Source: http://twn.my/title2/wto.info/2019/ti190405.htm
Timestamp: 2019-04-23 23:03:03+00:00

Document:
Geneva, 4 Apr (Chakravarthi Raghavan**) – The World Trade Organisation (WTO) and its Multilateral Trading System (MTS) is facing an existential threat, and unless this is taken up and resolved at the highest political decision- making levels of the WTO membership, the WTO system will atrophy and wither away.
Tackling and resolving the issues raised by this threat is the highest priority.
In this light, after resolving the threat to the system posed by the US blockage of a process to fill four current vacancies in the Appellate Body (AB), a mandatory obligation under Art.17.2 of the Dispute Settlement Understanding (DSU), WTO members must take up and discharge the obligation cast on them at Marrakesh in 1994, namely, to undertake a complete review of the DSU and decide to continue it as it is or with changes to its rules or to terminate and replace it with something else.
The review and changes to the existing DSU as such would need decisions by consensus, without it being linked collaterally to other desired changes of any delegation or group of them in the WTO-MTS. These changes may need “amendments” to the current DSU and/or the WTO, and will be subject to the amendment procedures prescribed in the WTO Treaty and its annexed Agreements.
In concluding the Uruguay Round (UR) of GATT negotiations at Marrakesh in 1994 with the WTO Treaty and its annexed Agreements, the Ministers of the participating countries with plenipotentiary powers also took some decisions and understandings that are integral parts of the adopted Treaty, set out in the “Legal Texts”.
Among these is the “Decision on Application and Review of the Understanding on Rules and Procedures Governing the Settlement of Disputes” (p465 of the Legal Texts, GATT Secretariat 1994).
The WTO Treaty committed all parties to sign on to all the agreements, and bring their own domestic laws and regulations into compliance with their obligations under the WTO Treaty.
The Treaty has also set out, under each of the “agreements, decisions and understandings”, a commitment by members to undertake further negotiations in a number of areas.
These were set out in full detail by the WTO secretariat in an official document in 1995-96, something that the then UNCTAD Secretary-General, Mr. Rubens Ricupero, used to call the “built-in agenda”.
These further negotiations on issues that were unresolved in the WTO Treaty is a continuing collective obligation of the WTO members, and an agenda that cannot be just jettisoned without necessary decisions at the highest level (and some may need amendment of the Treaty).
Such a review and decision was to have been made at the Seattle Ministerial Conference (1999), but could not be done in the kind of confusion in which the Conference met and ended, as a result of the US Clinton administration-organised street demonstrations and protests (with “anarchists” playing a role in the mayhem and chaos that ensued there).
In the preparations for that Seattle meeting, the informal group of developing countries did its own review in a small committee of members, chaired by Ambassador Munir Zahran of Egypt. The group sought and drew on the expertise of its former negotiators and others.
The Ministers at Doha decided this deliberately, so that the Review could be done and changes in Rules effected, without any attempt by any Member or Group to use this as a trade-off for concessions by other Members in other areas.
This decision has not been over-ruled or changed in any way by subsequent MCs, and is thus still in force.
Such a review was never carried out in “good faith”, the negotiations for the Review being constantly side-tracked by the US and the EU.
The two have been the major beneficiaries of the DSU process and the functioning of panels and the Appellate Body (AB).
On the other hand, developing nations and their development prospects have been the long-ignored victims.
Taking advantage of the DSU provision for the adoption of reports and the rulings and recommendations of panels and the AB by negative consensus, and advised by the WTO secretariat (servicing them) in violation of all principles of natural justice, the panels and the AB, in carrying out their mandate to clarify the existing provisions of the WTO Treaty and its agreements, have handed down rulings resulting sometimes in their rule-less behaviour and even running contrary to the specific provisions of the WTO Treaty.
As noted above, in the nearly two-decades of off-and-on negotiations on the DSU review, except for a few minor procedural changes, both the US and the EU have opposed any substantive changes. The review has neither been completed nor concluded, and remains on the agenda of the informal DSB negotiating sessions.
It is sheer hypocrisy for the EU or the US now to talk of the need for reforms and decisions on the items remaining on the agenda of WTO bodies without any decisions.
The US, under the Trump administration, has now created a situation (by blocking the consensus for filling vacancies on the AB) whereby before end-2019, the AB will become non-functional for lack of three members to constitute a division bench to hear and dispose of appeals on issues of law.
Though the US has done so for mala fide collateral purposes, namely, to force other members to yield to US blackmail tactics to effect so-called “WTO Reforms”, it has done the developing countries a great service by bringing the DSU review issue prominently back on the WTO agenda, and identifying the WTO DG Roberto Azevedo (and thus the Secretariat) as being partisans in promoting the US agenda (and hence should not be allowed to play any role in this).
This is an opportunity that developing countries would miss at their own peril; and the future of the WTO-MTS will be irreparably damaged, if they do not use it to ensure a complete review of the DSU to meet not only the issues being flagged by the US, but also their own much earlier voiced criticisms of the system and the functioning of the secretariats of the WTO including that of the AB, in “servicing” the panels and the AB.
Such a DSU review should be taken up after the Ministerial Conference or the General Council (GC) has considered the current threat to the WTO and its Multilateral Trading System, and has provided authoritative interpretations of DSU Article 17.2 to make clear that it is both a collective obligation of the Members as a whole as well as of individual Members to implement Art. 17.2 in good faith.
The DSU is in Annex II to the WTO Treaty. As such, the relevant parts of Art. IX:2 for an authoritative interpretation of DSU Art. 17.2 are the first and third sentences of Art. IX:2.
The various multilateral trade agreements in Annex I to the WTO Treaty – agreements on trade in goods (IA), in services or GATS (IB) and on intellectual property or TRIPS (IC) – were negotiated over a seven-year period among different groups of nations and their officials in various negotiating groups (1986-1990) and at the TNC (Trade Negotiations Committee) level (1991-1993).
This resulted sometimes in the same concept or agreed view being formulated in different language in the various agreements under the Multilateral Agreement on Trade in Goods (Annex IA).
On the other hand, the WTO Treaty and the Dispute Settlement Understanding (Annex II) were fashioned towards the end of the UR negotiations in 1993.
These two were first agreed upon by the US and the EU at ministerial level talks (by USTR Micky Kantor for the US and Sir Leon Brittan for the EU, then the EEC), and settled (at official level) in detail by more or less the same group of countries and delegates (though aided by different advisors).
In the process outlined in the paragraph above, three different terms have been used (in the WTO Treaty and the DSU Art. 3).
These are “to clarify” in DSU Art 3.2; “authoritative interpretation” in Art IX:2, and “Amendment” in Article X respectively of the WTO Treaty.
Though the terms “clarify” and “interpret” are generally used loosely as synonyms, in the WTO and DSU context, where two different terms have been used, in terms of the “ordinary meaning” under the Vienna Convention on the Law of Treaties (VCLT), it is clear that the intent was, and is, to relate to two different functions: “clarify” as a function of panels and the AB, and “interpretation” as a function of the Ministerial Conference and when it is not in session, that of the General Council.
It is time to ensure that the AB, which often talks of its duty as “treaty interpreter”, functions in accord with the WTO Treaty intent.
Where the language used in any covered agreement is ambiguous and needs “interpretation”, the AB, rather than providing an “interpretation” of the provisions of the agreements, must ask the MC/GC to provide an “authoritative interpretation”.
The WTO Treaty and the DSU, along with various agreements listed in Annexes IA, IB and IC, were concluded at official level in November-December 1993.
None of the negotiators, until this stage, had a clear idea of how the various agreements under the UR would be dealt with: whether as one agreement or several agreements, and the nature of the organisation that would come into being to service and administer these agreements or in any other way.
“In the event of conflict between a provision of the General Agreement on Tariffs and Trade 1994 and a provision of another agreement in Annex IA to the Agreement Establishing the World Trade Organization (referred to in the Agreements in Annex IA as the “WTO Agreement”), the provisions of the other agreement shall prevail to the extent of the conflict.” (p20 of the Legal Texts).
Early in 1994, at the stage of the legal scrutiny of texts concluded at official level was taken up, and when the ambiguity and/or variation in language used in various agreements was again brought up, that Canada (then a part of the QU AD and generally viewed by others as reflecting the US views) insisted that any effort to reconcile the texts would lead to the unravelling of the entire package and should not be undertaken.
Rather, Canada suggested, these matters could be left to be sorted out by panels and the AB. This view prevailed.
From the beginning, with the US cheer-leading, panels and the AB, tasked with “clarifying existing provisions” (DSU Art. 3:2), have disregarded the over-riding interpretative note to Annex IA, and have made it inutile. (More on this later).
As set out above, before taking up the DSU review, the MC/GC need to settle, by authoritative interpretation, Art. 17.2 of the DSU.
This is perhaps the only Article or rule in the WTO Treaty and its annexes, that sets out in the mandatory “shall”, both the collective and individual obligation of Members to implement in good faith.
If there can be any doubt left in anyone’s mind on the US lack of good faith, in blocking the processes for filling vacancies on the AB, the recent testimony of the USTR Robert Lighthizer to the US Senate Finance Committee that its objections are intended to force others to radically change the WTO-MTS to suit its current needs makes its lack of good faith clear.
As noted in the first part of this series, taking the US objections at face -value and in an effort to make suggestions for resolving the deadlock over the AB appointments, a number of former trade negotiators, trade law academics, and some members of the WTO, have put forward various suggestions (some of these are referenced below*), without the US either spelling out the changes it w ants or responding in detail to the suggestions and proposals.
In practical terms, unless the US, in good faith, agrees, with or without changes to any or all of them, most of the proposed solutions like arbitration will result in over 40 percent of disputes involving the US, as complainant or respondent, remaining unresolved. Such a dispute settlement system ill-serves the collectivity of the WTO.
2. Five papers and writings cited by Clement Marqet in footnote 8 to SSRN-id32.pdf.

References: Art.17
 Art. 17
 Art. 17
 Art. 3
 Art 3
 Art. 3
 Art. 17