Statements by the United States at the WTO General Council Meeting

Statements Delivered to the General Council by Ambassador Dennis Shea
U.S. Permanent Representative to the World Trade Organization

Geneva, October 15, 2019

4. INFORMAL PROCESS ON MATTERS RELATED TO THE FUNCTIONING OF THE APPELLATE BODY – REPORT BY THE FACILITATOR

 We thank the Facilitator, Ambassador David Walker, for his considerable efforts to date and for his report to Members.

We have also listened carefully to the discussions. As we have explained, the fundamental problem is that the Appellate Body is not respecting the current, clear language of the DSU.  While a number of Members have expressed concern with actions or approaches by the Appellate Body, others appear willing to tolerate – or even encourage – those actions.   If we WTO Members cannot agree that we should be concerned that the Appellate Body has broken the plain rules that Members agreed to in the DSU, then it is difficult to see how we can find solutions to a “problem” we do not agree exists.  By denying that they are concerned about persistent rule-breaking by the Appellate Body, some WTO Members seek to avoid the deeper question: why did the Appellate Body feel free to disregard the clear text of the agreements?

We cannot find meaningful solutions without understanding how we arrived at this point. Without an accurate diagnosis, we cannot assess the likely effectiveness of any potential solution.  It is possible that some explanations may cut across several of the issues and be of a systemic nature.  For instance, one cause could be the ongoing challenges facing the WTO negotiating function and its oversight function, leading to unchecked “institutional creep” by the Appellate Body as Members push to achieve through litigation what they haven’t achieved or can’t achieve at the negotiating table.

Another cause could be that some WTO Members believe that the Appellate Body is an “international court” and its members are “judges” who inherently have more expansive authority than is provided in the DSU, for example, to create “jurisprudence” and fill gaps in the WTO agreements.  This view may be shared by some who have served on the Appellate Body.  It is also possible that some explanations for why the Appellate Body felt free to depart from the clear text of the DSU may be specific to the concerns that have been raised.

For example, Article 17.5 of the DSU could not be more clear or categorical that appellate reports must be issued within 90 days.  While the DSB minutes record that some WTO Members raised concerns about the Appellate Body’s exceeding 90 days, particularly without even consulting the parties, the minutes also record a few Members excusing the breach of our agreed rules.  Did the attitude of these Members contribute to a mindset among the Appellate Body that the WTO’s rules and deadlines did not need to be respected?

On so-called “cogent reasons”, the Facilitator’s Report suggests that Members agree that “precedent” is not created through WTO dispute settlement.    If this is so, then why did some WTO Members advocate for the Appellate Body to assert that its interpretations must be followed by panels absent unidentified cogent reasons?  And why then does the Appellate Body assert a precedential value for its reports like an authoritative interpretation that only WTO Members in the Ministerial Conference or General Council can give?

As a result of these fundamental questions not yet being addressed, we do not see convergence among Members with respect to an understanding and appreciation of the concerns raised.

It is important to recognize that suggested convergence on statements in the Facilitator’s Report that largely reflect the existing text of the DSU does not indicate convergence on the understanding of the problem and the situation in which Members now find themselves. It simply will not work to “paper over” the problems that have been identified with new language that the Appellate Body and some Members could subsequently argue means the Appellate Body can continue operating the way that it has.

To find a solution to the concerns raised, WTO Members will need to reach a shared understanding that the Appellate Body has failed to follow the rules agreed by Members and the role assigned to it by the Members. And let me repeat – the purpose of this process is not to re-negotiate the rules already agreed by Members to establish and govern the WTO dispute settlement system.  Rather, we need to find a way to ensure the system operates as agreed by Members.  Consequently, simply re-affirming the current WTO rules that have been broken persistently does not resolve the problem.

In addition to these threshold considerations, we question whether there is convergence on the suggestions presented in the Facilitator’s Report.  For example:

  • With respect to the issue of Appellate Body members whose terms have expired, the proposal would appear to depart from the DSU and provide for an undetermined term for those former Appellate Body members.
  • Regarding the 90-day deadline for Appellate Body reports, the DSU text is already clear, and yet the Appellate Body has failed to respect it. What reason would there be to think this language would ensure a different result?
  • With respect to the issue of appellate review of questions of fact, we are concerned that the Appellate Body would say it is already abiding by the text in the Facilitator’s Report, especially since the Appellate Body has interpreted DSU Article 11 to convert questions of fact into questions of law, and we hear WTO Members expressing different views on the meaning of Article 11 of the DSU.
  • With respect to advisory opinions, similarly, the Appellate Body presumably considers that it is already abiding by the text in the Faciliator’s Report. What basis is there to consider that this language would have a different result?
  • Regarding the issue of precedent, the Appellate Body has relied on the reference in the DSU to security and predictability to justify its “cogent reasons” approach, and we are concerned that the proposed language does not address the issue.
  • With respect to the issue of overreach, it is clear that the Appellate Body would say that it already abides by the text of Article 17.6 of the Anti-Dumping Agreement and, in turn, the text in the Facilitator’s Report. The problem is that the Appellate Body has adopted an erroneous interpretation of Article 17.6 that renders it inutile.  We have not yet seen convergence on how to address this issue, or other instances in which the Appellate Body has departed from the plain text of other covered agreements.

And we would note that there are a number of concerns that have been expressed over the years with respect to the Appellate Body’s approach to substantive provisions in a variety of areas, such as national treatment and technical barriers to trade, safeguards, subsidies, countervailing measures, and antidumping duties.  Concerns related to the Appellate Body departing from the plain text of the covered agreements and upsetting the careful balance of rights and obligations struck by Members have not yet been part of the discussions.

In sum, the Facilitator’s Report suggests agreement among some Members that the DSU imposes clear limitations on the Appellate Body.  We appreciate that some progress has been made through engagement by Members and the efforts of the Facilitator and others.  But we fail to see convergence on how to ensure that those limitations are respected going forward, and what are the consequences for continued failure to adhere to those limitations.  To find an appropriate and effective solution, it is imperative for Members to engage in a discussion on how we have come to this point.

  1. PROCEDURES TO STRENGTHEN THE NEGOTIATING FUNCTION OF THE WTO – STATEMENT BY THE UNITED STATES (WT/GC/W/757/REV.1 AND WT/GC/W/764)

The United States is pleased to continue our discussion of this important reform initiative. As the Membership is aware, the United States in January submitted a detailed paper on the lack of differentiation at the WTO, and why this is damaging the WTO’s negotiating function.

On that factual and analytic basis, the United States in February submitted to the General Council a proposal to resolve the differentiation problem through a pragmatic approach that recognizes the complexity of this issue.

The U.S. proposal establishes objective criteria for determining whether a WTO Member may continue to avail itself of blanket, open ended “special and differential treatment” (S&D) in current and future WTO negotiations.  The four criteria are:

  • A WTO Member that is a Member of the OECD, or a WTO Member that has begun the accession process to the OECD;
  • A WTO Member that is a member of the G20;
  • A WTO Member that is designated as a “high income” country by the World Bank; or
  • A WTO Member that accounts for no less than 0.5 percent of global merchandise trade.

Since the last meeting of the General Council in July, there have been several important developments. Chair, last month, Singapore committed to not seek S&D in current and future WTO negotiations.  In its statement, Singapore stated that “all members should take on commitments commensurate with their abilities.”

We firmly agree, and we know many other Members do, too.  An increasing number of Members are expressing this view to us.  We applaud Singapore for stating it publicly, and for taking action.  That is the kind of leadership this organization sorely needs from the “friends of the system.”

While noting that it still sees itself as a developing country, Singapore emphasized the importance of updating the WTO so it can remain relevant in a rapidly changing global economy. The message for the rest of us is obvious: the WTO has a role to play in advancing the development aspirations of all Members’ citizens, but to remain relevant, the WTO’s architecture must evolve to keep pace with the times.

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Chair, at the July meeting of the General Council, we shared several themes that were emerging from our initial conversations with Members.  For example, we saw growing traction for our call to reform.  It is worth reminding ourselves that this reform conversation did not seem remotely possible just a short time ago, but now it is a centerpiece of the WTO reform discussion.  This is progress.

We also shared that the U.S. analytic paper on differentiation enjoys support from a diverse and deep cross-section of the Membership.  We suspect this is because the paper raised issues of basic fairness that resonate for nearly all Members in this room.

  • Members across the development spectrum know that certain self-declared developing Members are relatively advanced, wealthy, and influential.
  • Members across the development spectrum hear these Members, year after year, insist on receiving access to any blanket special and differential treatment in every negotiation as if they were smaller and less advanced and lacking the negotiating capacity in Geneva to advance their interests.
  • Members across the development spectrum recognize that these Members’ insistence on inclusion in this special and differential treatment dilutes and in fact prevents Members from agreeing upon the critical special and differential treatment that is intended to benefit the poorest among us, and to help them integrate into the trading system. We have all witnessed this cycle repeat itself over and over again.
  • And, Members across the development spectrum know it is nearly impossible to negotiate new agreements when the more capable among us refuse to make meaningful offers and preserve their right to hold back fair and equitable contributions to the global trading system by insisting that they belong in the same category as poorer and less advanced economies.

Since the General Council meeting in July, we have expanded and deepened our conversations with scores of Members across the development spectrum, holding dozens of meetings in capitals, in Washington, and in Geneva. We continue to engage Members who would meet at least one of the four criteria in the U.S. proposal.  We are also engaging other Members—such as LDCs—who would benefit if the more advanced, wealthy, and influential economies among us finally accept responsibilities commensurate with their role in the global economy and agree to step back and allow special and differential treatment to apply only to those that require it.

Many share our goal of reserving blanket S&D provisions for those Members that are the relatively less developed of the over 100 Members claiming developing country status. Many have confirmed that the current situation does not lead to equitable outcomes. Our extensive discussions with Members have continued to be candid and thoughtful.  These conversations are also increasingly detailed, reflecting the growing number of Members that are giving serious thought to the U.S. proposal.

In short, Members are listening to us, and we are listening to them.  We are providing clarifications where necessary, and we are giving careful consideration to constructive suggestions that have been offered in the spirit of real reform.

We stand ready to continue these discussions and are open to making improvements to the U.S. proposal.  We appreciate Members’ open-mindedness and willingness to consider how they can show leadership in improving this organization for the good of all.

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In late July, the President of the United States issued a memorandum that directs USTR to secure changes at the WTO so that relatively advanced, wealthy, or influential Members forego S&D in current and future WTO negotiations.  The President is keenly interested in this issue.

I would like to spend a few minutes explaining the memo and providing a few clarifications, in light of questions from some Members.

In the memo, the President instructed the USTR to take several actions.  One of these actions was for the USTR to update the President on progress made within 60 days.  That update was provided. The memo also instructs the USTR to take certain actions within 90 days—October 24—if he determines that substantial progress has not been made toward ensuring that relatively advanced, wealthy, or influential Members forego S&D in current and future negotiations.

  • In that case, the USTR shall no longer treat as a developing country for the purposes of the WTO any self-declared developing country Member that, in the USTR’s judgment, can inappropriately seek S&D in current and future WTO negotiations.
  • In addition, the USTR shall not support any such country’s application for membership in the OECD.

Unrelated to the 90-day deadline, the President instructed the USTR to publish on its website a list of all self-declared developing countries that the USTR believes are inappropriately seeking S&D in WTO negotiations.

I want to emphasize a few points.

  • First, the President’s memo does not instruct USTR to ask any Member to change its self-declared development status. This is consistent with the U.S. reform proposal, which—as we have stated repeatedly—does not ask any Member to change its self-declared development status.
  • Second, the President’s memo does not instruct USTR to ask any Member to forego S&D in existing WTO agreements. This is consistent with the U.S. reform proposal, which does not ask any Member to forego such S&D.  We are not seeking to reopen existing agreements.
  • Third, nothing in the President’s memo or in the U.S. proposal preclude a Member from negotiating the flexibilities it needs in a WTO negotiation. All Members negotiate their specific needs in every negotiation.  We expect any country that foregoes blanket S&D provisions in any future WTO Agreement would negotiate its needs into the agreement text.  
  • Fourth, several Members have asked what action USTR will take to “no longer treat as a developing country for the purposes of the WTO any self-declared developing Member that, the in USTR’s judgment, can inappropriately seek S&D in current and future WTO negotiations.” Regarding this instruction, and as directed by the White House memo, USTR is consulting with the interagency Trade Policy Staff Committee.

In closing, we thank Members for their constructive dialogue with us.  This work is important, as this issue and the U.S. proposal will not go away.  We look forward to continuing to engage with Members and to making new progress on this reform effort.

  1. STATEMENT DELIVERED BY THE UNITED STATES ON THE IMPORTANCE OF TRANSPARENCY IN WTO DISPUTE SETTLEMENT

At the last General Council meeting, the United States presented a lengthy statement on the lack of transparency in the WTO dispute settlement system, and why the Dispute Settlement Understanding does not prevent Members from achieving greater transparency today in their disputes.  Following that meeting, we have had very constructive conversations with a number of delegations to reach a deeper understanding in relation to the value of transparency in dispute settlement.

At today’s meeting, my delegation is pleased to be able to deliver the following joint statement on behalf of itself and the following co-sponsors: Argentina, Australia, Brazil, Canada, Costa Rica, New Zealand, Norway, Singapore, Switzerland, and the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu.  Today’s statement will be circulated as a W document following today’s meeting.

The co-sponsors of today’s statement recognize that the aim of the dispute settlement mechanism is to secure a positive solution to a dispute (DSU Article 3.7), and that greater transparency in dispute settlement may facilitate finding such a solution by improving confidence among stakeholders, businesses, and communities in the dispute settlement mechanism.

Transparency is of great importance for the legitimacy and integrity of the WTO dispute settlement system.  The WTO dispute settlement mechanism as it operates today has nothing to hide, so increased transparency could only increase its legitimacy with the public and reduce the space for misrepresentation or misunderstanding.

Transparency in dispute settlement enhances WTO Members’ understanding of the dispute settlement system, particularly for those who do not participate often in the system.  Increasing the ability for all WTO Members to access hearings and submissions will assist all Members by increasing the system’s accessibility.

The co-sponsors of today’s statement recognize that increased transparency can be achieved by Members today, in each of their disputes, without modifying the existing rules and while protecting confidential information.

The DSU recognizes the right of each Member to disclose statements of its own position to the public (DSU Article 18.2).  Thus, each Member has the ability, on its own, to make its positions publicly available in any given dispute.

Members can, and are encouraged to, bring greater openness to dispute settlement through a variety of mechanisms under the appropriate circumstances, including:

  • to make their written submissions publicly available and
  • to make their statements observable by WTO Members and the public, with the aid of the adjudicator in a proceeding and the Secretariat.

The co-sponsors of today’s statement encourage all Members to join this statement on the importance of transparency in dispute settlement and to take the steps we have described to improve transparency in their disputes.