Dear Ulli,
On a slightly more optimistic note than your post of yesterday (and realizing that with corona, other, more important issues are on people's minds), I think you are unnecessarily equating “independent third-party adjudication” with the specific incarnation that the Appellate Body has taken after 25 years of WTO. For simplicity sake, I’ll call the latter “appellate review 2019”.
I agree with you that “independent third-party adjudication” (ITPA) is a “public good”. And I am, moreover, convinced that, over time, also the US (and especially US businesses) will realize that ITPA is, on the whole, in the US national interest and better than “unilateral” enforcement and the trade wars and unpredictability that come with it. This is the case especially in a world where the US is no longer the “sole hegemon” and the risk of retaliation by other “large markets” is real.
But ITPA, which the EU has called a “red line”, can take many forms. Panels plus “appellate review 2019” is only one of them. ITPA could also take the form of a single-tiered panel system (on condition that panel reports are automatically adopted). Indeed, most international versions of ITPA are single-tiered (think of the PCIJ, ICJ, ITLOS, ECHR, ISDS-outside-ICSID or dispute settlement in FTAs).
And, yes, ITPA with an appeal is another option. But there as well various appeal mechanisms (all in line with ITPA) can be on the menu. This is, for example, what is currently being discussed in UNCITRAL Working Group III, debating a possible appellate review mechanism for ISDS.
Generally speaking, appellate review can aim at “correctness” of specific rulings, or “consistency” across cases, or both. And both objectives (correctness and consistency) can be pursued at various degrees of intensity. I leave aside the question of whether “appellate review 2019” is in line with what the drafters of the WTO treaty in 1994 had in mind (“appellate review 1994”). At the very least, both sides in this debate have to admit that
(i) there were various ways in which the Appellate Body could have evolved over the last 25 years (for this, the one DSU article on “appellate review”, Art. 17, leaves enough space), and
(ii) the US (after all, the main “user” of the system) is deeply unhappy with how things turned out (arguing that “appellate review 2019” is a deviation from “appellate review 1994”).
Grossly generalizing, “appellate review 2019” has put a premium on (i) (what the AB perceives as) “correctness” (e.g. 68% of panels appealed and 83% of panels modified or reversed on appeal; frequent appellate review also of factual findings under DSU Art. 11 and all “issues raised” under DSU Art. 17.12; increasingly long and complex reports and proceedings) as well as (ii) “consistency” (e.g. de facto rule of precedent, aversion against dissents, important role for the Secretariat).
Do not misunderstand me, “appellate review 2019” is in line with ITPA and may be the preferred evolution of some or even a majority of WTO members (even though, in the US view, it breaches the DSU). But, as hard as it may be for some people who have been building and inside “appellate review 2019”, there are valid, ITPA-consistent alternatives to it. The demise of “appellate review 2019” must not and cannot be equated to the demise of ITPA.
Rather than ferociously criticizing or blindly defending what once was “appellate review 2019”, what is needed now is
(i) convincing all WTO members of the need for ITPA, and
(ii) constructing a form of WTO dispute settlement that is acceptable to critics of “appellate review 2019” but stays within the “red lines” of independent third-party adjudication.
In the short to medium term, this will likely include setting up, testing and re-adjusting appeal arbitration under Art. 25 as between a coalition of the willing. In the longer term, this may morph into “appellate review 2024”.
One ITPA-consistent alternative (which can be tested under Art. 25) could, for example, be appellate review that focuses more on “speed” (that is, quick decisions, allowing for prompt compliance or rapid but equivalent retaliation in case of breach) and reversing only "egregious" errors by panels, rather than detailed and time-consuming “correctness” (which may remain unclear and subjective anyhow) and across the board “consistency” (which risks setting every first decision on an issue in stone). In a system where legislative correction is near impossible, panel and AB mandates (and rules of treaty interpretation) could also be tightened so as to limit findings of breach to conduct clearly outside the four corners of WTO treaty text. All of this can be done without crossing the “red line” of ITPA.
So, in the words of Debra Steger, and addressing both its long-time critics and its die-hard defenders, “let [appellate review 2019] rest”. But let's not give up on independent third-party adjudication. By defending "appellate review 2019" as if it were the only way to have independent third-party adjudication, you are bound to lose both.
