WTO Members Pursue Options to Improve Dispute Settlement Process

27 July 2017

WTO members examined a series of issues last week involving the functioning of the organisation’s dispute settlement arm, including a renewed initiative led by Canada on voluntary steps to improve the system’s operation in practice.

During a meeting of the WTO’s Dispute Settlement Body (DSB) on 20 July, members also debated how to replace two members of the Appellate Body judges, given that one’s term has expired and the other will end later this year – ultimately finding themselves unable to reach agreement, according to a Geneva trade official.

Reform discussions

Since its establishment in the early 1990s following the Uruguay Round of trade talks, WTO members have put forward over 500 disputes. Some of these stay at the first “consultations” phase, while others make their way through the dispute panel and appellate processes, and even to “compliance” reviews and arbitration.

Over that timeframe, disputes have become increasingly difficult, leading both past and present WTO Directors-General and the membership itself to raise concerns over the burdens on the system. This strain has manifested itself in much longer proceedings than what were originally envisioned under WTO dispute settlement rules. Meanwhile, efforts to negotiate updates to these rules have been formally underway since the Doha Round of trade talks was launched in 2001.

Discussions on reform of the DSU have shown little progress, with members unable to reach consensus on moving proposals forward. Informal consultations have also been underway over the past seven years under a separate “Dispute Settlement Efficiency Exercise,” bringing together opinions on how to make the current system better – though the implementation of these ideas is up to the parties involved in any given case.

New Canadian-sponsored practice documents

In July 2016, Canada led a group of members in launching an informal, voluntary mechanism that would involve information-sharing about new approaches to the dispute settlement process. The mechanism and a number of initial practice agreements were “endorsed” by various other members. At the time, Canada noted the difficulties in advancing membership-wide updates to the current system. (See Bridges Weekly, 28 July 2016)

Ahead of last week’s DSB meeting, Canada put forward four additional communications outlining “additional practices and procedures in the conduct of WTO disputes.” These procedural agreements, with varying numbers of endorsements, would supplement those that were circulated last year.

These new documents include creating a larger pool of candidates to choose from when setting up dispute panels; allowing dispute parties to submit documents only through electronic means, such as e-mail or DVD; speeding up responses to “third party” requests to join dispute consultations; and publishing working procedures, timetables, and preliminary dispute rulings.

According to a Geneva trade official, delegates from over a dozen members spoke in appreciation of Canada’s efforts to spur discussion forward in this area, with some already confirming that they would endorse many or all of these approaches. Certain members also suggested areas where future voluntary agreements could go even further. 

Some members did ask for clarification on how “endorsing” these voluntary steps would work, asking either for feedback from members that had endorsed the 2016 mechanism and associated documents, or for more details on what the term “endorse” means. For example, the US asked about the “intended legal effect, if any,” of endorsements, while noting that it “appreciate[s] the opportunity for members to discuss these four proposals.”

Canada also said that it would be updating and releasing a new list of endorsing members for when the DSB convenes in late August.

AB selection disagreement persists

According to a Geneva trade official, WTO members remain at odds on appointing two new members to the Appellate Body – fuelling fears that the situation could significantly weigh down the system.

The Appellate Body is a seven-member group that serves as the WTO’s highest adjudicative body, with each member serving a four-year term, with the possibility of a one-time renewal. These appointments are made by consensus, and WTO rules do not dictate the details of how the appointment process should work.

Members are currently weighing two different proposals for beginning the appointment process to replace Ricardo Ramírez-Hernández and Peter Van den Bossche, whose respective second terms are ending this year. Ramírez-Hernández’s term ended in June, while Van den Bossche’s term ends in December.

Late last year, the DSB chairperson proposed one selection process for both slots, citing past precedent, and suggesting that this be wrapped up by June of this year. However, given that some members pushed for these two roles to be filled through separate processes, the chair has since been consulting with members on next steps.

Argentina, Brazil, Colombia, Chile, Guatemala, Mexico, and Peru have put forward – and subsequently updated – a proposal that would focus solely on the Ramírez-Hernández slot. The EU, for its part, has tabled and updated a proposal covering both roles.

Meanwhile, the US has maintained on repeated occasions, including at last week’s meeting, that given factors such as the domestic change-over in its trade team, it is only prepared to move forward on the Appellate Body slot that opened in July 2017.

Some members have said that they would be willing to support either proposal to advance the overall process. If the appointment process is not launched soon, the Appellate Body will find itself, for the second time in two years, without its full slate of judges. The DSB chair is due to continue consultations with the membership to determine next steps.

ICTSD reporting.

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