DISPUTE SETTLEMENT

Note

This summary has been prepared by the WTO Secretariat’s Information and External Relations Division to help public understanding about developments in WTO disputes. It is not a legal interpretation of the issues, and it is not intended as a complete account of the issues. These can be found in the reports themselves and in the minutes of the Dispute Settlement Body’s meetings.

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Mexico, speaking on behalf of the group, introduced once again their proposal to start the selection processes for filling six vacancies in the Appellate Body – the four existing vacancies plus the two vacancies that will emerge when the second terms of  two members expire on 10 December, after which the Appellate Body will no longer have a quorum to review new appeals.

Mexico said the considerable number of members submitting the proposal reflects a common concern over the current situation in the Appellate Body that is seriously affecting its workings as well as the workings of the overall dispute settlement system against the best interest of members. WTO members have a responsibility to safeguard and preserve the Appellate Body, the dispute settlement system, and the multilateral trading system.

The United States once again said it was still not in the position to support the decision and that the systemic concerns that it previously identified remain unaddressed. The fundamental problem is that the Appellate Body is not respecting the current, clear language of the WTO's Dispute Settlement Understanding, and members cannot find meaningful solutions to this problem without understanding how members arrived at this point.  Without an accurate diagnostic, the US said, members cannot assess the likely effectiveness of any potential solution.

More than 20 members took the floor to underline the importance of resolving the impasse over the appointment of new Appellate Body members as soon as possible; they noted the large number of members (more than 70 per cent of the membership) that supported the joint proposal. Several said that the current situation runs contrary to the long-term interest of all members, and that a properly-functioning dispute settlement mechanism with an appeals review was important for the rules-based system. Reference was also made to the 15 October draft General Council Decision from Ambassador David Walker of New Zealand on the functioning of the Appellate Body; members urged him to continue his facilitator discussions on finding a solution to the impasse, with the active engagement of all members.

Amb. Walker noted that the text of the draft decision was based on the proposals submitted by members and extensive discussions in the informal process as well as the feedback received since July. It is now up to members to see how to take this matter forward, he said, adding that he stands ready to assist as facilitator in order to find a workable and agreeable solution to improve the functioning of the Appellate Body and to avoid deadlock come December.

Pending appeals – statement by the DSB Chair

Amb. Walker reminded members that, at the last DSB meeting in October, he noted that a number of appeals were currently in the pipeline and, in this regard, he said he would be consulting with those members who have such appeals ahead of 10 December in order to understand how to deal with those appeals. The chair said he has been consulting with the members concerned as well as with the other parties concerned and that these consultations are ongoing. In light of this, he proposed suspending the consideration of this agenda item. The chair added that he would continue to consult on these matters and will reconvene the meeting on this agenda item as soon as possible.

There are 13 appeals currently pending before the Appellate Body. The full list is available here.

Statement by the United States on systemic concerns regarding the compensation of Appellate Body members

The United States raised what it said was a matter of systemic importance – the compensation structure for Appellate Body members and the compensation provided to former Appellate Body members who continue to decide appeals under the so-called "Rule 15" of the Working Procedures for Appellate Review. The US said the issue does not concern any particular Appellate Body member or former members, but that it wanted to address the compensation structure as a general matter and to consider possible consequences.

Citing the compensation offered to Appellate Body members through monthly retainers, daily fees and per diems, the US argued that, taken together, the amount of compensation and other payments realized per member has remained at a high level while the number of Appellate Body reports circulated over recent years has remained steady – about five to six reports per year. The US said members agreed to this compensation structure based on the understanding that the Appellate Body would issue rulings within the required 60-90 days, and that all WTO members – and not the Appellate Body itself – would appoint Appellate Body members; these rules are not being respected.

The US also questioned whether this compensation structure creates the appropriate incentives, under which more time spent on an appeal means more compensation. These benefits may be even more substantial for ex-Appellate Body members still working on appeals, who would otherwise not receive the monthly retainer. The US asked whether, without appropriate oversight, WTO members have acquiesced in a compensation structure that undermines, rather than promotes, the prompt resolution of disputes, and said it hoped members would reflect on this.

Several WTO members took the floor to comment. One member said a discussion on remuneration was only relevant if there is a functioning Appellate Body, and that remuneration should be at a level which attracts the best candidates. Others said budget transparency was important and that they were ready to discuss the matter, although one member said problems meeting the 90-day deadline for issuing rulings was due to other factors than the compensation structure, notably the lack of resources in the WTO Secretariat and translation delays. 

One member argued that compensation for Appellate Body members falls well below that of peers in other international judicial bodies, and was significantly lower than adjudicators providing similar services such as commercial and investment arbitration, while another said it did not understand the US link between compensation concerns and the use of Rule 15, since former Appellate Body members were being asked to stay on and continue cases due to the US blockage over the appointment of new members.

DS234: United States – Continued Dumping and Subsidy Offset Act of 2000

The European Union reiterated its request that the United States cease transferring anti-dumping and countervailing duties to the US domestic industry, arguing that every such disbursement was a clear act of non-compliance with the rulings on this matter. Brazil and Canada supported the EU statement, while the United States said it has taken all actions necessary to implement the ruling.

DS316: European Communities and Certain Member States – Measures affecting trade in large civil aircraft: Implementations of the recommendations adopted by the DSB

The United States said that once again the European Union has failed to provide a status report to the DSB concerning dispute DS316. The European Union repeated that the matter is subject to new compliance proceedings and thus there was no obligation on the EU to submit a status report.

Surveillance of implementation

Brazil presented its first status report with regards to the implementation of the WTO ruling in DS472 and DS497, "Brazil — Certain Measures Concerning Taxation and Charges".  Brazil noted that the European Union and Japan agreed with Brazil that the deadline for Brazil to comply with the rulings would be 31 December 2019, with the exception of the measures found to be prohibited subsidies, for which Brazil agreed to bring its measures into compliance on 21 June 2019.

The US presented status reports with regard to DS184, "US — Anti-Dumping Measures on Certain Hot-Rolled Steel Products from Japan",  DS160, "United States — Section 110(5) of US Copyright Act", DS464, "United States — Anti-Dumping and Countervailing Measures on Large Residential Washers from Korea", and DS471,"United States — Certain Methodologies and their Application to Anti-Dumping Proceedings Involving China".

The European Union presented a status report with regard to DS291, "EC — Measures Affecting the Approval and Marketing of Biotech Products".

Indonesia presented its status reports in DS477 and DS478, "Indonesia — Importation of Horticultural Products, Animals and Animal Products". 

Next meeting

The next regular meeting of the DSB is scheduled for 18 December.

More information on WTO dispute settlement is available here.

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