Statements Delivered by Ambassador Dennis Shea – WTO General Council Meeting, July 23, 2019

Statements Delivered by Ambassador Dennis Shea
WTO General Council Meeting
Geneva, July 23, 2019

ITEM 5. INFORMAL PROCESS ON MATTERS RELATED TO THE FUNCTIONING OF THE APPELLATE BODY

Let me begin by repeating what I have said at recent meetings of the General Council:  if WTO Members say that we support a rules-based trading system, then the Appellate Body must follow the rules we all agreed to.

The United States has expressed in clear terms the U.S. understanding of these rules through detailed interventions at the Dispute Settlement Body and in regular and ongoing discussions with Members. In each instance, the United States has identified specific instances in which the Appellate Body has departed from the clear rules in the Dispute Settlement Understanding.

Through the U.S. statements and by direct engagement, the United States has endeavored to foster a dialogue so that we, as WTO Members can determine if we have a shared understanding of the rules, including where those rules place clear limits on the role of the Appellate Body.

We recognize the work of the Facilitator, Ambassador Walker, to provide another forum to continue this important dialogue. The United States, along with other Members, has been actively engaged in this process.  The United States has met with the Facilitator on an ongoing and regular basis in a variety of configurations.

Today’s report from the Facilitator reflects a simple fact also evident from numerous informal discussions.  Many Members – and not only the United States – recognize that the Appellate Body has breached and continues to breach the clear rules of the DSU. While it would have been desirable to acknowledge these breaches, and consider how to arrest them some years ago, we nonetheless welcome the growing acknowledgment by WTO Members of the legitimacy of long-standing U.S. concerns.

And we likewise recognize that proposals circulated by some Members appear to make genuine attempts to begin to grapple with some of the difficulties the Appellate Body has created for a rules-based dispute settlement system.

At the same time, we question the proposals by other Members, some of which not only fail to acknowledge any breach of clear rules by the Appellate Body but would even change the rules to further empower the Appellate Body and diminish its accountability.

Given that some Members appear prepared to condone continued rule-breaking by the Appellate Body, it is not surprising that the Facilitator’s Report reflects only limited progress.  The Report highlights certain areas of limited agreement on Members’ understanding of the rules, while also raising significant questions on the appropriate action to ensure future compliance with these rules.

On transitional rules for Appellate Body members, the Facilitator’s Report suggests convergence on the understanding that the DSB has the “explicit” authority to appoint Appellate Body members.

The United States agrees as it simply reflects the text of DSU Article 17.2.  The question, however, is whether Members, through the DSB, have the exclusive authority to appoint Appellate Body members. This too follows from the text of the DSU, which gives the power to appoint to no other actor.  In other words, do Members agree that the Appellate Body does not have the authority to “deem” a person who is no longer an Appellate Body member to nonetheless continue to be a member and decide appeals?  And do Members agree that Rule 15 is inconsistent with the text of the DSU?

Furthermore, we question whether there is convergence on the suggestion to establish automatic procedures for the replacement of Appellate Body members whose terms have expired.  Such a process could serve to reduce the DSB’s authority under the rules and limit the DSB’s capacity to exercise judgement about appropriate selection procedures.

On the deadline to submit reports, the Facilitator’s Report indicates convergence on the understanding that the Appellate Body “needs” to issue reports within 90 days.  The United States welcomes the acknowledgment from many Members that the DSU places the Appellate Body under an obligation to issue its report within 90 days through the use of the mandatory term “shall”.  Therefore, rather than “needs to”, the report should rather reflect that the Appellate Body is “obligated to”.

As Members agree that the 90-day deadline is an obligation, we must understand what led the Appellate Body to depart from this unambiguous rule, and what are the consequences where the Appellate Body breaches this rule?  For example, can the deadline be exceeded by agreement of the parties, or rather would deviation from this rule be an issue for the DSB to decide?

On municipal law and questions of fact, the Facilitator’s Report indicates convergence on the understanding that the meaning of municipal law is an issue of fact, and the DSU does not permit the Appellate Body to engage in de novo review of facts. The United States agrees.  But the report does not address the means by which the Appellate Body evades this limitation on its review, by asserting that it can review whether a panel fulfills its supposed “obligation” to make an objective assessment of the facts.

As we have explained, the Appellate Body ignores that to make an objective assessment under DSU Article 11 is a “function” of a panel, not an “obligation”, and the DSU uses the verb “should” make an objective assessment, not “shall” make.  Apparently, further discussion is needed to understand these words to which Members agreed, and to understand why, time and again, the Appellate Body has felt free to review the facts, including through de novo review of the meaning of municipal law.

The Facilitator’s Report does not suggest any convergence on how to address this repeated breach of the rules by the Appellate Body.

So too with advisory opinions.  According to the Facilitator’s Report, Members are in general agreement that issues not raised by either party to a dispute “should not” be decided by the Appellate Body.  The United States welcomes this acknowledgment that the Appellate Body is not to make out a case for a party or opine on an issue that does not form part of the matter that the DSB established a panel to consider.  But this is not a matter of discretion.  Rather than “should not”, the Appellate Body “may not” render advisory opinions.

As we have explained, the Appellate Body report exists to consider issues of law and legal interpretation in the panel report.

The panel is charged by the DSB under DSU Article 7.1 to examine the matter set out in the panel request and to make such findings as will assist the DSB in making the recommendation to bring a WTO-inconsistent measure into conformity with the relevant WTO agreement.

Therefore, a panel is not to make findings that will not assist the DSB in making the recommendation under DSU Article 19.1.  And the Appellate Body report therefore reviews such panel findings in order to assist the DSB in making that recommendation.

Again, however, the Facilitator’s Report does not identify convergence on this understanding and the appropriate means to ensure compliance with this rule.

With regard to precedent, the Facilitator’s Report highlights the widely divergent views among Members on the value of prior Appellate Body reports.  The Report suggests agreement among Members that “precedent” is not created through WTO dispute settlement.  Yet, time and again, some Members insist that a panel must adhere to the interpretation in past Appellate Body reports.  And, time and again, the Appellate Body insists that panels must adhere to past reports absent undefined “cogent reasons”, a term that appears nowhere in the DSU.  These assertions on the value of interpretations in prior reports are, as we have explained, directly contrary to the DSU and the WTO Agreement.  We therefore have not reached a common understanding among Members on the plain text of our agreed rules.

All of these issues are manifestations of the final issue in the Facilitator’s Report, that of overreaching, or disregard of clear rules such as to add to or diminish Members’ rights or obligations.

It is inaccurate to say that we have a consensus that the DSU limitation in Articles 3.2 and 19.2 must be observed if WTO Members cannot agree that the clear procedural and systemic rules the United States has outlined are being broken.  Rather, some Members appear to support diminishing other Members’ rights to have the DSU rules applied and respected as written.

In sum, the Facilitator’s Report recognizes that several Members agree that the DSU imposes clear limitations on the Appellate Body, and that the Appellate Body has felt free to disregard these rules. On the other hand, it is striking that a few Members appear to be taking the view that these same rules do not impose such limitations.  We would like to understand how it is Members can supposedly understand the same, clear words in such disparate ways.

For those rules where Members do share a common understanding, as we have previously explained, to find an appropriate and effective solution to prevent the Appellate Body’s repeated disregard of the rules from happening again in the future, it is imperative that Members understand how it is that we have come to this point.

To do so will require Members to engage in a deeper discussion of why the Appellate Body has felt free to depart from what Members agreed to.

Without this understanding, there is no reason to believe that simply adopting new or additional language, in whatever form, will be effective in addressing the concerns shared by several Members.

6. WORK PROGRAMME ON ELECTRONIC COMMERCE

The United States supports reinvigorating the Work Programme on Electronic Commerce.

We have been actively participating in the discussions and sharing information on certain capacity building projects that support the digital economy.We have also used the Work Programme to advance Members’ understanding on the importance of cross-border data flows to the expansion of international trade.Our CTS submission in June 2019 was designed to be a complement to the ongoing negotiations to reach an ambitious outcome on digital trade and ecommerce. The United States looks forward to continued work under the Work Programme to advance e-commerce and digital trade and we support the continuation of the moratorium on customs duties on electronic transmissions as our Ministers have done for the past 20 years.

 ITEM 7. PROCEDURAL GUIDELINES FOR WTO COUNCILS AND COMMITTEES ADDRESSING TRADE CONCERNS

The United States would like to thank the European Union and its cosponsors for this draft decision, which has sparked some interesting conversations amongst us about how WTO councils and committees function.

As one of the most active Members in the WTO’s committee system, my delegation certainly does see room for improvement – particularly in notifications, which we are addressing through a separate proposal – but also in terms of participation in some councils and committees.

It is frustrating for us – as it must be for others – for specific trade concerns to be raised in councils and committees and then never addressed by the respondent Member.

For example, it’s frustrating that we’ve raised concerns in the TBT Committee for almost 4 years with the EU’s practice of granting GI protections to products with common cheese names that also have long-established international Codex standards. And instead of working to resolve this concern, we have learned that the EU just granted GI protection to Havarti.  Again, over objections of trading partners.

It’s frustrating that we’ve been raising concerns in the TBT Committee about the EU’s policies regarding traditional terms for wine for more than 20 years. More recently, we have also raised concerns with these policies in the CTG and still haven’t been able to find resolution or even receive information about the status of our industry’s applications submitted a decade ago.

And it’s deeply disappointing that we’ve raised concerns in the TBT Committee with the EU’s regulatory regime for chemicals for almost 14 years.

We would also note that at the most recent TBT Committee, Members raised 63 STCs.  Of these 63 STCs, 18 involved conduct by the EU, nearly 30 percent.

However, in reading through this draft decision, we are not at all sure that it would make a meaningful difference in forcing Members to respond and engage on specific trade concerns.  In fact, it could be that this decision goes some distance to limit, or at least make more cumbersome, the ability of Members to raise issues in WTO councils and committees.  We feel this could be particularly true for small delegations.

A turn in this direction would be troubling.

We are also concerned about what we perceive to be an increased role for Chairpersons and the Secretariat, neither of whom have authority to resolve specific trade concerns.  The ability to resolve STCs remains with the Members, and in the case of TBT and SPS, with regulatory bodies.

We would like to note, in particular, that both the SPS and TBT Agreements have built-in mechanisms to review the operation and implementation of the Agreements.  These periodic reviews by the committees are excellent opportunities to propose improvements to committee procedures.

The TBT Committee just concluded its 8th review and the SPS Committee is in the midst of its 5th review.   We note that a number of suggestions in this proposal appear to be drawn from other Members’ contributions in those processes – some of those ideas have already been adopted, others did not reach consensus among Members – demonstrating that a bottom up approach to improvements in the context of each Committee works better and would be more appropriate than a horizontal, one size fits all approach.

Further, in contrast to this draft decision, we note the exemplary efforts of Brazil to lead an open, inclusive process over the last year to develop consensus proposals to improve the functioning of the SPS Committee.

As noted in the EU draft decision, regular WTO council and committee meetings offer Members the possibility to discuss and resolve concerns with trade-related measures. But resolution requires a willingness of Members to address concerns raised.

In short, what’s needed most is not more process but more political will. This would be the most effective way to resolve these longstanding concerns.

Rather than seeking to silence concerns via committee reform, we urge the proponents to take these concerns into account and to bring their measures into greater alignment with scientific evidence and international norms.   This alone would make a significant difference in the operation of the WTO committee system, to which years have been dedicated on these STCs and others like them.