‘As we know it, the US’s larger game plan appears to be the non-judicialisation of trade multilateralism’ | Photo credit: Getty Images/iStockphoto
In June 2022, the member countries of the World Trade Organization (WTO) managed to hammer out a face-saving deal at the Geneva Ministerial Conference – with India playing a key role, keeping the faith in trade multilateralism alive. An important part was to revive the WTO’s Dispute Settlement System (DSS), also known as the ‘crown jewel’ of the WTO, by 2024. Since 2019, the WTO’s two-tier DSS has remained inactive. The Appellate Body, which is the second level of the WTO’s DSS that hears appeals from WTO panels, is non-functional because the United States has single-handedly blocked the appointment of its members. The Appellate Body has, from 1995-2019, upheld the rule of international law by holding powerful countries such as the US and the European Union accountable for violations of international law. However, the Appellate Body has become a victim of its success. America, once its supporter, has become its harshest critic. Now, the clock is ticking, and from publicly available information, it looks unlikely that the DSS will be in the pink until 2024.
‘precedent’ problem
The US rebukes the Appellate Body for judicial overreach and for going beyond its stated institutional mandate. Thus it has been argued that unless the role of the Appellate Body is precisely defined, it cannot be revived. A major problem the US recognizes is that the Appellate Body, contrary to the text of the WTO’s Dispute Settlement Understanding (DSU), is creating binding precedents through its decisions.
It is well established that there is no rule of thumb for adjudication – that is, no rule of precedent in international law. The WTO’s DSU also makes it clear in Article 3.2 that the decisions of the Appellate Body can neither add to nor reduce the rights and obligations of WTO member states. However, the same article also states: “The dispute settlement system of the WTO is a central element in providing security and predictability to the multilateral trading system.” Thus, the Appellate Body has an obligation to ensure that there is consistency in the interpretation and application of WTO agreements without setting any binding precedents. This requires striking a fine balance – exactly what the Appellate Body has attempted to do. This has encouraged WTO panels to rely on previous interpretations, especially where the issues are similar. Simultaneously, the Appellate Body has clarified that deviations from previous decisions and reasoning can be made if there are “cogent reasons”. The argument that this means that the appellate body is following a system of precedent, in the sense that it is followed in the common law system, is tantamount to grossly overstating the case, as James Bacchus and Simon Lester argue.
Furthermore, the Appellate Body is not the only international court that follows its previous decisions. Other international courts such as the International Court of Justice and the International Tribunal for the Law of the Sea also follow previous decisions unless there are valid reasons not to do so. At any rate, it has been proposed that WTO member-states could adopt a statement that the Appellate Body’s decisions do not set precedent. However, this will not satisfy America
Non-judicialisation of trade multilateralism
As we know, the US’s larger game plan appears to be to make trade multilateralism non-judicial. The WTO was founded in a world that was awash with the neoliberal consensus that emerged after the Cold War and the fall of communism. International economic lawyer Ernst-Ulrich Petersmann argued that in a neoliberal economic system, the ‘invisible hand’ of market competition must be complemented by the ‘visible hand’ of law. The WTO became the ‘visible hand’ of law to regulate global trade. This period saw not only the legalization of international relations (states accepting precise international law standards to judge their behavior and delegating this power to judge international courts) but also its legalization (establishment of international courts and tribunals). details that dominate decision making) were also observed. of national actors) This, arguably, erodes the sovereignty of nations as they lose control over key decision-making. De-judicialisation, as Daniel Abebe and Tom Ginsberg define it, is the reverse phenomenon where countries undermine international courts in order to take back decision-making power. Faced with the emerging geo-economic challenges posed by a rising China, the US seeks to exercise full power over its trade policies, removing the shackles of judicial review from the Appellate Body. This non-judicialisation should not be confused with putting political oversight on the appellate body to improve its functioning. Although Washington has identified many problems with DSS, it has rarely offered constructive suggestions.
on voting
It is a fool’s errand to negotiate with the US to get the Appellate Body back on track. As Henry Gao argues, one option other countries have is to elect members of the Appellate Body by resorting to voting at a WTO General Council meeting. But this will make America angry, are the countries ready to follow that path?
Prabhash Ranjan teaches at the Faculty of Legal Studies, South Asian University. Views expressed are personal