US continues to block appointment to key WTO body

Washington spurns the draft General Council decision presented by facilitator

Crisis at the World Trade Organization escalated on Monday with the US refusing to “unblock” the selection process for filling the six vacancies at the highest court for trade disputes despite a large majority of countries ready to accept a draft decision prepared by the facilitator, trade envoys said.

At an extraordinary General Council meeting, which is the highest decision-making body after the ministerial conference, the facilitator Ambassador David Walker, who is also the chair for the dispute settlement system, presented his draft decision to break the impasse for starting the selection process for filling six vacancies expeditiously so to ensure that the Appellate Body remains functional without much delay.

Comprehensive changes

The draft General Council decision includes some comprehensive changes in the rules governing the dispute settlement understanding to address the specific concerns raised by the US.

The draft decision emphasises “the central importance of a properly functioning dispute settlement system in the rules-based multilateral trading system, which serves to preserve the rights and obligations of Members under the WTO Agreement and ensures that rules are enforceable.”

To address US demands

More important, the draft decision contains several amendments to address the US demands on what ought to be “transitional rules for outgoing Appellate Body members,” the “90-day rule for completing the AB reports” (including a positive consensus that any party to the dispute can decide whether to go ahead or not), “scope of appeal,” “advisor opinions,” “precedent,” “overreach”, and “regular dialogue between the DSB and the Appellate Body.”

The facilitator’s draft decision also calls for unblocking the selection process for filling the six vacancies along with adopting the proposed changes for adjudicating future trade disputes that the US had raised during the past two years.

Gone ‘astray’

The US had maintained repeatedly that the Appellate Body had gone “astray” from following the DSU (dispute settlement understanding) provisions. Consequently, the facilitator Ambassador Walker tried to address the US’ concerns during the last one year. The proposed changes in the GC draft decision are acceptable to a majority of the WTO membership.

Yet, the US spurned the draft GC (General Council) decision, nor offered “any single proposal or counter proposal of its own,” said the European Union trade envoy João Aguiar Machado.

“However, we have just heard, the United States is not ready to unblock on the basis of the revised draft decision as presented today,” said Ambassador Machado, explaining the grave consequences that follow at the WTO.

“In two days from now, we will have an unprecedented situation in the World Trade Organization, which will no longer be able to deliver binding resolution of trade disputes and will no longer guarantee the right to appeal review,” he said.

Consequently, “the very idea of a rules-based multilateral trading system is at stake,” the EU maintained.

The US, according to one trade envoy, who asked not to be quoted, sought unambiguous admission that the AB has gone “astray” in the draft GC decision.