WT/GC/W/763/Rev.1  
 
8 April 2019  
(19-2219) Page: 1/5 
General Council  Original: English  
 
GUID ELINE DEVELOPMENT DIS CUSSION  
COMMUNICATION FROM T HE SEPARATE CUSTOMS TERRITORY OF TAIWAN,  PENGHU, KINMEN 
AND MATSU TO THE GEN ERAL COUNCIL  
Revision* 
The following communication, dated 5 April 2019 , is being circulated at the request of the delegation 
of the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu.  
 
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1  INTRODUCTION  
1.1.  We fully recognize the critical importance of the WTO dispute settlement mechanism to the 
rules-based multilateral trading system. In our view, a well -functioning Appellate Body which 
adhere s strictly to the rules negotiated and agreed by WTO Members is an essential pillar of the 
whole system. In this regard, t he continuing impasse in launching the selection process to fill the 
vacant seats on the Appellat e Body, which raises the real prospect of a total paralysis of the Body , 
and the indication that the Appellate Body has for long been straying from some of the provisions of 
the Understanding on Rules and Procedures Governing the Settlement of Disputes ("D SU"),  are both  
matter s of serious concern to us .  
1.2.  It is greatly appreciate d that certain Members have raised these important issues  and we 
welcome  the proposals tabled with a view to addressing these  concerns, in cluding the 
communications from the European  Union and several Members in WT/GC/W/752, from Australia, 
Singapore and several Members in WT/GC/W/754, from Honduras in WT/GC/W/758, 759, 760 and 
761 and from Brazil in WT/GC/W /767. Having also taken note of all the relevant discussions at 
meetings of th e General Council and the Dispute Settlement Body ("DSB"), we recall in particular 
the wide divergence of views among Members as to how such concerns should be addressed, and 
even whether such concern s are well -founded.  
1.3.  For ease of reference, we shall her einafter refer to the five issues being addressed in 
WT/GC/W/752 as (1) the Rule 15 issue; (2) the 90 days issue; (3) the municipal law issue; (4) the 
advisory opinion issue, and; (5) the precedent issue,  and to the issue being addressed in 
WT/GC/W/754 as "the overreach issue" . The actual content of each issue is not repeated from here 
onwards.  
1.4.  To further explore the present controversy, we find it helpful to start with the 90 days issue. 
In the previous discussions, many Members appeared to attribute the cause of this issue to the 
overload of work at the Appellate Body. With the DSU negotiators in 1995 not having foreseen the 
trends of increasing numbers and complexity of appeals, the time -frame set in Article 17.5 of the 
DSU is simply not practical today.  
                                                
* For the ease of reference of the reader, this revised version includes a new section  3 entitled 
"Suggestions on the Guidelines" about the substance of the possible guidelines. Other revisions are made in 
paragraph 2.4 (elaborating on the principles of the possible interaction mechanisms),  paragraph  2.5 
(emphasiz ing the risk of over -prescriptiveness ) and paragraph  2.6 (elaborating on the time factor of this issue).  WT/GC/W/763/Rev.1  
 
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  1.5.  Some Members , on the other hand, appear to consider that the 90 days issue results from the 
Appellate Body's wilful disregard of the DSU rules, or at least its failure to make every effort to 
comply with them. Moreover, there are indications that in some recent disputes, despite the appeal 
processes having far exceeded the 90 days, the Appellate Body has still spent time and pages on 
addressing issues not directly related to resolving the disput es.  
1.6.  Without wishing to pass judgment on which argument may better explain the 90 days issue, 
we might start by recalling some well -known facts about the establishment of the Appellate Body in 
the first place. During the negotiations of the DSU in the Urug uay Round, Members displayed no 
intention of creating a strong international trade court. The Appellate Body that exists today was 
born more out of an afterthought of the negotiators, or a safety -valve in the event of the occasional 
"bad" panel report1. In this regard, Article 17 of the DSU lays down a number of constraints on the 
Appellate Body. Article 17.6, for example, limits the appellate review to only issues of law, with no 
remand mechanism provided for. Institutionally, compared to other internation al courts, (e.g., the 
International Court of Justice), the Appellate Body is composed of fewer adjudicators (seven) with 
a shorter term of office (four years and being reappointed once). Moreover, Article 17.3 of the DSU 
requires that all Appellate Body me mbers "shall be available at all times and on short notice ", 
implying that they serve on a part -time basis.  
1.7.  From this perspective, the very tight timeframe set out in Article 17.5 of the DSU may not be 
interpreted simply as an outdated or bad piece of leg islation. Instead, it might be viewed as another 
element laid down deliberately by the negotiators in order to circumscribe the Appellate Body's 
function. In addition to being a procedural deadline, the tight timeframe may have further 
implications for the  Appellate Body 's approach to disputes .2 
1.8.  It is also useful to recall, and the literature indicates this as well, that the Appellate Body has 
undergone a major process of self -evolution over the last two decades before reaching its current 
state of being wi dely recognized as the highest adjudicatory organ in the multilateral trading 
system .3  
1.9.  Again, no judgment of this evolution is intended here. We just want to point out that a gap 
does indeed exist between, on the one hand, what the Members in 1995 intende d the Appellate Body 
to be, and on the other, what the Appellate Body really is and does today. In our view, it is this gap 
that underlies the issues raised above, therefore it should serve as the focus of our future solution -
oriented discussions.  
2  PROPOSED  APPROACH  
2.1.  In light of the above, we propose that Members immediately enter into discussions for the 
purpose of developing guidelines on the future functioning of the Appellate Body . In these 
discussions, Members should thoroughly examine the DSU and, if ne cessary, the relevant negotiati on 
materials so as to more clearly portray the role of the Appellate Body . One important objective will 
be to clarify any explicit or implicit boundaries that Members in the Uruguay Round have intended 
to impose on the Appell ate Body.  
2.2.  More specifically, i n the guidelines to be developed, Members may want to clarify certain DSU 
provisions  so as to provide better , more  clear-cut operational rules for the Appellate Body to follow. 
In respect to some provisions  considered to be c lear and relevant today , Members may also want to 
re-confirm the obligations imposed thereof by emphasi zing their importance, or by providing  further 
                                                
1 See, for example, Peter Van den Bossche, "From Aft erthought to Centerpiece - The WTO Appellate Body 
and its Rise to Prominence in the World Trading System" in Rufus Yerxa and Bruce Wilson (eds.), Key Issues in 
WTO Dispute Settlement – The First Ten Years  (Cambridge University Press, 2005), p. 64. ("As a s afety measure 
against such 'bad' panel reports, the negotiators provided for an appellate review mechanism. The introduction 
of appellate review was a quid pro quo  for the quasi -automatic adoption of panel reports.")  
2 See, for example, Robert Howse, "The World Trade Organization 20 Years: Global Governance by 
Judiciary", European Journal of International Law  Vol. 27 no. 1 (2016), 9, p.20. ("By establishing appellate review 
only for error of law and giving appellate review a very tight timeline (60 to 90 da ys), the Uruguay Round 
negotiators virtually guaranteed that a factual basis determined by essentially amateur adjudicators and 
technocrats within the WTO bureaucracy would be decisive in framing the disputes.")  
3 See, in general, Howse, supra  note 2. See also, David Unterhalter, "The Authority of an Institution: The 
Appellate Body under Review", in Gabrielle Marceau (ed.) A History of Law and Lawyers in the GATT/WTO  
(Cambridge University Press, 2015), pp. 466 -475. WT/GC/W/763/Rev.1  
 
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  elaboration o n the underlying objective of these provisions in order to guide the Appellate Body's 
future practices.  
2.3.  Furthermore, Members should consider  ways of harmonizing the potential conflicts among 
certain DSU provisions that have been raised in the previous discussions. For example , to address 
the advisory opinion issue, Member s may want to develop int erpretations enabling a harmonious  
reading between  the Appellate Body's obligation to address "each of the issues" under Article 17.12 
on the one hand, and the "prompt settlement" obligation under Article 3.3 on the other.  
2.4.  Moreover, s ome Members are also concerned that "if the A ppellate Body does not follow the 
explicit and existing rules as laid down in the DSU, why should it follow any of the amendments or 
footnotes in the DSU either? " In which case, we are drawn to the conclusion that the real problem 
facing us today might lie not in the rules amendment, but in the enforcement of the rules of the 
DSU. Indeed, in our opinion, it is in this area of enforcement where the guidelines can pl ay their 
most important and effective role. Through the guidelines , Members may establish mechanisms to 
enhance the transparency of the Appellate Body's relevant practices. Certain examples of such 
mechanisms have been provide d in the previous proposals, s uch as holding annual meetings 
between the Appellate Body and Members  as suggested in WT/GC/W/752, or the external review 
mechanism as suggested in WT/GC/W/760. We consider that, in order to minimize administrative 
costs and at the same time maintain the A ppellate Body's independence, such  mechanism s may, to 
the largest extent, make use of the already existing practices, such as the Appellate Body's annual 
report or the expression of views under Article 17.14 of the DSU. With the collective contribution of 
Members, we believe a suitable balance can be struck between effective enforcement and the ever -
evolving global trading environment.  
2.5.  Lastly, in developing the guidelines and relevant mechanisms, Members should avoid over-
prescriptiv eness and over-intrusive ness with regard to the Appellate Body's interpretive approaches. 
Article 3.2 of the DSU already provides that the dispute settlement  system  should carry out its 
interpretive task " in accordance with customary rules of interpretation of public internationa l law" . 
The m ore rigid the norms or interventional controls are, the more they tend to undermine the 
Appellate Body's independence and to limit its ability to deal with the increasing dynamics of 
disputes. Excessive intervention may also raise "adverse sel ection" concerns over the composition 
of the Appellate Body ; i.e., person s of recognized authority and with demonstrable expertise in law, 
international trade, and other relevant  areas , may be reluctant to operate  within such a rigid, ossified 
framework . 
2.6.  Given the present urgency of the matter, we propose that the above guideline development 
process should be completed in the most expeditious way ( within [X] days). Another  important 
reason for propos ing the development process as a solution to the existing  impasse  is that we are 
dealing with a tentative timeframe. Without the need to undergo possible treaty amendment 
procedures at the domestic level, there is a greater chance that Members  will be able to complete 
the guideline development process in a timely  manner, thus avoiding the otherwise likely total 
paralysis of the Appellate Body at the end of year  2019. 
2.7.  In terms of the legal form of the guidelines, we propose that Members consider following the 
procedures under Article IX:2 of the WTO Agreement  and the framework suggested in WT/GC/W/754  
to form an authoritative interpretation of the DSU. Another route to adoption of the guidelines, which 
Members may consider taking, would be through a decision of the General Council or the DSB.  
2.8.  We should have t he understanding that once this proposal is adopted, Members could 
immediately agree to initiate the selection processes to fill the vacancies of the Appellate Body, so 
as to allow the Appellate Body to work in accordance with the agreed guidelines at its full capacity.  
2.9.  Members should continue to closely monitor the Appellate Body 's operations. In the case that 
after a certain period of time  ([Z] months),  the Appellate Body, despite fully adhering to the 
guidelines, still finds it difficult to observe cert ain procedural limits (such as the 90 days deadline) 
due to the overload of work, Members should consider addressing these issues by amending the 
DSU. Such amendments might include expanding the timeframe or increasing the number of 
Appellate Body members,  as suggested by the European Union and several Members in 
WT/GC/W/753.  WT/GC/W/763/Rev.1  
 
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  2.10.   The process  is demonstrated  in the flow -chart at the end of this document, using the 90  days 
issue as an example . 
3  SUGGESTIONS ON THE G UIDELINES  
3.1.  Based on the principles laid out above, we here make suggest ions on the possible guidelines 
relating to the five issues addressed in WT/GC/W/752  and the mechanisms which will enhanc e 
interactions between the Appellate Body and Members .  
3.2.  The Rule 15 issue . Members re-confirm that  the rules as set  out in Article 17.2 of the DSU, 
relating to the term of office and the procedure for appointment and re -appointment of Appellate 
Body members,  should be strictly followed. A case where a person who ceases to be an Appellate 
Body member continues his or he r disposition of an appeal can only be allowed by the DSB, or should 
be based on transitional rules agreed by the whole WTO Membership .4  
3.3.  The 90 days issue.  Members re-confirm that the timeframes set out in Article 17.5 of the 
DSU are mandatory . These time frames reflect Members' strong desire for the prompt settlement of 
disputes, as also indicated in Articles 3.3 and 21.1 of the DSU. Reading  these timeframe provisions 
together with Article 17.6 of the DSU should also give the effect that the appellate revi ew be limited 
to issues of law  which are  necessary for the resolution of the dispute . Nevertheless , in consider ation 
of practical needs, Members agree that the se timeframe s could be extended on the agreement of 
the disputing parties.  
3.4.  The municipal law issue . Members re-confirm th at under  Article 17.6 of the DSU , the 
Appellate Review should be limited to issues of law. For greater certainty, the "issues of law" here 
do not include the panel findings with regard to the meaning of the municipal measures of  a Member.  
Members agree that the Appellate Body should refuse to review any appeal s raised under Article 11 
of the DSU  on the panel's factual findings unless the appellant establishes a prima facie  case that 
the panel committed an egregious error that cal ls into question the good faith of that panel5.  
3.5.  The advisory opinion issue . Members clarify that Articles 3.3, 3.4 , 17.5  and 17.12 , being 
read together , should  mean that the Appellate Body should review issues of law being raised to the 
extent that they a chieve a prompt and satisfactory settlement of the dispute.  
3.6.  The precedent issue. Members confirm that, under  the DSU, panel and Appellate Body 
reports do not have binding precedential values. Findings of a panel and the Appellate Body should 
be based on t he covered agreements and the evidence presented in each individual dispute. 
Nevertheless, for the purpose of providing security and predictability to the multilateral trading 
system  as noted in Article 3.2 of the DSU , and to protect Members' legitimate le gal expectations, 
the reasoning and interpretations made in prior disputes by panels and the Appellate Body may be 
taken into account by an adjudicator, after proper and independent  deliberation, in addressing 
relevant issues.  
3.7.  Interaction mechanism.  For th e purpose of facilitating communication s between the 
Appellate Body and the WTO Members, the Secr etariat should periodically  publish a report to 
highlight and summarize the views and concerns express ed by Members under Article 17.14 of the 
DSU on Appellate  Body reports, in particular those relating to issues covered in these  guidelines or 
other issues of systemic significance  (e.g. by exceeding the 90 -days deadline). The Appellate Body 
shall endeavour to respond to those views and concerns  by adapting its practices accordingly, and 
to indicate which steps it has taken to that effect  in its annual report or, if it deems proper, in a 
dedicated document , which may be published at a higher frequency.  
                                                
4 In the latter case, we suggest Members to consider the following text of the transitional rule:  A person 
who ceases to be a Member of the Appellate Body may  complete the disposition of any appeal to which that 
person was assigned while a Member, and in which the oral hearing has been held . That person shall, for that 
purpose only, be deemed to continue to be a Member of the Appellate Body.  
5 Appellate Body Report,  EC – Hormones , para. 133 . WT/GC/W/763/Rev.1  
 
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