot procedure, the complaining Party shall select two individuals from the roster who are citizens of the complaining Party." Letting the complaining party pick is a very effective way of dealing with the issue. There may be some concern about the individuals eligible to be the chair, because it says "an individual from the roster who is not a citizen of that Party." To deal with this, the complaining party could designate someone on its own list who is not a citizen of that country; or it could choose from the third USMCA party's list.
Now for the caveat. One sentence in Article 31.8 says: "The Rules of Procedure, which shall be established by the date of entry into force of this Agreement, shall provide for how to compose a panel in such circumstances." The "such circumstances" seems to refer to a situation where "a Party fails to designate its individuals to the roster." It's not completely clear to us why they didn't just have Article 31.9 apply to that situation. Leaving this to be dealt in the Rules of Procedure creates a bit of uncertainty. What panel composition rules will be in the Rules of Procedure? We hope that these Rules will reflect the principles of Article 31.9, which should resolve any doubts about how panel composition will operate in these circumstances. It is possible that the purpose of this sentence is to address a specific problem: What if, for example, Canada and Mexico each designate 10 people, but the U.S. does not, and then the U.S. files a complaint? That would make some of the Article 31.9 rules about citizenship of panelists difficult to apply, and would require some additional guidance. If the Rules of Procedure address that issue, but keep the same general principles, it should all be fine.
We are also a little confused by this sentence: "The roster shall remain in effect for a minimum of three years or until the Parties constitute a new roster." What exactly do they have in mind for the roster terms? Will the initial term be 3 years? A longer period? An undefined period? When do they expect to constitute a new roster? What are the procedures for that? If the roster lapses eventually as individuals leave the list, a complaining party should still be able to designate new people for its list in order to make sure a roster is in place.
In addition, the provisions requiring action by the Free Trade Commission in regard to panel establishment were deleted, which was another potential way to block a panel.
Of course, there is always the possibility that a party could take extreme measures to avoid a complaint, such as withdrawing from the agreement. There is only so much certainty that can be provided! But these provisions look like a substantial improvement.
