WT/GC/W/763  
 
13 February 2019  
(19-0841) Page: 1/4 
General Council  Original: English  
 
GUID ELINE DEVELOPMENT DIS CUSSION  
COMMUNICATION FROM THE SEPARATE  CUSTOMS TERRITORY O F TAIWAN, PENGHU, KI NMEN 
AND MATSU  TO THE GENERAL COUN CIL 
The following communication , dated 12 February  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 sele ction process to fill the 
vacant seats on the Appe llate 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 ("DSU") , 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 , including the 
communication s from the European Union and several Members  in WT/GC/W/752 , from Australia, 
Singapore and several Members in WT/GC /W/754 , and from Honduras in WT/GC/W/758, 759, 760 
and 761 . Having also taken note of all the relevant di scussions at meetings of the 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 here inafter 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 a ddressed 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.  
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 a re 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 disputes.  
1.6.  Without wishing to pass judgm ent 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 WT/GC/W/763  
 
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  the first place . During the negotiations of the DSU in the Uruguay 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 DS U 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 international courts, (e.g., the 
Internationa l 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 members "shall be available at all t imes 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 legislation. Instead, it might be vie wed 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 disp utes2. 
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 widely recognized as the highest adj udicatory organ in the multilateral trading 
system3.  
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 intended 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  PROPOS ED APPROACH  
2.1.  In light of the above, w e 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 necessary, 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 Appellate 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 clear and relevant today , Member s may also want to 
re-confirm the obligations imposed thereof by emphasi zing their importance, or by providing  further 
elaboration o n the underlying objective of these provisions in order to guide the Appellate Body's 
future practices.  
2.3.  Furthermore, Member s 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 interpretation s enabling a harmoni ous 
                                                
1 See, for example, Peter Van den Bossche, "From Afterthought 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 safety measure 
against such 'bad' panel reports, the negotiators provided for an appellate review mechanism. The introduc tion 
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 days), the Uruguay Round 
negotiators virtually guaranteed that a factual basis determined by essentially amateur adjudicat ors 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  
 
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  reading between  the Appellate Body's obligation to address "each of the issues" under Art icle 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 ppellat e 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 i n 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 play 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, such as holding annual meetings 
between the Appellate Body and Members  as suggested in WT/GC/W/752, o r the external review 
mechanism as suggested in WT/GC/W/760. 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.  Given the present urgency of the matter, we propose that the above guideline development 
process should be completed in an expeditious way ( within [X] days).  
2.6.  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 DS B.  
2.7.  Should the consensus on the guidelines be reached, Members should 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.  
2.8.  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 certain procedural limits (such as the 90 days deadline) 
because of the overload of work, Members should consider addressing these issues by amending the 
DSU. Such amendments mig ht 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.  
2.9.  The process  is demonstrated  in the following flowchart, using the 90  days issue as an example . 
  WT/GC/W/763  
 
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