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March 11, 2020, by CSUSTL Staff.

The U.S. Trade Representative (USTR), on February 11, 2020, issued its report on the World Trade Organization’s (WTO) Appellate Body setting forth the Appellate Body’s failure to follow established procedures and the applicable standard of review. In the report, USTR stated that the Appellate Body’s conduct “has converted the WTO from a forum for discussion and negotiation into a forum for litigation.” They continued that the Appellate Body had strayed far from its intended role, which is to act as a check when a WTO panel report contains an error. Instead the Appellate Body has continually expanded the scope of issues it will review, dragging out the dispute settlement process and using the process to force changes in the national laws of WTO signatories. More than one-quarter of all cases reviewed by the Appellate Body involved challenges to U.S. laws causing an disproportionate impact on the United States, its businesses and their workers. The report is the first comprehensive review, by the U.S. agency, on the Appellate Body, ahead of a WTO ministerial meeting in Kazakhstan in June, 2020, where the problems are to be a major topic.

The report states that “the Appellate Body has added to U.S. obligations and diminished U.S. rights by failing to comply with WTO rules, addressing issues it has no authority to address, taking actions it has no authority to take, and interpreting WTO agreements in ways not envisioned by the WTO Members who entered into those agreements. This persistent overreaching is plainly contrary to the Appellate Body’s limited mandate, as set out in WTO rules.”

The Committee To Support U.S. Trade Laws (CSUSTL) strongly supports the findings of the report and commends Ambassador Robert Lighthizer for documenting the “persistent overreaching” of the Appellate Body, which has been used to alter the United States’ commitments agreed to in the WTO Dispute Settlement Understanding.

The report cites specific examples, including the Appellate Body:

  • having allowed individuals to continue deciding appeals even after their term has expired;

  • making findings on issues of fact, even though only authorized to address legal issues, including facts relating to members’ domestic laws;

  • issuing advisory opinions on issues not necessary to resolving the dispute before it; and

  • pronouncing opinions on matters within the authority of WTO members acting through the Ministerial Conference, General Council and Dispute Settlement Body.

“These longstanding problems with the WTO Appellate Body have weakened the ability of U.S. companies and workers to address trade law violations like dumping, subsidies, and distortions caused by state-owned enterprises,” said Tim Brightbill, chair of the CSUSTL Executive Committee. “Now is the time to act on this bipartisan issue.”

In response to USTR’s report, the WTO Director General Roberto Azevedo said he was in contact with USTR Lighthizer and said he agreed with USTR about the need for structural changes to the WTO, as well as broader changes to the organization to reflect global economic developments, including the rise of China. Despite these comments, it is expected any substantive changes to the Appellate Body will be difficult to obtain, as many nations view the process as a way to diminish the effectiveness of U.S. trade remedy laws and to more easily obtain control of the US market through the use of unfair trade practices. The WTO Appellate Body (a 7 member panel) currently has only 1 member due to the United States’ blocking of new panel appointments since 2017, meaning it is now unable to sit to render decisions.

Tom Beline, Co-Chair of CSUSTL’s Lawyers Committee, stated, “The USTR report provides a cogent explanation of how the Appellate Body has been used by Member States to achieve through dispute settlement that which cannot be achieved in treaty negotiations.” He continued, “This comprehensive report provides crystal clear examples in specific cases of how the Appellate Body has altered substantively Member States’ obligations above and beyond any of the WTO Agreements’ text.”

CSUSTL supports a reassessment of the WTO and its role in resolving disputes between member nations because of the Appellate Body’s failure to comply with the WTO Agreements. Since its inception the panel has been the venue of choice in attacking US trade remedy laws. CSUSTL believes that WTO members need to address the underlying problems, as identified by USTR, to ensure a lasting reform of the dispute settlement system of the WTO.

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