A document from the United States that is labelled as a "notification of an appeal" in the DS533 softwood lumber case has been circulated at the WTO. In that document, the United States does not list any specific points of appeal, and says:
At this time, no division of the Appellate Body can be established to hear this appeal in accordance with DSU Article 17.1. The United States will confer with Canada so the parties may determine the way forward in this dispute.
It's interesting to compare this document with the previous U.S. "appeal into the void" in the DS436 compliance proceeding, which said:
At this time, no division of the Appellate Body can be established to hear this appeal in accordance with DSU Article 17.1. The United States will confer with India so the parties may determine the way forward in this dispute, including whether the matters at issue may be resolved at this stage or to consider alternatives to the appellate process.
For whatever reason, "alternatives to the appellate process" are not explicitly mentioned in the DS533 notification.
The U.S. decision to appeal was discussed at Monday's DSB meeting. Canada said it was "surprised" by the U.S. action here:
- In a statement at the last DSB meeting, the United States stated that, despite the ongoing Appellate Body impasse, the dispute settlement system still worked.
The United States’ behaviour in this dispute and in previous disputes contradicts its statement.- We recall that all WTO Members, including the United States, agreed to the Dispute Settlement Understanding. It provides that, when a panel report is issued, it can be either adopted or appealed. When there is an appeal, the Appellate Body must issue a report in that appeal. In either case, the Dispute Settlement Body will be in a position to adopt recommendations if violations have been found. In the event that the respondent does not bring its measures into compliance with its WTO obligations, a complainant may adopt counter-measures.
- In this dispute, in the absence of a functioning Appellate Body, Canada offered to the United States to enter into an appeal-arbitration agreement that would have allowed the United States to seek review of the Panel Report if it so wished. Having refused that offer, Canada would have hoped that the United States would have allowed the adoption of the Panel report and implemented its recommendations and rulings as soon as possible.
- By appealing this Panel Report to an Appellate Body that it made non-functional through its blockage of AB member appointments, the United States is compounding the unfair treatment accorded to Canadian softwood lumber producers. An appeal, in the current circumstances, has the effect of denying Canada its right, under the Dispute Settlement Understanding, to prompt settlement of this dispute.
- Canada was surprised that the United States has appealed given the stated position of the US Trade Representative that there is no need for an Appellate Body.
- In the interests of a clear and predictable settlement of our differences, rather than compounding the uncertainty created by the effective suspension of the appellate body, Canada calls upon the United States to accept the decision of the panel and fully implement the recommendations of the Panel in this dispute.
- More broadly, Canada is deeply concerned by the United States’ actions which frustrate the proper functioning of the dispute settlement system.
- The United States’ behaviour significantly reduces the security and predictability that we collectively value in international trade.
The U.S. had this to say:
- The United States will, at the appropriate time, fully explain the errors in the panel report. As stated in our notification to the DSB of the U.S. decision to appeal, we are open to discussions with Canada on the way forward in this dispute.
- The suggestion that the United States has appealed simply to delay this dispute settlement proceeding is utterly without foundation.
- The DSU provides Members the right of appeal, and the United States has availed itself of that right.
- The DSU also establishes rules governing the conduct of appeals, and for years the Appellate Body has failed to abide by those rules.
- The Appellate Body’s failure to follow the agreed rules has undermined confidence in the World Trade Organization. It is difficult to maintain support for a rules-based trading system in which the adjudicator does not itself follow the rules.
- The United States remains resolute in its view that Members need to resolve that issue as a priority. But the United States will continue to insist that WTO rules be followed by the WTO dispute settlement system, and will continue our efforts and our discussions with Members and with the Chair to seek a solution on these important issues.
- The United States has always been a strong supporter of a rules-based international trading system and remains so now.
So Canada says it "offered to the United States to enter into an appeal-arbitration agreement that would have allowed the United States to seek review of the Panel Report if it so wished," but the U.S. "refused that offer." The U.S. says it is "open to discussions with Canada on the way forward in this dispute."
I have this sense that many things in the trade policy world are on hold until the November 3 presidential election. We'll see who wins that and then everyone will have a better sense of the possibilities. If I'm right about that, this view may apply to DS533 as well.
