A “work in progress” report issued last week by the facilitator of the World Trade Organization’s (WTO) dispute settlement reform process highlights that many critical issues surrounding the Appellate/Review mechanism remain unresolved, according to individuals familiar with the discussions.
The report underscores that numerous reform proposals may undermine a robust enforcement function, which is essential for the rule-based and member-driven intergovernmental trade body to negotiate new agreements effectively.
The 35-page restricted document raises significant doubts about the likelihood of restoring a “fully and functioning dispute settlement” system by the end of 2024. This objective was mandated by trade ministers at the WTO’s 13th Ministerial Conference in Abu Dhabi earlier this year.
Mandate from Ministers
Trade ministers instructed officials to “accelerate discussions in an inclusive and transparent manner, build on the progress already made, and work on unresolved issues, including those related to appeal/review and accessibility, to achieve the objective by 2024, as set forth at MC12.”
Report Findings
The restricted document, prepared by Ambassador Usha Dwarka-Canabady of Mauritius, suggests that significant issues, particularly those in the Appeal/Review pillar, are unlikely to be resolved before the WTO’s winter break.
The report (Job/GC/DSR/3), seen by WTD, indicates limited progress in the Accessibility pillar compared to critical areas concerning the Appeal/Review mechanism. It also suggests that the restoration of the Appellate Body, paralyzed by the United States in December 2019, is not expected to be achieved through the current reform process.
At the October 28 Dispute Settlement Body meeting, the United States stated it is “not working towards a restoration of the Appellate Body as it was.” Observers interpret the report as reinforcing the U.S. stance, suggesting that members may have to accept a diminished appeal/review mechanism, weakening the WTO’s enforcement function.
Accessibility Pillar Progress
The report notes progress in the Accessibility pillar, with “zero drafts” on “capacity building” and “technical assistance” ready for plenary discussion. Regarding the “dispute settlement fund model” and “reimbursement model,” it states, “two workshops held; moving to table form.”
Appeal/Review Mechanism
Work on the Appeal/Review mechanism remains incomplete, with discussions on several reform ideas still ongoing. These ideas span six key areas:
1.Scope of review.
2.Standard of review.
3.Form of the mechanism.
4.Reducing/changing incentives to appeal.
5.Clarifying members’ expectations of adjudicators.
6.Access to the mechanism.
The discussions appear underdeveloped, particularly concerning the “form of the mechanism,” which is pivotal in determining the nature of the body that would replace the Appellate Body, previously a cornerstone of the enforcement function.
Reform Proposals
The report includes proposals on the “nature of the body” such as:
1.Ad hoc selection of adjudicators from a pool or list.
2.Increasing the number of standing adjudicators.
3.A hybrid system of standing and ad hoc adjudicators.
4.Adding adjudicators at the interim review stage in lieu of a separate appeal/review stage.
5.Having panel conclusions reviewed by a committee of WTO members instead of adjudicators.
The key objectives of these proposals include addressing concerns that a standing body could create de facto precedents and rule-making authority while failing to ensure correct decisions. However, most members expressed that a standing body of highly qualified experts is essential for predictability, consistency, and legitimacy.
Expertise and Gender Balance
The report notes that expertise requirements for adjudicators, as outlined in Article 17.3 of the Dispute Settlement Understanding (DSU), are unchanged. Members expressed interest in maintaining high expertise standards and ensuring gender balance.
Working Procedures and Decision-Making
Proposals to reform working procedures include:
1.Limiting procedures to procedural aspects of appeal/review.
2.Developing procedures in consultation with the Dispute Settlement Body (DSB).
3.Subjecting procedures to review under the accountability mechanism.
Regarding decision-making, one proposal suggests requiring consensus among adjudicators to modify or reverse a panel decision. However, members are divided, with some emphasizing the importance of collegiality and consensus for consistent decision-making.
Impartiality and Independence
The report reiterates the importance of maintaining adjudicators’ independence and neutrality, which are critical to legitimacy, accountability, and transparency.
Conclusion
The report underscores the challenges in achieving consensus on key issues, casting doubt on the restoration of a fully functional dispute settlement system within the mandated timeline. Progress in some areas is noted, but significant hurdles remain, particularly in reconciling divergent views on the Appeal/Review mechanism and other foundational reforms.
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