Discussions concerning dispute settlement reform

The Chair of the DSB, Ambassador Petter Ølberg of Norway, briefed members on his recent consultations with delegations regarding how and when to bring the ongoing informal discussions on dispute settlement reform into a formal setting within the DSB and/or General Council.  He said all the delegations he met said they consider dispute settlement reform a priority issue for the upcoming 13th Ministerial Conference in late February and beyond. They also acknowledged the work done so far in the informal process, he said, and saw great value in it.  In addition, they underscored that the informal process has achieved significant progress so far and that this work should be preserved.

Concerning the issue of “formalization,” delegations recognized the need to formalize the reform discussions but it was clear this means different things to different delegations, in terms of process, timing, purpose and leadership, he said. One group of delegations said the informal discussions should be formalized under the DSB/General Council as quickly as possible while another group said this should be done at MC13. A third group believed this should be done at the first DSB meeting after MC13, and a fourth indicated this should be done sometime in the future when the text of a dispute settlement reform agreement is complete, the Chair said. Another group stated that any formalization should take place later, at the appropriate time.

Since there is no consensus on the issue at this time, the Chair suggested that members allow the informal process on reform to continue to do as much work as possible to achieve a successful outcome.  In the meantime, he said, he will reflect on what will be the best way forward to inform ministers on the progress made in this area. He will also continue to engage with delegations.

Marco Molina, Deputy Permanent Representative of Guatemala to the WTO, reported to members in his personal capacity as the convenor of the informal meetings.  He said it was important to note that the informal process is operating on two separate tracks: one for the revision of the draft consolidated text and the other for the discussion on the appeal/review mechanism.

Regarding the consolidated text, members are currently reviewing its fifth iteration, with a sixth revision of the text, reflecting changes made during informal discussions held over the course of the past week, due to be circulated on 29 January. Members will then further review this document, with the expectation of incorporating final comments by the week of 5 February, and with the aim of completing the consolidated draft text by 9 February.

As for the appeal/review mechanism, members in plenary sessions have initiated the identification of certain concepts that could offer a solution to this critical issue. In the coming days, Mr Molina said, the plan is to create an inventory of the concepts gaining interest and support among members and further develop those that require consideration.  Members are gradually progressing towards finding a viable solution for the appeal/review mechanism, he said; when they are ready, the next step will be to draft legal text. With members’ commitment, determination and a focus on interests and concerns, it is feasible to achieve the objective of designing an appeal/review mechanism that works for all WTO members in the next few weeks, he said.

Mr Molina stressed it was important to highlight that the consolidated draft text, now exceeding 50 pages, was not an improvised effort but rather the tangible outcome of extensive conversations and exchanges among members over several years. Delegates have been engaged in an enduring ultramarathon on dispute settlement reform and find themselves just some steps away from the finish line.  The final steps are the most challenging — this is not the moment to stop or quit the race. “Together, members can do it,” he declared.

Twenty-six members took the floor to comment.  As in previous DSB meetings, many members thanked Mr Molina for his efforts and said significant progress has been made in the informal discussions.  A number of members noted that work still remains and that several key issues in the reform discussions — including the appeal/review mechanism — have still not been resolved. 

Different views emerged over what possible outcome might emerge on this issue at MC13. Several said members should continue to build on the consolidated text developed through the informal process and maintain the positive momentum, as this was the best chance of achieving a complete package of reform.  Other members said that the process must be formalized before any agreement could be achieved in order to ensure an inclusive, balanced and member-led outcome.  Some members cautioned against the idea of an “early harvest” or mini-package on dispute settlement reform at MC13, particularly if it does not address the key outstanding issues. They said the text emerging from the informal process should be regarded as one of many inputs to be considered in the formal process.

DS597 United States — Origin Marking Requirement (Hong Kong, China)

For the eighth time, the United States raised the matter of the panel ruling in DS597 at a DSB meeting. The US referred back to its previous statements regarding its position on essential security and its reason for placing this item on the DSB agenda. The US fundamentally disagrees with the panel’s approach, which suggests a state ought to defer consideration of its essential security interests until after a breakdown in relations with another member, it said.  The US also drew attention to what it said was the alarming circumstances regarding human rights and freedom of speech in Hong Kong, China which justified its measure.

Hong Kong, China criticized the United States for putting this item for the eighth time on the DSB agenda despite the fact the US appealed the panel report. It criticized the US for failing to avoid repetition of issues as set out under Rule 27 for DSB meetings. It also strongly objected to the US characterization of recent developments in Hong Kong, China, which it described as a smear campaign.

China said it was deeply concerned about the US raising this dispute case again, which was in contradiction of Rule 27.  It is clear from the seven panel rulings issued to date that the national security exception under the WTO agreements is not entirely self-judging.  China added that a restored appeal mechanism was the proper place to correct possible errors and rejected in the strongest terms what it said were the false allegations of the US regarding the situation in Hong Kong, China.

Appellate Body appointments

Guatemala, speaking on behalf of 130 members, introduced for the 73rd time the group's proposal to start the selection processes for filling vacancies on the Appellate Body. The extensive number of members submitting the proposal reflects a common concern over the current situation in the Appellate Body which is seriously affecting the overall WTO dispute settlement system against the best interest of members, Guatemala said for the group.

The United States repeated that it does not support the proposed decision to commence the appointment of Appellate Body members as its longstanding concerns with WTO dispute settlement remain unaddressed. While members may prefer the status quo, the old system was not working for the US and it was not working for many other members. As members engage on reform, they must bear in mind that re-launching the Appellate Body selection process will not address these concerns, and calls for the restoration of the Appellate Body undermine collective efforts for reform, the US said.

Twenty-two members then took the floor to comment, with one speaking on behalf of a group of members. Many of these members again noted the commitment by ministers at MC12 to engage in discussions aimed at securing a fully functioning dispute settlement system by 2024, with some noting the urgent need to resolve this issue in order to safeguard the security and predictability of the multilateral trading system.  One member said the US comment that the appeal mechanism was not working for many members was surprising given the 130 members that are co-sponsoring the proposal for appointing new Appellate Body members. Seven members made reference to the Multi-party interim appeal arrangement (MPIA) as a means of maintaining appeal rights in the absence of a functioning Appellate Body.

Guatemala said that on behalf of the 130 members it regretted that for the 73rd occasion members have not been able to launch the selection processes. Ongoing conversations about reform of the dispute settlement system should not prevent the Appellate Body from continuing to operate fully, and members should comply with their obligation under the DSU to fill the vacancies as they arise, Guatemala said for the group.

Surveillance of implementation

The United States 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.” 

Other business

DS561: Turkey — Additional Duties on Certain Products from the United States

The United States took the floor to comment on the 19 December panel ruling in DS561, which it welcomed.  Türkiye's decision to pursue its dispute against the US Section 232 measures on steel and aluminum highlighted the contradiction of both suing the US in the WTO and at the same time unilaterally retaliating with tariffs, the US said.  Ongoing dispute settlement reform discussions must ensure that issues of national security cannot be reviewed in WTO dispute settlement, the US said.

Türkiye said it disagreed with the panel's findings and noted that the US maintains its WTO-inconsistent Section 232 measures, which left Türkiye no choice but to appeal the panel report.

Canada, the European Union, Russia and India also took the floor to comment.

Next meeting

The next regular DSB meeting will take place on 19 March.