At the WITA event I mentioned previously, former USTR official Wendy Cutler spoke with U.S. Trade Rep. Katherine Tai about WTO dispute settlement reform. Here was their exchange:
Cutler:
You've mentioned, and I've heard others talk about, ... we should think post MC12, and particularly about the reform discussion going forward. For a lot of countries, when they talk about reform, they're really focused on fixing the dispute settlement system as a first step. And it seems to me that this is an area where the US has been under a lot of criticism, but perhaps in recent months there has been a change in tone, and countries are beginning to sense that we are interested in fixing the system. And you were a USTR litigator, you know the value of the system, but you know the ugly parts too, very well. So how are you approaching dispute settlement? Are you going to give your team kind of the leeway to explore solutions and a way to fix the dispute settlement system?
Tai:
I love this question, Wendy, because obviously, you're no stranger to the WTO or the dispute settlement system either. And you're no stranger to the conversations, and I absolutely agree with you, that the conversations from when I started at USTR to today, in these 15 months, has really evolved.
I would go a step further and say that when I started a lot of the focus on WTO reform was not about fixing the dispute settlement system or addressing it. It was about, "restoring the Appellate Body," which is a very, very narrow way of approaching this particular issue. And I think we've been quite successful in orienting people to the fact that the Appellate Body problem is a symptom of a larger challenge that we have, and it is around the dispute settlement system, and whether or not it is doing the thing that it was designed to do, which is literally to help settle disputes between the Members at the WTO.
And I gave a speech in Geneva last October where I talked about, first, reaffirm the Biden administration's commitment to the WTO. And then to go through some of the areas of reform that we think really need robust engagement from the WTO membership.
At the top is the dispute settlement system. I think that over time, it has become this very, very unwieldy and expensive mechanism for litigation that not all WTO Members can access. There's actually a very high threshold to accessing the system. If you think about it, how effective is a dispute settlement system that only a small part of the Membership feels like it can use?
And that's without even going into to, right, the ins and outs of how that litigation system works. So over time dispute settlement has kind of become synonymous with litigation. That's the challenge, that's a problem, especially because we also have this issue where the last truly multilateral agreement that came out of the WTO was accomplished in 2014, it was the Trade Facilitation Agreement, which if you get into the ins and outs of the TFA is a no brainer. It really is something that is good for the system, and it's about upgrading to reflect the realities of today's trade in goods. And yet that required a small miracle, and I think ... the personal charm and relationships that Ambassador Michael Punke had built up in Geneva. So if you look at it that way, the negotiation function at the WTO is also significantly broken down and I'm interested to engage at MC12 to see as of 2022, has it started to heal itself in a time of great global economic need? Are we able to come together? Or, is the system still going to be stymied by all the dynamics that we've seen?
And I think that the reason why I raised this is because the ability of WTO Members to obtain findings through litigation that effectively create rules that did not need to go through the negotiation process is part of the significant challenge that the WTO has had as an institution and I think that that larger issue needs to be surfaced and dealt with if we truly are committed to the WTO.
And so to get to your specific question, yes, absolutely, I have asked my team to engage on dispute settlement as part of this larger vision for reinvigorating the WTO.
Let's start with the last point: "I have asked my team to engage on dispute settlement as part of this larger vision for reinvigorating the WTO." This is great to hear! I hope the discussions are going well.
Going back to the beginning of her remarks, she mentioned the difficulty certain Members have with accessing the system. Here I'll just note the great work of the Advisory Centre on WTO Law. I'm not sure how to measure degrees of accessibility, but the ACWL probably makes it easier for developing countries to participate in WTO dispute settlement than it is for them in many areas of international or domestic law.
As to whether dispute settlement is synonymous with litigation, that's not how I think of it. It's true that litigation generates headlines (and revenue for law firms), but there are lots of formal disputes that don't get litigated for one reason or another. And responding parties have the option of avoiding litigation by negotiating resolutions to disputes. They often choose not to do that, but I think people would generally agree that in many cases that would be a good outcome.
In terms of whether governments litigate to get favorable rulings that they could not get in negotiations, and that this has made it difficult to conclude trade deals at the WTO, the U.S. has been making this point for a while, but just about everyone I've spoken to about it has a different view. Could litigation have an impact at the margins? I guess it's possible. But from what I can tell, the main reason there have been no big WTO deals in recent years is because governments simply can't agree on the issues and aren't willing to make concessions in areas that are sensitive for them.
As to "findings through litigation that effectively create rules," that goes to the design of the dispute settlement system. The precise role you give adjudicators in interpreting and applying the rules is key here, and I'm curious to hear suggestions from the U.S. as to exactly how they want the system to operate in this regard.
