Yesterday, the journal Global Policy published an essay of mine on the case for rebooting the WTO Appellate Body. In the article, I propose a range of options for deciding what kind of judges the WTO needs going forward, and addressing some of the more justified criticisms of prior judges, especially their decisions in cases concerning trade remedies-where, as with a few other instances like country of origin and tuna-safe labeling, the prior Appellate Body seemed to think it was like the OMB, or a domestic administrative court, putting domestic agencies or sub-regulations under a microscope. My piece draws on work by such luminaries as Simon Lester, the curator of this blog, Jennifer Hillman, and James Bacchus, among others; I'm not going to repeat or summarize the main arguments here. Rather I'd like to move ahead to the choices that the Biden Administration faces now, after its first 100 days in office, and with a new USTR and a new WTO Director General fully in place. In the very early days of the Adiministration, US officials in Geneva suggested that the time was not right, the stars had someone not aligned yet or whatever, for thinking about a process for restaffing the AB. Whether these words were a placeholder til the Administration got its trade team fully in place or whether they held a deeper, ominous-albeit still cryptic-meaning is impossible so far to say.
What the Administration's impressive new USTR Katherine Tai has said is that she is committed to using existing tools of trade law to address the unfair and illegal trade practices of other countries, including China. If one is to take this committment seriously, and I do, it is difficult to imagine how it could be met without taking stock of the current state of WTO dispute settlement. With the Appellate Body in abeyance (given the Trump Administration blockage of appointments), the panel process continues. In the absence of the AB, the losing party can either agree to implement a panel ruling against it, negotiate some kind of settlement or "appeal into the void." This last outcome effectively prevents a panel decision from becoming binding on the parties and obstructs any sort of enforcement through retaliation under Article 26 of the DSU. This leaves (as some have proposed) the option of adopting trade reprisals under the guise of general countermeasures under customary international law.
How does this situation affect US interests in WTO law being correctly applied and effectively enforced? Some, nostalgic for the GATT in the manner of former USTR Bob Lighthizer may find the status quo attractive-decapitating the AB appears to leave the WTO with a (non-) system where legal rulings in disputes still happen but diplomacy and politics end up determining the extent to which they resolve any given conflict. Now of course that's always true to some extent. So the difference is probably one of degree. But unlike in the GATT period for which some are pining, the United States is now far from the hegemonic power in the trading system. Given the economic and political power they wield, China and also the EU to name two of today's great powers, can certainly afford to stand up to the United States where the US loses WTO panel rulings on trade remedies cases, for example. Retaliation outside the suspended WTO enforcement framework is a completely realistic option, as we know.
Under Trump, the idea was also (seemingly) that without the Appellate Body, panel rulings would drift in the direction of greater deference to domestic agencies, at least in trade remedies cases. Is this in fact what panels are doing, or likely to do, in the continued absence of the Appellate Body? I see little evidence of it so far (though admittedly these impressions are anecdotal). In the absence of a renewed Appellate Body, it is more likely that panels will continue to apply but in an increasingly mechanistic and simplistic manner established AB jurisprudence. On most doctrinal questions, they won't reinvent the wheel. Without appellate judges who are independent jurists, dispute settlement at the WTO will look increasingly like the product of the very Geneva bureaucracy that the Washington trade community so distrusts. We still have a system where many panelists aren't legal professionals so the result it that panels often remain heavily dependent on the Secreetariat. If we lived in a world where the United States could easily gain the upper hand in the Geneva bureaucracy, that might be an attractive outcome-at least from a narrow national interest point of view. But it is most certainly not where we are at today. Of course, the United State could try and change the rulebook itself, on matters such as subsidies and dumping. But if China is the target it certainly will never agree to that.
But there is some leverage the Administration can use if it does so shrewdly. In general, the WTO Membership would welcome the Appellate Body's return. The step of unblocking appointments, modest in itself, will invest the WTO's Members in the effort to find a solution to US concerns about the kind of judges and judgment that are appropriate for appellate review at the WTO. By allowing an appointments process to go forward, the Administration is not commiting to agree with China or any other Member on who should or should not be an AB judge. The US will certainly not be the only WTO Member that isn't looking for an AB that is a copy cat of the prior bench. That's not to criticize any particular judge but to acknowledge that the chance now to appoint a full bench gives rise to an opportunity to reconsider how balance and diversity should be handled given two decades of experience with an appellate instance.
Of course, the appointments process could break down. It could turn out that the Membership, especially given divisions such as that between the US and China, won't agree on the kind of rule of law they want for the WTO. But the failure to appoint a new Appellate Body would itself reveal vital information about the limits of legalism in the WTO, which would affect how the Administration views its options in terms of trade enforcement, and what kind of investment in political capital WTO Members are prepared to make in revitalizing the WTO as the central institution for rules-based international trade.
When the Biden Administration lifted the Trump sanctions against officials of the International Criminal Court, America's diplomatic partners widely applauded, even major powers like Russia and China that are skeptical of the ICC. Secretary Blinken stressed that lifting sanctions did not mean an end to America's disagreement with the Court on some important controversies, but that a more constructive approach to disagreement than sanctions was warranted. Likewise by lifting Trump's blockade on the Appellate Body, the Administration will not be sweeping our concerns under the rug but inviting our partners to face them candidly.
