The U.S. keeps asking a question along the lines of "why did the Appellate Body feel free to disregard the clear text of the agreements?" Here's an answer provided by Ambassador Shea at today's General Council meeting:
... For nearly a year, in the General Council and the Dispute Settlement Body, we have sought to deepen Members’ collective understanding of the concerns raised and asked Members to engage on a fundamental question: why did the Appellate Body feel free to disregard the clear text of the agreements?
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Notwithstanding Members’ public silence, at the October meeting of the General Council, the United States offered several potential explanations based on conversations and on our own reflections. For example, one cause could be the ongoing challenges facing the WTO negotiating function and its oversight function, leading to unchecked “institutional creep” by the Appellate Body.
At the same meeting, we suggested that another cause could be that some WTO Members believe that the Appellate Body is an independent “international court” and its members are like “judges” who inherently have more authority to make rules than the focused review provided in the DSU. A related cause could be that some Appellate Body members view themselves as “appellate judges” [1] serving on a “World Trade Court” that is the “centerpiece” of the WTO dispute settlement system,[2] 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.
We also commented at that meeting that it was possible that some explanations for why the Appellate Body felt free to depart from the clear text of the DSU may be specific to the concerns that have been raised. For example, with regard to the Appellate Body’s repeated breach of Article 17.5 of the DSU, we noted that while some WTO Members raised concerns about the Appellate Body’s exceeding 90 days, particularly without consulting the parties, a few Members excused the breach of our agreed rules. We asked whether the attitude of those Members contributed to a mindset among the Appellate Body that the WTO’s rules and deadlines did not need to be respected.
Similarly, in that statement, with respect to so-called “cogent” reasons, we noted the Facilitator’s Report suggests that Members agree that “precedent” is not created through WTO dispute settlement. And so we asked at that meeting why some WTO Members advocate for the Appellate Body to assert that its interpretations must be followed by panels absent unidentified cogent reasons. We also asked why then does the Appellate Body assert a precedential value for its reports like an authoritative interpretation that only WTO Members in the Ministerial Conference or General Council can give.
More recently, at the November meeting of the DSB, we sought to discuss with Members systemic concerns regarding the compensation of Appellate Body members. We sought to further Members’ understanding of the compensation structure as a general matter, and to consider the possible consequences of that structure. In that statement, we commented that a system that provides a financial reward for violating DSU rules and prolonging the duration of an appeal would appear inconsistent with the objective behind the DSU rule of providing for the prompt resolution of disputes. And we asked Members whether the current structure creates the correct incentive, or a negative one? Does this structure encourage prolonged appeals at the expense of clear WTO rules? Without debate or effective oversight, have WTO Members acquiesced in a compensation structure that may undermine, rather than promote, the prompt resolution of a dispute?
My answer to the question of "why" the Appellate Body has taken the various actions the U.S. complains about is not all that exciting: administrative convenience, reasonable people can disagree about procedural and substantive issues, and sometimes the Appellate Body has made mistakes.
In terms of the answers Shea offers above, certainly the WTO negotiating function has been a problem. Nobody seems willing to liberalize their sensitive areas, so it's hard to make any progress. As a result, it may be that governments have filed complaints on issues that would otherwise have been dealt with in negotiations. But we can't blame the Appellate Body for this.
With regard to terms like "international court" and "judges," I generally try to avoid those, but when speaking to general audiences sometimes you end up using these terms so that people have a sense of what you are talking about. Overall, I am much less concerned about the use of these terms than some people seem to be. I doubt it has much impact on the content of decisions.
As to "precedent," I don't think there is all that much substantive disagreement on the role of past cases, as I wrote about here. Again, this is a question of what terms to use. I am not particularly attached to "precedent," and we don't have to use that term. It's just convenient shorthand for "relying on reasoning in past cases when it is persuasive." And with regard to the question, "why then does the Appellate Body assert a precedential value for its reports like an authoritative interpretation that only WTO Members in the Ministerial Conference or General Council can give," I really don't think that's what it is doing.
There was also this from today's U.S. statement:
With respect to the issue of appellate review of questions of fact, we are concerned that the Appellate Body would say it is already abiding by the text in the Facilitator’s Report, especially since the Appellate Body has interpreted DSU Article 11 to convert questions of fact into questions of law. And some WTO Members would even today support the Appellate Body’s approach to Article 11, despite real-world consequences we can all see, such as a current appeal with dozens of Article 11 challenges to panel fact-finding – an appeal that has been going on for 17 months, and for which the Appellate Body has held not one, but two oral hearings lasting weeks.
I continue to be puzzled by the U.S. position on DSU Article 11. If they said, "DSU Article 11 should not be the basis for appeals," I would say they have a good case for that, and it's a worthwhile discussion to have. But they don't say that, and I'm not sure how they want Article 11 to function with regard to appeals.
