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Unblocking WTO Litigation is Aim of EU Proposal

Wednesday, November 28, 2018
Sandler, Travis & Rosenberg Trade Report

The European Union and other World Trade Organization members have submitted a proposal designed to reform the functioning of the WTO’s Appellate Body, which reviews Dispute Settlement Body decisions concerning compliance with WTO rules. EU officials said they now expect the U.S. to “engage with these formal proposals that are aimed squarely at addressing their concerns,” according to a Reuters article, although Washington has yet to offer an official response.

The Trump administration has held up the confirmation of additional judges to the Appellate Body in an effort to secure various reforms. Only three of seven possible judges are currently serving, which has further hindered the body’s ability to render decisions in a timely manner. Once that number drops below three, which will occur in December 2019 unless additional judges are appointed, the body will be required to cease operations. Such a situation would indefinitely postpone cases challenging U.S. trade policies, including the Section 232 and 301 tariff increases, but would also delay U.S. cases against foreign trade barriers.

In hopes of avoiding this scenario, the EU, Australia, Canada, China, Iceland, India, Korea, Mexico, New Zealand, Norway, Singapore, and Switzerland will present at a Dec. 12 meeting of the WTO General Council a proposal that would do the following.

- establish new rules clarifying in which cases outgoing Appellate Body members can stay on to complete the proceedings they are working on

- ensure that appeal proceedings are finished in line with the 90-day timeframe set out in WTO rules unless the parties in the dispute agree otherwise

- clarify that the legal issues subject to appeal do not include the meaning of domestic legislation

- indicate that the Appellate Body should only address issues necessary to resolve the dispute

- introduce annual meetings between WTO members and the Appellate Body to discuss systemic issues or trends in jurisprudence

A separate proposal backed by the EU and a smaller group of WTO members would (a) increase the number of Appellate body members from seven to nine and establish a single six- to eight-year term for them and (b) ensure that the process of selecting Appellate Body members starts automatically when a post is vacant and that there is an orderly transition with outgoing members.

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