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WTO Appellate Body Overreach and the Crisis in the Making: A View from the South

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The Appellate Body of the WTO and Its Reform

Abstract

The WTO Appellate Body is facing an existential crisis that threatens to impair the institutional edifice of the entire multilateral trading system. The immediate reason for the crisis is the US blocking of the appointment and reappointment of the Appellate Body members on the ground that the Appellate Body has exhibited a pattern of “judicial over-reaching” by going beyond the strict bounds of permissible interpretation thereby indulging in judicial law-making. Are these allegations founded on facts and could this be another effort by the US to dismantle legitimately established multilateral institutions/processes? This chapter views that while one may concede the US blockade as largely motivated by self-interest, an analysis of the WTO jurisprudence is replete with occasions where the panels and the Appellate Body have misused their discretion and improperly engaged in creating new WTO rules and procedures through techniques of “filling legal gaps”, “completing the analysis”, or “clarifying ambiguity”. This trend has been viewed by a large section of the WTO Members and trade scholars as detrimental to organisational legitimacy of the WTO. This chapter also argues that the current crisis, though precipitated by the US self-interest, offers an opportunity for the WTO member states and the Appellate Body members to introspect and restore democratic deficit and prevent judicial overreach. This chapter also perceives that the current crisis also owes to the inability of WTO political bodies to check and correct actions of other WTO bodies that have undermined the state-centric nature of the WTO law-making.

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Notes

  1. 1.

    WTO Press Releases (2009).

  2. 2.

    Reich (2017).

  3. 3.

    Ihara (2018).

  4. 4.

    WTO (2018).

  5. 5.

    WTO General Council (2018).

  6. 6.

    General Council, Communication from the European Union, China, Canada, India, Norway, New Zealand, Switzerland, Australia, Republic of Korea, Iceland, Singapore and Mexico to the General Council, WT/GC/W/752 (26 Nov 2018).

  7. 7.

    Baschuk (2018).

  8. 8.

    Marrakesh Agreement Establishing the World Trade Organization art. IX:2, 15 Apr 1994, 1867 U.N.T.S. 154 (hereinafter WTO Agreement).

  9. 9.

    Ehlermann and Ehring (2006, p. 162).

  10. 10.

    Appellate Body Report, United States—Measures Affecting the Production and Sale of Clove Cigarettes, para 252, DS406 (4 Apr 2012).

  11. 11.

    Id. Panel Report, EC—Bananas III, para 7.107. See also, Ehlermann and Ehring (2005, p. 806).

  12. 12.

    See General Council, Communication from the European Communities, Request for an Authoritative Interpretation Pursuant to Article IX:2 of the Marrakesh Agreement of the WTO, WT/GC/W/133 (25 Jan 1999). See Ehlermann and Ehring, supra note 11, at p. 803. See also, Desierto (2015, p. 242).

  13. 13.

    Umbricht (2001).

  14. 14.

    Panel, US—Import Prohibition of Certain Shrimp and Shrimp Products, WT/DS58 (15 May 1998); Appellate Body Report, US—Import Prohibition of Certain Shrimp and Shrimp Products, WT/DS58/AB/R (12 Oct 1998).

  15. 15.

    WTO, Minutes of the DSB Meeting held on 6 November 1998, DSB Special Session, at 5, WT/DSB/M/50 (14 Dec 1998).

  16. 16.

    Id. at pp. 7–8.

  17. 17.

    See General Council, Minutes of Meeting of the General Council, WT/GC/M/60 (22 Nov 2000).

  18. 18.

    Understanding on Rules and Procedures Governing the Settlement of Disputes, 15 Apr 1994, WTO Agreement, Annex 2, 1896 U.N.T.S.401. The Result of the Uruguay Round of Multilateral Trade Negotiations, 1994.

  19. 19.

    Appellate Body Report, United States—Tax Treatment for “Foreign Sales Corporation”, n. 127, WT/DS108/AB/R (24 Feb 2000).

  20. 20.

    Matsushita (2006, p. 192).

  21. 21.

    “Adopted panel reports are an important part of the GATT acquis.” See Japan—Taxes on Alcoholic Beverages, WT/DS8/AB/R, WT/DS10/AB/R, WT/DS11/AB/R (4 Oct 1996); Mora (1993, p. 163).

  22. 22.

    Babu (2016, p. 502).

  23. 23.

    Ragosta et al. (2003), Colares (2009), Chimni (1999), von Bogdandy (2001, p. 611), Singh (2008), Babu (2016), supra note 23.

  24. 24.

    Ragosta et al., supra note 23.

  25. 25.

    Perdikis and Read (2005, p. 41). See also Bown (2005), Hoekman and Mavroidis (2006), Holmes et al. (2003, pp. 5–6).

  26. 26.

    Hudec presents the most comprehensive analysis of GATT dispute outcomes from 1948 to 1989. Hudec (1993, p. 273).

  27. 27.

    Raghavan (2000).

  28. 28.

    Statement of Jamaica at the DSB Meeting (2000).

  29. 29.

    Id. at pp. 18–19.

  30. 30.

    Kelly (2002, p. 387), (2008).

  31. 31.

    Trachtman (2000, p. 735).

  32. 32.

    Babu (2010, p. 61).

  33. 33.

    Bello (1996, p. 416).

  34. 34.

    The WTO panels and Appellate Body members have no prohibition on members’ “nationals” sitting in judgment over “measures” of one’s own country. See India’s submission to the DSB Special Session on the Review of the DSU. Proposal by India, Terms of Appointment of Appellate Body, WT/DSB/W/17 (Nov 1999).

  35. 35.

    Broude (2004, p. 168) and Davey (2002).

  36. 36.

    Ehlermann and Ehring, supra note 11, at p. 812.

  37. 37.

    Cottier and Takenoshita (2008, p. 185). See also, Cottier and Takenoshita (2003).

  38. 38.

    Rules of Procedure for Meetings of the Council for Trade in Goods, r.33, WT/L/79 (7 Aug 1995).

  39. 39.

    Appellate Body Report, United States—Measures Affecting the Production and Sale of Clove Cigarettes, para 254, WT/DS406/AB/R (4 Apr 2012).

  40. 40.

    Ehlermann and Ehring, supra note 11, at p. 806.

  41. 41.

    Babu, supra note 22.

  42. 42.

    Dube (2012, p. 5), Kapoor (2004), King (2003), and Wolfe (2005).

  43. 43.

    Jackson (2006, p. 114). See also, Guan (2014).

  44. 44.

    Steinberg, supra note 31, at p. 365.

  45. 45.

    Narlikar (2001). See also Hoekman (2014).

  46. 46.

    Dispute Settlement Body, Negotiations on Improvements and Clarifications of the Dispute Settlement Understanding on Improving Flexibility and Member Control in WTO Dispute Settlement Contribution by Chile and the US, TN/DS/W/28 (17 Dec 2002). Ehlermann and Ehring (2005, p. 71).

  47. 47.

    WTO Consultative Group appointed by the Director-General in June 2003 (17 Jan 2005), at p. 57. http://www.wto.org/english/thewto_e/10anniv_e/future_wto_e.pdf. Ehlermann and Ehring though wonder whether this could become another review of the panels and the Appellate Body rulings with the potential of undermining the working of the dispute settlement system. Ehlermann and Ehring, supra note 11, at p. 822.

  48. 48.

    United States—Continued suspension of obligations in the EC—Hormones dispute WT/DS320; Canada—Continued Suspension of Obligations in the EC—Hormones Dispute, WT/DS321. See, Ahlborn and Pfitzer (2009, p. 22). http://www.ciel.org/Publications/Transparency_WTO_Dec09.pdf. Accessed 8 May 2019; Bonzo (2014).

  49. 49.

    Only 5% of panel reports and 2% of Appellate Body reports contain separate opinions of any kind. See Lewis (2006).

  50. 50.

    Statute of the International Court of Justice art. 57, 18 Apr 1946, 33 U.N.T.S. 993.

  51. 51.

    Anand (1965, p. 788).

  52. 52.

    Hudson (1950, p. 20) cited in Anand, id.

  53. 53.

    Lewis, supra note 50.

  54. 54.

    Shihata (1965, p. 203–222). Also see generally, Anand (1962), (1969, p. 74).

  55. 55.

    Id. at p. 216.

  56. 56.

    Shahabudeen (1996, p. 20).

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  1. Indian Institute of Management Calcutta, Kolkata, India

    R. Rajesh Babu

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  1. Constitutional Court of Taiwan, ROC, Taipei, Taiwan

    Chang-fa Lo

  2. Chuo Gakuin University, Tokyo, Japan

    Junji Nakagawa

  3. School of Law, National Chiao Tung University, Hsinchu, Taiwan

    Tsai-fang Chen

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Rajesh Babu, R. (2020). WTO Appellate Body Overreach and the Crisis in the Making: A View from the South. In: Lo, Cf., Nakagawa, J., Chen, Tf. (eds) The Appellate Body of the WTO and Its Reform. Springer, Singapore. https://doi.org/10.1007/978-981-15-0255-2_6

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