Disruptive Construction or Constructive Destruction? Reflections on the Appellate Body Crisis

Gao, Henry

doi:10.1007/978-981-15-0255-2_13

Disruptive Construction or Constructive Destruction? Reflections on the Appellate Body Crisis

Henry Gao⁴

Chapter
First Online: 06 November 2019

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Abstract

Over the past few months, the blockage of the Appellate Body appointment process by the United State (U.S.) has emerged as the biggest existential threat to the World Trade Organization (WTO). In response to the criticisms from other WTO Members, the U.S. justified its action as a way to raise people’s attention on long-standing problems in the Appellate Body (AB). Are the U.S. criticisms valid? Even if assuming that the U.S. allegations are correct, is the specific approach that the U.S. has taken legitimate? Drawing from both the treaty text and jurisprudence of WTO law, this chapter argues that the U.S. criticisms, especially those concerning the systemic issues in WTO dispute settlement, are deeply flawed. Moreover, this chapter also argues that, regardless of the validity of the substantive claims of the U.S., the U.S. has chosen the wrong approach by holding hostage the entire AB appointment process. This chapter concludes with practical suggestions on how to overcome the AB crisis and restore its functions.

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Notes

1.
Caporal (2016).
2.
Mission of the United States, Statement by the United States at the Meeting of the WTO Dispute Settlement Body (23 May 2016), 1, 12–13. DSB. https://geneva.usmission.gov/wp-content/uploads/sites/290/May23.DSB_.pdf. These four reports: Appellate Body Report, Argentina—Measures Relating to Trade in Goods and Services, WT/DS453/AB/R and Add.1 (adopted 9 May, 2016), at 431; Appellate Body Report, India—Measures Concerning the Importation of Certain Agricultural Products, WT/DS430/AB/R (adopted 19 June, 2015), at 2459; Appellate Body Report, United States—Countervailing Duty Measures on Certain Products from China, WT/DS437/AB/R (adopted 16 Jan 2015), at 7; and Appellate Body Report, United States—Countervailing and Anti-Dumping Measures on Certain Products from China, WT/DS449/AB/R and Corr.1 (adopted 22 July 2014), at 3027.
3.
Id. at 13–15.
4.
Id. at 15.
5.
Id.
6.
WTO Appoints Two New Appellate Body Members, World Trade Organ (23 Nov 2016). https://www.wto.org/english/news_e/news16_e/disp_28nov16_e.htm.
7.
See Dispute Settlement Body, Minutes of Meeting Held in the Centre William Rappard on 20 February 2017, para 11, WT/DSB/M/392 (20 Feb 2017).
8.
See Dispute Settlement Body, Minutes of Meeting Held in the Centre William Rappard on 19 June 2017, para 8.3, WT/DSB/M/398 (19 June 2017).
9.
See Dispute Settlement Body, Minutes of Meeting Held in the Centre William Rappard on 20 July 2017, para 5.14, WT/DSB/M/399 (20 July 2017).
10.
See Dispute Settlement Body, Minutes of Meeting Held in the Centre William Rappard on 31 August 2017, para 5.1, WT/DSB/M/400 (31 Aug 2017).
11.
Id. at para 5.3.
12.
Id. at para 5.4.
13.
Id. at para 5.5.
14.
Id. at para 7.3.
15.
Id. at para 7.11.
16.
Office of the United States Trade Representative (2018).
17.
See for example, Mission of the United States (29 Oct 2018) Statements by the United States at the Meeting of the WTO Dispute Settlement Body, 1, 53–54. DSB. https://geneva.usmission.gov/wp-content/uploads/sites/290/Oct29.DSB_.Stmt_.as-delivered.fin_.rev_.public.pdf; Mission of the United States (21 Nov 2018), Statements by the United States at the Meeting of the WTO Dispute Settlement Body, 1, 38–39. DSB. https://geneva.usmission.gov/wp-content/uploads/sites/290/Nov21.DSB_Stmt_.as-deliv.fin_.public.pdf.
18.
Mission of the United States (25 Feb 2019) Statements by the United States at the Meeting of the WTO Dispute Settlement Body, 1, 12–14. DSB. https://geneva.usmission.gov/wp-content/uploads/sites/290/Feb25.DSB_.Stmt_.as-deliv.fin_.public.pdf.
19.
Id. at 24–25.
20.
Id. at 25–26.
21.
Id. at 22–24.
22.
Id. at 28.
23.
Id. at 26–27.
24.
Id. at 27.
25.
Id. at 27–28.
26.
Some of the arguments in the following sections are based on Gao (2018).
27.
See Dainow (1966–1967), pp. 423–424. See also Sacerdoti (2011).
28.
See Understanding on Rules and Procedures Governing the Settlement of Dispute Article 1.1, 15 Apr 1994, Marrakesh Agreement Establishing the World Trade Organization, Annex 2, 1869 U.N.T.S. 401 [hereinafter DSU] and Appendix 1 of the DSU.
29.
Dainow, supra note 27, at p. 421.
30.
Lasser (1995, p. 1327).
31.
Sacerdoti, supra note 27, at p. 4.
32.
Benayas (1982, p. 1645).
33.
Posner (2008, p. 144).
34.
Sacerdoti, supra note 27, at n.11.
35.
Dainow, supra note 27, at p. 432; Terris et al. (2007, p. 123).
36.
Lasser, supra note 30, at p. 1342.
37.
Sacerdoti, supra note 27, at p. 4.
38.
Id.
39.
Dainow, supra note 27, at p. 432.
40.
Terris et al., supra note 35, at p. 123.
41.
See e.g., Article 11 of the DSU, which states that “[t]he function of panels is to assist the DSB in discharging its responsibilities under this Understanding and the covered agreements”.
42.
Marrakesh Agreement Establishing the World Trade Organization Articles. IV:2 & 3, 15 Apr 1994, 1867 U.N.T.S.154 [hereinafter WTO agreement].
43.
Steger (2017, p. 448).
44.
Matsushita (2017), supra note 43, at p. 548.
45.
Bartels (2004, p. 864).
46.
WTO Appellate Body, Working Procedures for Appellate Review, at Rule 3(2), WT/AB/WP/6, (16 Aug 2010).
47.
Id. at Rule 4(1).
48.
Hughes (2004, pp. 127–128).
49.
WTO Appellate Body, supra note 46, at Rule 4(3).
50.
Hughes, supra note 48, at pp. 127–128; Ehlermann (2002, pp. 612–613).
51.
Steger, supra note 43, at p. 453.
52.
Terris et al., supra note 35, at p. 123.
53.
WTO Appellate Body, supra note 46, at Rule 3(2).
54.
Matsushita, supra note 44, at pp. 556–57. See also Lewis (2006).
55.
This does not mean that there are no disagreements among Appellate Body members, but the Appellate Body worked very hard to reach consensus. See e.g., Lacarte-Muró (2017, pp. 478–479).
56.
Bacchus (2002).
57.
See Picker (2008, p. 1083), Bhala (1998, pp. 849–850). [The page seems wrong, since the beginning page of this article is 845. Please kindly check it.].
58.
Jackson (1998, p. 178).
59.
For example, in his comprehensive review on the treatment of precedents by international adjudicators, former ICJ President Gilbert Guillaume notes that, while international courts “construct an entire jurisprudence based on their own precedent”, they all “distance themselves in principle from the rule of stare decisis”. Similarly, while “[t]he arbitration tribunals are… inclined to rely on precedent… with rather excessive zeal”, “stare decisis rule is no more applied in ICSID than it is in other international jurisdictional instances.” See Guillaume (2011, pp. 7–16). See also Pauwelyn (2016), at n.1, which notes that “[t]he only international tribunal to date that was set up with a binding rule of precedent (stare decisis) is the Caribbean Court of Justice.”.
60.
Statute of the International Court of Justice Article 59, 18 Apr 1946, 33 U.N.T.S. 993.
61.
Sacerdoti, supra note 27, at pp. 7–10.
62.
Rome Statute of the International Criminal Court, 17 July 1998, 2187 U.N.T.S. 3.
63.
Chua (1998, p. 177).
64.
Id.
65.
Report of the Panel, EEC—Restrictions on Imports of Apples from Chile, L/5047 (10 Nov 1980), GATT BISD 27S/98.
66.
Report of the Panel, European Economic Community—Restrictions on Imports of Apples—Complaint by the United States, para 12.1, L/6513 (2 June 1989), GATT BISD 36S/135. See also Chua, supra note 63, at p. 178.
67.
WTO Agreement, Article IX:2.
68.
Chua, supra note 63, at p. 174.
69.
See e.g., Bhala, supra note 57, at p. 845; Pelc (2016, p. 177).
70.
Chua, supra note 63, at p. 195.
71.
Panel Report, Japan—Taxes on Alcoholic Beverages, WT/DS8/R, WT/DS10/R, WT/DS11/R (adopted 1 Nov 1996), as modified by Appellate Body Report, para 6.1, WT/DS8/AB/R, WT/DS10/AB/R, WT/DS11/AB/R.
72.
Appellate Body Report, Japan—Taxes on Alcoholic Beverages, para 13, WT/DS8/AB/R, WT/DS10/AB/R, WT/DS11/AB/R (adopted 1 Nov 1996).
73.
Id.
74.
Id. at 14.
75.
Id. at 15.
76.
Id. at 14.
77.
Appellate Body Report, United States—Import Prohibition of Certain Shrimp and Shrimp Products—Recourse to Article 21.5 of the DSU by Malaysia, para 107, WT/DS58/AB/RW (adopted 21 Nov 2001).
78.
Id. at para 109.
79.
Id. at para 107. The report referred to here is Appellate Body Report, United States—Import Prohibition of Certain Shrimp and Shrimp Products, WTO Doc. WT/DS58/AB/R (adopted 6 Nov 1998), at 2755.
80.
Id.
81.
Panel Report, United States—Final Anti-Dumping Measures on Stainless Steel from Mexico, WT/DS344/R (adopted 20 May 2008), as modified by Appellate Body Report, para 7.106, WTO Doc. WT/DS344/AB/R (adopted 30 Apr 2008).
82.
Id.
83.
In the World Trade Organization before the Appellate Body AB-2008-1, DS344 United States—Final Anti-Dumping Measures on Stainless Steel from Mexico, Third participant notification and written submission by the European Communities, (25 Feb 2008), para 56.
84.
Appellate Body Report, United States—Final Anti-Dumping Measures on Stainless Steel from Mexico, para 162, WT/DS344/AB/R (adopted 20 May 2008) [hereinafter US—Stainless Steel (Mexico)].
85.
Id. at para 161.
86.
Id. at para 160.
87.
See e.g., David’s discussion on the heated debate between WTOP Members when the Appellate Body Report in US—Stainless Steel was adopted. David (2009, pp. 8–9).
88.
See Sacerdoti, supra note 27, at p. 14; Davis (2016) Deterring Disputes: WTO Dispute Settlement as a Tool for Conflict Management, 20. https://scholar.harvard.edu/files/cldavis/files/davis2016.pdf; Cho (2016, pp. 20–21); Alford (2008) The Role of Precedent at the WTO. Opinion Juris. http://opiniojuris.org/2008/05/02/the-role-of-precedent-at-the-wto/.
89.
US—Stainless Steel (Mexico), supra note 84, at para 158.
90.
This view is shared by many Appellate Body insiders. For example, Unterhalter stated that “[t]he WTO dispute settlement system knows no formal system of precedent” in D. Unterhalter, supra note 43, at p. 473. Matsushita stated that “in the WTO jurisprudence stare decisis is not recognized” in Matsushita, supra note 44, at p. 552. Hughes stated that “stare decisis does not apply in the WTO dispute settlement system” in Hughes, supra note 48, at p. 421.
91.
Jackson (2006, p. 177).
92.
Id. at p. 173.
93.
Beshkar and Chilton (2016, pp. 386–388).
94.
Id. at pp. 386–387.
95.
Id. at pp. 387–388.
96.
Id. at p. 387.
97.
Hudec (1990, p. 191).
98.
Hughes, supra note 48, at pp. 121–122.
99.
Steger, supra note 43, at p. 447. See also Van den Bossche (2006).
100.
For discussions on WTO as a “Member-driven” organization, see Elsig (2016).
101.
Posner, supra note 33, at pp. 192–193.
102.
According to Black’s Law Dictionary, stare decisis means “to stand by things decided”. However, there has been considerable confusion in determining what “things” have in fact been “decided”. See e.g., Steinman (2013, p. 1810), Abramowicz and Stearns (2005, p. 1094).
103.
McAllister (2011, p. 161), Stanford Law Review (1952, p. 513), Greenawalt (1989).
104.
Llewellyn (1996, pp. 43–44).
105.
Aldisert et al. (2009, p. 19).
106.
McAllister, supra note 103, at p. 177.
107.
Mission of the United States, supra note 17, at p. 10.
108.
For an analysis on the issue, see Yanovich and Voon (2006).
109.
GATT Panel Report, European Economic Community—Payments and Subsidies Paid to Processors and Producers of Oilseeds and Related Animal Feed Proteins, para 137, L/6627 (25 Jan 1990), GATT BISD 37S/86.
110.
Appellate Body Report, Canada—Certain Measures Concerning Periodicals, para 33, WTO Doc. WT/DS31/AB/R (adopted 30 July 1997).
111.
Appellate Body Report, United States—Import Prohibition of Certain Shrimp and Shrimp Products—Recourse to Article 21.5 of the DSU by Malaysia, WT/DS58/AB/RW (adopted 21 November 2001), at para 107.
112.
Appellate Body Report, United States—Measures Affecting the Cross-Border Supply of Gambling and Betting Services, paras 129–30, WT/DS285/AB/R (adopted 20 Apr 2005).
113.
Id. at para 131.
114.
Id. at para 132.
115.
Mission of the United States, supra note 2, at p. 13.
116.
Sacerdoti (2006, p. 49).
117.
DSU, Article 7.2.
118.
Mission of the United States, supra note 18, at p. 12.
119.
James Lankford: Senator Lankford Attends Finance Committee Hearing on the World Trade Organization (12 Mar 2019). Market Screener. https://www.marketscreener.com/news/James-Lankford-Senator-Lankford-Attends-Finance-Committee-Hearing-on-the-World-Trade-Organization–28155024/?utm_medium=RSS&utm_content=20190312.
120.
The WTO: Looking Forward (12 Oct 2018). Ctr for Strategic Int Stud. https://www.csis.org/events/wto-looking-forward.
121.
Donnan and Baschuk (2018) Trump’s Threat to Leave the WTO Could Be a Saving Grace, Bloomberg Businessweek. https://www.bloomberg.com/news/articles/2018-10-12/trump-s-threat-to-leave-the-wto-could-be-a-saving-grace.
122.
Hillman J, Three Approaches to Fixing the World Trade Organization’s Appellate Body: the Good, the Bad and the Ugly? Geo U Law Ctr, https://georgetown.box.com/s/966hfv0smran4m31biblgfszj42za40b. Accessed 18 Mar 2019.
123.
Hillman, id. at p. 13. See also WTO General Council, Minutes of the Meeting Held in the Centre William Rappard on November 22, 2000, WT/GC/M/60 (22 Nov 2000).
124.
WTO Agreement, Article X.1.
125.
WTO Agreement, Article IX.1.
126.
R. E. Lighthizer, Testimony of Robert E. Lighthizer before the U.S. Senate Committee on Finance, United States Senate Committee on Finance (12 Mar 2019), https://www.finance.senate.gov/download/03122019-lighthizer-testimony.
127.
C. Wang, Trump Threatens to Withdraw from World Trade Organization, CNBC (30 Aug 2018), https://www.cnbc.com/2018/08/30/trump-threatens-to-withdraw-from-world-trade-organization.html.

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Henry Gao

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Chang-fa Lo
Chuo Gakuin University, Tokyo, Japan
Junji Nakagawa
School of Law, National Chiao Tung University, Hsinchu, Taiwan
Tsai-fang Chen

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Gao, H. (2020). Disruptive Construction or Constructive Destruction? Reflections on the Appellate Body Crisis. 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_13

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