World Trade Organization negotiators have identified several “concepts” that could be the basis for a “viable solution” to the question of what the appeals stage of the dispute settlement system will look like, the facilitator of the reform talks said on Friday, adding that a deal on that issue is possible before the 13th ministerial in one month -- if members work with enough “determination.”
The WTO Appellate Body has been largely defunct since December 2017, as the U.S. has maintained a block on filling vacancies on the body across two administrations, leaving more than 30 appealed disputes in limbo. The fracture of the dispute settlement system sparked a reform effort, which has produced a draft text that identifies a number of procedural and operational improvements to the system, although it does not yet include any outline of a new or reformed appeals stage.
The dispute settlement reform talks are being facilitated informally by Guatemala’s deputy permanent representative, Marco Molina, who took the reins in early 2023 following initial discussions launched by the U.S. the previous year. During a Dispute Settlement Body meeting on Friday, Molina told members the discussions are happening on two tracks: One for refining the existing draft text and one for how to set up an appeal or review mechanism.
The talks on a second stage have identified some promising “concepts” that members hope could lead to an eventual deal, Molina said, according to a copy of his remarks obtained by Inside U.S. Trade.
“These concepts are undergoing refinement and testing to ensure they address the interests and concerns identified by Members. In the coming days, the plan is to create an inventory of the elements of these concepts gaining interest and support among Members and further develop those that require consideration,” he said. “Gradually, we are progressing towards finding a viable solution for the appeal/review mechanism.”
Molina did not elaborate on what those concepts were but insisted that a solution was still possible ahead of MC13, which is set for Feb. 26-29 in Abu Dhabi, United Arab Emirates.
“With Members’ commitment, determination, and a focus on interests and concerns, it is feasible to achieve the objective of designing an appeal/review mechanism that works for all WTO Members in the next few weeks,” he said.
According to Molina, the goal is to complete the draft text -- likely without the appeals stage -- by Feb. 9, with an updated version set to be circulated on Jan. 29. Once members finish finalizing the draft text, “the intention is to shift all attention and energy to the question of the appeal/review mechanism,” the facilitator said.
During Friday’s meeting, a vast majority of members -- more than 130 -- again proposed restarting the Appellate Body nomination process as they have since the U.S. first instituted its block. The U.S. again blocked the proposal, arguing -- pointedly -- that it undermines the reform effort.
“Under the previous agenda item [on dispute settlement reform], Members’ statements focused on the future of the dispute settlement system; under the current agenda item [on the Appellate Body proposal], Members continue to look back,” the U.S. said, according to a copy of its remarks provided by the U.S. Mission in Geneva. “It may be that some Members prefer the status quo. But let us be clear: the old system was not working for the United States and it was not working for many other Members.”
“In contrast, investing in dispute settlement reform presents an opportunity to build a new system that overcomes the problems of the past,” the U.S. added. “As we engage on reform, we must bear in mind that re-launching the Appellate Body selection process will not address the concerns -- and calls for the restoration of the Appellate Body undermine our collective efforts for reform.”
The U.S. has continuously praised the informal process and did so again during the meeting, saying it has led to “substantial progress” and produced a “draft text on a number of procedural and functional reforms” that shows “a shift in the culture toward resolving disputes and avoiding needless litigation for the sake of litigation.”
But Washington also noted that “difficult issues remain,” citing the needs of developing and least-developed country members as well as “critical substantive areas where ‘judicial’ overreach has damaged the functioning of the WTO and altered the balance of Members’ rights and obligations.”
“If you are concerned about policy space, you should be for a reformed dispute settlement system. A reformed system should address erroneous interpretations on such issues as essential security, regulatory space, remedies for unfair trade, and other fundamental systemic issues,” the U.S. added.
“Policy space” is a bit of a buzzword in Geneva -- a phrase used by some members to identify areas in which they believe the WTO should allow for more flexibility, exceptions or other easing of rules so countries can adopt policies they want. Frequently, it is invoked by developing countries in pushing for certain special and differential treatment provisions; notably, the U.S. cited the need for “policy space” in withdrawing its support for certain e-commerce proposals in the plurilateral WTO talks.
The U.S. has several times called for an “authoritative interpretation” on the national security exception to be part of dispute settlement reform, although how much the U.S. had pushed on the issue or whether it had proposed anything on this front was unclear. But according to a weekly summary of WTO meetings provided by the mission on Friday, U.S. Ambassador to the WTO María Pagán has been meeting with other delegations to hash out issues related to dispute settlement reform, including national security.
“Ambassador Pagán continued to conduct bilateral and small group outreach with WTO Members to advance dispute settlement reform discussions and, in particular, engaged with Members on a shared understanding of essential security and other critical issues related to reform,” the summary says.
The U.S. has said it is prepared to harvest whatever is ready from the talks for MC13, although it is not clear that all members are on board with an early harvest deal at the ministerial. Some warned against an early harvest deal at MC13, insisting any deal must include an appeals stage, according to the Geneva official.
Washington did caution against attempting to move too quickly ahead of MC13 or “artificially slowing down” the talks, referring to a push from some members to “formalize” the process into an official WTO body like the DSB or General Council. Several members reiterated that desire on Friday, arguing it would be more transparent and inclusive, according to a Geneva-based trade official familiar with the meeting.
“As we approach MC13, we are in favor of neither speeding too quickly to an outcome that overlooks the needs of certain Members, nor artificially slowing down the discussion by imposing constraints that limit rather than encourage constructive dialogue,” the U.S. said. “We feel strongly -- as evidenced by our progress to date -- that the interest-based discussions provide us with the best opportunity to address the remaining issues.”
The chair of the DSB, Norwegian Ambassador Petter Ølberg, told members during Friday’s meeting that he had consulted with various delegations on whether and how to formalize the talks, according to the Geneva official. There is no consensus among members, he said, and recommended that they continue with the discussions as-is while he works to establish a way forward.
A General Council meeting is set for Feb. 14 to collect and transmit texts to trade ministers ahead of MC13. If members decide to provide an official dispute settlement reform deal to ministerial for approval, the process likely would have to be formalized in some way. However, if the goal is to continue with the informal process past MC13, members could instead opt to acknowledge progress or provide guidance in some other way. -- Hannah Monicken (hmonicken@iwpnews.com)