In what is being called a legitimacy crisis, the WTO faces the vacation of two Appellate Body (AB) seats as the United States has, in an unprecedented move – opposed the re-appointment of Mr. Seung Wha Chang, from South Korea. And in what seems to be a knee jerk reaction, South Korea has now announced their opposition to the re-appointment of any AB members, bringing their number down from seven to five – as it is only Ms Yuejiao Zhang from China who is set to finish her second term this year, and the Selection Committee is yet to propose a candidate who has the membership’s consensus.
In an official joint statement on the 23rd of May, Ambassador Michael Punke, US Permanent Representative to the WTO and USTR General Counsel Tim Reif declared that the United States was ‘strongly opposed’ to AB members ‘deviating from their appropriate role’ by ‘restricting the rights’ or ‘expanding trade agreement obligations’ and could not support any individual with such a record. The statement claimed that they had come to this decision after careful review of Mr. Chang’s service:
- Where, in their eyes: the AB went into the unnecessary detail of interpreting GATS provisions, which merely served as obiter dicta, and amounted to ‘making law’ outside the context of solving the dispute (Argentina – Measures Relating to Trade in Goods and Services– DS453).
- Where, ‘the candidate’ would issue reports engaging in abstract interpretation and raise concerns on matters not under appeal (India – Measures Concerning the Importation of Certain Agricultural Products from the United States – DS430).
- Where, the AB rejected the appeal but still went on to reverse the findings of the Panel (United States – Countervailing Duty Measures on Certain Products from China – DS437).
- And finally, where the AB reviewed a Member’s domestic law (United States – Countervailing and Anti-dumping Measures on Certain Products from China– DS449).
To say that this pronouncement by the US hasn’t been taken well might even be the understatement of the year. This isn’t the first time that the US has blocked appointments, (Jennifer Hillman in 2011 and James Gathii in 2013) but it is however, the first time they have blocked the appointment of a non-US citizen. For the South Korean delegation, the message is loud and clear – if AB members make decisions that the US doesn’t agree with, re-appointment will probably not be possible. The six current, as well as the thirteen former AB members have written letters to the Chairman of the dispute settlement body (DSB), and while accepting that there was no right of reappointment to the Board, they objected to the absurdity of linking the re-appointment of one member to AB decisions, when appellate rulings are a result of consensus. The EU, Brazil and Japan were among the two dozen Members who protested as well – calling the block a serious threat to the independence and impartiality of future AB members, as well as a source of chilling effects for future AB decisions.
Reading into this development in light of United States’ non-implementation of adverse rulings and their rising impatience to ensure maximum Trans-Pacific Partnership (TPP) participation, it is suggestive of their intention to thwart multilateral agreements in favour of hegemonic-bilateral treaties.
Closer home, United States’ TPP pressure on India to adhere to their TRIPs plus regime continues
– and has been covered widely on the blog. With trade negotiations for the Regional Comprehensive Economic Partnership (RCEP) underway, it will be interesting to see how the US reacts to its possible conclusion. Indian courts are also not immune to the growing politicisation of judicial appointments, with increasing post retirement appointments.
While America’s preference for bilateral measures has been clear for years, their proposals such as the TPP do not impose obligations on countries that do not accede. What will, however, have a direct effect, is the politicisation of the DSB. Often called the ‘crown jewel’ of the WTO, the independence of the dispute settlement system is integral to ensure that Members’ do not lose faith in what has now grown to be a system known for its efficiency. Arguments in favour of this move are few and far between, but they are not necessarily wrong. The US was well within their rights to block Chang’s appointment, it’s true – and perhaps that is exactly what’s wrong with the system. It is possible that giving States the power to block re-appointments is reflective of the support to multilateralism that existed when the DSB was formed, but twenty-one years hence, it might just amount to putting power in the wrong hands.
(Image taken from here)