I was struck by two particular passages in the USTR Report on the Appellate Body, and wonder whether they signal the USTR’s intention about the future of the WTO Dispute Settlement system.
The first is paragraph 3 of the Introduction:
On a more fundamental level, this [AB] overreaching also violates the basic principles of the United States Government. There is no legitimacy under our democratic, constitutional system for the nation to submit to a rule imposed by three individuals sitting in Geneva, with neither agreement by the United States nor approval by the United States Congress. The Appellate Body has consistently acted to increase its own authority while decreasing the authority of the United States and other WTO Members, which, unlike the individuals on the Appellate Body, are accountable to the citizens in their countries – citizens whose lives and livelihoods are affected by the WTO’s decisions.
Since all the individuals sitting in Geneva on the AB have been approved by the US government, the USTR must be referring to the “rule” making activity allegedly committed by the AB. Given the inevitable “gap filling” effect of treaty interpretation, it seems the only way to prevent some individuals sitting in Geneva from making binding interpretations of the WTO agreements is to make the acceptance of all dispute settlement decision voluntary, i.e., going back to the GATT days.
However, the following passage in the report on the negotiating history seems to suggest that, rather than going all the way back to the GATT days, the USTR may be willing to return to the design of a modest AB as originally intended. It states on page 24:
3. Negotiating Members Wanted an Appellate Mechanism that Would Be Limited and Used Sparingly
Even those countries in favor of an appellate mechanism made clear that the mechanism was to be limited in its role, that the mechanism would be used rarely, and that recourse to appeal would not be a common occurrence. As Canada explained:
“In rare cases, where a party to a dispute considered, despite the review by the panel, that a report was so fundamentally flawed that it should not be accepted, the GATT dispute settlement system should provide for a means of correcting errors. The addition of an appellate mechanism would serve that purpose. The intent would not be to have appellate review become a quasi-automatic step in the dispute settlement process. Rather, in those cases where a party to a dispute considered that the panel had made a fundamental error in interpretation of rights and obligations, that party could ask for appellate review. Decisions of the Appellate Body would be final.”
… Unfortunately, in practice, appeal of panel reports has been the norm, not the exception, with over 60 percent of panel reports appealed. [italics original; footnotes omitted]
Although most WTO members do not seem to mind that the AB has developed from a mere “afterthought to centerpiece” (per Prof. Peter Van den Bossche) and may view such a development as progress in international rule of law, the United States strongly disagrees. Given that the AB institution did evolve away from the original mutual intentions of the WTO members, the US opposition is understandable - even though the United States itself has contributed to such evolution along the way.
Compared to returning to the old GATT days, having a limited but binding appellate review mechanism as originally intended is clearly preferable. The question is (i) whether the idea of returning to the original vision of the AB is acceptable to all members, and (ii) if so, how to redesign technically the mechanism so as to realize this vision.
