WTO Appellate Body Dysfunctional – Remaining Three Members to Retire by December

·      Launch of the Appellate Body Annual Report for 2018

The Appellate Body has issued its 2018 Annual Report summarizing the activities of the Appellate Body and its Secretariat over the past year. At an event to mark the launch of the report on 28 May, 2018 Appellate Body chair Ujal Singh Bhatia said the Appellate Body’s docket continued to grow with increasingly complex appeals while at the same time operating with fewer members. Former Appellate Body member Peter Van den Bossche also delivered farewell remarks at the event.

In presenting the report, Mr. Bhatia noted that the Appellate Body circulated nine Appellate Body reports concerning six matters in 2018 while also assisting an arbitrator in determining the reasonable period of time for implementation in one dispute.  In addition, 12 panel reports concerning 11 matters were appealed in 2018.

"In sum, the heavy workload of the Appellate Body continues unabated," he said. "These indicators would appear to suggest that WTO Members consider the appellate system to be a key pillar of a robust and effective dispute settlement mechanism."

However, Mr. Bhatia also noted the current "mood swing" regarding the Appellate Body as reflected in calls for reform.  While not denying the need for reform, he stressed that good solutions will depend on the right questions being asked.

"Members should think carefully about what kind of system they want, what its role and reach should be, and what core principles should govern its operation," he declared.  "Only then will Members be able to engage in long-lasting reform projects."

Appellate Body Appointments

Mexico, speaking on behalf of 75 members, introduced once again the group's proposal to start the selection processes to fill four vacancies on the Appellate Body. Mexico said the considerable number of members submitting the proposal reflects a common concern over the current situation in the Appellate Body that is seriously affecting its workings as well as the workings of the overall dispute settlement system against the best interest of members.

WTO members have a responsibility to safeguard and preserve the Appellate Body, the dispute settlement system and the multilateral trading system, and thus a responsibility to proceed with the launch of the selection process, Mexico said.

The United States responded that it was still not in the position to support the proposal and that its concerns previously identified remain unaddressed. It reiterated its concerns regarding the Appellate Body's alleged persistent overreach, its disregard for deadlines, and the authorization of Appellate Body members to decide appeals even after their term of office has expired. This undermines the legitimacy of the system and damages the interests of all WTO members who care about having agreements respected as they were negotiated and agreed. The US will continue to insist that WTO rules be followed and will continue efforts and discussions to seek a solution, it said.

Around 20 members took the floor, on their own behalf or on behalf of groups of WTO members, to express concern over the impasse in the selection process which has now continued for more than two years. Several cited the increasing urgency to find a solution and the need for all members to play an active part in the discussions on overcoming the impasse being facilitated by the DSB chair.

The DSB chair, Ambassador David Walker (New Zealand), said the matter urgently requires meaningful engagement by all WTO members. He noted that he reported to the WTO's General Council on 7 May regarding his informal process and that he would continue this in a range of different formats before reporting back again to the General Council on 23 July.

Panel Established to Rule on Measures Imposed by Qatar on Goods from the UAE

At a meeting of the Dispute Settlement Body (DSB) on 28 May, WTO members agreed to establish a panel to rule on measures imposed by Qatar relating to the importing, stocking, distribution, marketing or sale of goods from the United Arab Emirates. The DSB also considered a request from the European Union for a panel to rule on anti-dumping and countervailing duties imposed by the United States on imported ripe olives from Spain.

DS576: Qatar – Certain measures concerning goods from the United Arab Emirates

The United Arab Emirates submitted its second request for a panel to examine Qatar's measures relating to the importing, stocking, distribution, marketing or sale of goods from the UAE. The UAE's first request was blocked by Qatar at a DSB meeting on 26 April.  The UAE said Qatar's retaliatory actions against UAE products and suppliers were in clear contravention of the prohibition on unilateral measures under Article 23 of the WTO's Dispute Settlement Understanding (DSU) and violate core WTO obligations.

Qatar said it regretted the UAE's decision to pursue its panel request, particularly as the measures challenged by the UAE either never existed or have ceased to exist. Qatar noted the UAE was complaining about an alleged lack of market access to Qatar while it was maintaining a two-year boycott against Qatar based on alleged national security interests.

Turkey said members would be better off if the two sides resolved such disputes through dialogue.

The DSB agreed to the establishment of the panel. The European Union, Japan, Chinese Taipei, Bahrain, Turkey, Ukraine, the United States, Norway, the Russian Federation, Singapore, Afghanistan, Canada, Egypt, Saudi Arabia, India, China and Brazil reserved their third-party rights to participate in the proceedings.

DS577: United States — Anti-dumping and countervailing duties on ripe olives from Spain

The European Union submitted its first request for the establishment of a dispute panel to rule on anti-dumping and countervailing duties imposed by the United States on imports of ripe olives from Spain. Consultations took place in Geneva on 20 March but failed to resolve the dispute, prompting the EU to request the establishment of a panel.

The EU said it had serious concerns about the US investigation leading to the duties, including the US targeting of non-specific subsidies, the absence of a pass-through analysis and the failure to show the imported olives were causing injury to US producers. It urged the US to bring the measure as well as the underlying US legislation in line with its WTO obligations.

The United States said it regretted the EU's decision to request a panel and that the duties on Spanish olives were imposed only after thorough investigations were carried out that were fully in line with WTO rules. In addition, the EU request for a panel included claims which were not included in the request for consultations.  For these reasons, the US said it did not agree to the establishment of a panel.

The DSB agreed to revert to the matter.

DS517: China — Tariff rate quotas (TRQs) for certain agricultural products

China noted this was the second agricultural dispute brought by the United States against China, a sector of special significance given its 1.3 billion-strong population. China welcomed the fact that the panel recognized its public notice in connection with the allocation and reallocation of TRQs was in conformity with WTO requirements but regretted that the panel found flaws in China's administration of TRQs. China said it will continue to administer imports of rice, wheat and corn through TRQs in line with WTO rules. Although disappointed, China said it would not appeal the panel ruling in order to settle the dispute.

The United States said it welcomed the findings of the panel, which confirmed China failed to administer its TRQs consistently with its WTO commitments. In particular, the panel found that several aspects of China's TRQ administration were not transparent, predictable or fair. The panel ruling confirms these practices inhibit the filling of the TRQs, with the result that WTO members do not have the access to China's market that China agreed to when it joined the WTO, the US said.

The DSB adopted the panel report.

DS495: Korea – Import bans, and testing and certification requirements for radionuclides

Korea reported to the DSB that it plans to implement the WTO's ruling in the case brought by Japan against Korea's restrictions on imported fishery products and certain additional food testing requirements. Korea had imposed such measures after the Fukushima earthquake and nuclear accident in March 2011. Korea said it estimates it would need one week to complete implementation by way of re-publication of the relevant measure.

Japan said that, contrary to Korea's claims, the Appellate Body ruling in the dispute did not reverse the panel's underlying factual findings on the safety of Japanese food products and that, because Korea did not challenge this on appeal, the findings were adopted by the DSB and still stand. Given this, Japan urged all WTO members which maintain restrictive measures on Japanese food products to remove such measures immediately.

Japan criticized the Appellate Body for substituting its preferred analytical approach for the panel's, with the result that it leaves the dispute unresolved. Japan sees this as another aspect of overreach by the Appellate Body which should be corrected.

Korea said the item was on the agenda for Korea to explain its intentions on implementation, not for Japan to make further criticisms about the ruling. Contrary to Japan's assertions, the Appellate Body properly made its findings within its mandate, Korea said.

The United States said it shared Japan's concerns about Appellate Body overreach.

DS511: China - Domestic support for agricultural producers

China said that it had notified the WTO on 16 May its intention to implement the panel ruling in DS511 and said it would need a reasonable period of time to ensure implementation.

The United States thanked China for its communication on the matter and said it stands ready to agree with China on the reasonable period of time.

DS234: United States – Continued Dumping and Subsidy Offset Act of 2000

The European Union reiterated its request that the United States cease transferring anti-dumping and countervailing duties to the US domestic industry, arguing that every such disbursement was a clear act of non-compliance with the rulings on this matter. Brazil and Canada supported the EU statement, while the United States has taken all actions necessary to implement the ruling.

DS316: European Communities and Certain Member States – Measures affecting trade in large civil aircraft: Implementations of the recommend-dations adopted by the DSB

The United States said that once again the European Union has failed to provide a status report to the DSB concerning dispute DS316. The European Union repeated that the matter is subject to new compliance proceedings and thus there was no obligation on the EU to submit a status report.