India Must Support All Options to End Crisis at WTO’s Dispute settlement System, says Expert

India must play an active role in resolving the WTO’s Appellate Body crisis triggered by the US by supporting feasible options for the appointment of judges, a top legal expert has said.

“There is a big chance that the US may declare the Appellate Body of the WTO non-functional in December 2019, as there would be just one judge left. India and other countries must then support Mexico’s proposal of appointing judges through an administrative majority decision (selection done on the basis of majority of vote cast),” said Ernst-Ulrich Petersmann, Emeritus Professor, Department of Law, European University Institute, in an interaction.

Petersmann is here to deliver a lecture on the WTO’s Appellate Body crisis at the invitation of the Centre for WTO Studies and the Centre for Trade and Investment Law. The Appellate Body is the top decision-making body that hears appeals from reports issued by panels in disputes brought on by WTO members.

The WTO’s dispute settlement system is facing a crisis as the US has blocked the appointment of appeals judges since last year, which has now resulted in the shrinking of the numbers from seven to three. Two of the three judges are scheduled to retire on December 10, following which appeals made by WTO members on panel reports can’t be entertained.

Call for change

The Donald Trump regime had initially said the Appellate Body’s functioning needed to be improved and that the body had been over-reaching and creating laws through legal rulings. The EU and several other members including India subsequently came up with proposals for inter-governmental reforms of the dispute settlement system, but Washington’s goal posts changed.

“The US’ blocking strategy seems to be now aimed at gaining leverage for WTO reforms in areas such as market access, notifications, state-owned enterprises, subsidies and least developed countries. The proposals on reforming the dispute settlement system is something it is unlikely to agree to,” Petersmann said.

Initiating an administrative majority decision, which is provided for in Article IX of the WTO (‘where a decision cannot be arrived at by consensus, the matter at issue shall be decided by voting’), would require a meeting to be convened by the General Council or the Dispute Settlement Body, the trade law expert added.

Asked whether going in for an administrative majority decision before the two judges retire in December would be a good move, Petersmann said it would be desireable but WTO diplomats are not likely to do so. “Members are more likely to wait and see as they do not want to provoke the US more at the moment,” he said.