As part of the WTO DS reform exercise, USTR officials have mentioned the importance of having WTO Members explain what they see as their interests in the system. In a recent communication to the WTO, Bangladesh, Egypt, India, Indonesia and South Africa have weighed in on their interest in a two-tier DS system with a standing appeal mechanism:
THOUGHTS ON OUR INTERESTS IN A REFORMED DISPUTE SETTLEMENT SYSTEM
Primacy of the two-tier system
5. A two-tier and binding dispute settlement process with a standing appeal mechanism is a critical element for enhancing trust in WTO's dispute settlement mechanism, in ensuring proper application of covered agreements, and safeguarding objectivity and fairness of adjudicated outcomes.
6. We note that there have been some informal discussions on the appellate review mechanism, which touch on issues of leave to appeal and standard of review. This discussion is being conducted in isolation from the issue of the restoration of the Appellate Body and the permanence of the underlying appellate structure. Considering the support expressed by a large number of Members to immediately start the selection processes for filling vacancies on the Appellate Body, we believe that the central focus of the reform efforts should be aimed at prioritizing the restoration of the Appellate Body. The discussion on the intricacies of the review standards should be considered once there is consensus on the structure of the two-tier system, with the Appellate Body at the core.
7. We also note that the focus in the informal discussions is on narrowing the possibility of appeal to "exceptional circumstances" by introducing new concepts and terms such as "real prospect of success" or "materially significant impact". There are efforts to conflate the panel and appellate stages by expanding the remit of the interim panel review. These are novel ideas that require greater examination, and should be backed by evidence.
This seems like a good opportunity to talk about why a two-tier system is better than a one-tier system in the context of WTO disputes. Briefly, here are two key reasons.
First, panels often have a very difficult job, because they have to sort through complicated facts and deal with a large number of legal claims. As a result, they are not able to devote their full attention to every legal issue that arises in a case. This means they are likely to get things wrong now and then. Appellate review can correct these errors. In an appeal, fewer issues are (or should be) before the Appellate Body than were before the panel, and therefore the Appellate Body can take the time needed to explore the contested legal issues more fully. (To be clear, none of this says anything about the inherent capabilities of panelists versus the appeals "judges." It's just about the nature of the proceedings at each stage, and how busy panels can be with the specific work required at the first tier stage).
Second, on a number of core WTO principles, as well as many lesser principles, reasonable people can disagree (and they often do!). The non-discrimination principle is a great example of this, where there are many and varied views of how the relevant obligations and exceptions should be interpreted and applied. That disagreement inevitably finds its way into WTO panel rulings, which is a problem because if different panels are saying different things, we don't know what the law is. Appellate review can offer a coherent interpretive approach that provides certainty, so that governments (and businesses, NGOs, etc.) know what has been agreed to in situations where the text of the agreement is vague.
