As readers of these pages will know, the Global Business Dialogue held an event in December on the current dispute over dispute settlement at the World Trade Organization in Geneva. This was
Disputed Court:
A Look at the Challenges To
(And From)
The WTO Dispute Settlement System,
which was held at the National Press Club in Washington on December 20, 2017.
Pablo Bentes was the third of four speakers at that event. Now with Steptoe and Johnson, Mr. Bentes served for six years as a Legal Officer in the Secretariat of the Appellate Body of the WTO. Those who had gone before him had focused on the core of the U.S. complaint with the system, specifically with the functioning and rulings of the Appellate Body, which for all practical purposes has the final say in WTO disputes. Formally, it is the Dispute Settlement Body - that is the full WTO membership acting on disputes - that has the last word, but the system is structured such that the full membership effectively has no choice but to accept the reports issued by the Appellate Body.
Mr. Bentes too talked about those issues, but as we listened to him, what came through most clearly was his view that the U.S. tactic of blocking appointments to the Appellate Body is a serious mistake. At first, the United States was only blocking the reappointment of its own, that is, U.S. members of the Appellate Body. Now, however, the tactic seems to be to block any and all Appellate Body appointments.
Referring to that first phase, Mr. Bentes said it was a mistake by the United States. And, he said,
It was just by virtue of the outcome of a single case. Everybody knows what I'm talking about. Yes, the famous zeroing cases.
Mr. Bentes did not discuss that case and neither shall we - at least not here. We will simply note that one of America's core complaints, in zeroing and in other areas, is that the Appellate Body has reached beyond its authority and in so doing expanded the obligations of WTO membership beyond what the U.S. and others agreed to. Mr. Bentes spoke to the alleged pattern of overreaching by the Appellate Body. First, however, it is worth taking note of what he said about various Appellate Body members with a role in this drama and his assessment of the consequences of America's actions.
NOTES ON APPELLATE BODY MEMBERS
Jim Bacchus, now a Senior Counsellor with the International Centre for Trade and Sustainable Development, is a former Member of Congress from Florida. Subsequently, he served two terms as chairman of the Appellate Body, from 1995 to 2003. Mr. Bentes talked about his service this way:
You will remember that Jim Bacchus, the original Appellate Body member, one of what we in Geneva call the founding fathers, and by all means the generation that actually established the system. And, ironically, the most judicially activist generation, I would submit, ever, ever. Widely accepted. Widely recognized as legitimate.
But, of course, Mr. Bacchus's service came before the famous zeroing case. The Appellate Body report in that case was issued in April 2006. In terms of the Appellate Body members mentioned by Mr. Bentes, the next one was Merit Janow.
Merit Janow served as a member of the Appellate Body from 2003 to 2007. She did not serve a second term. Her reappointment was blocked by the United States, Mr. Bentes said. She is now the Dean of Columbia University's School of International Public Affairs.
Jennifer Hillman, a professor at Georgetown University Law Center, served as a member of the Appellate Body from 2007 to 2011. Her reappointment too was blocked by the United States, Mr. Bentes said. Then he asked:
You know what happens when you sack your own Appellate Body Member only after four years? By the time that Appellate Body Member is at the apex, at the top of its game and it's really able to influence everybody in the room, she leaves and somebody else brand-new starts from scratch. And takes another two years of learning curve.
So, I'd say the sacking of U.S. Appellate Body members was a strategic mistake. And it was just by virtue of the outcome of, I would suggest, a single case. Everybody knows what I'm talking about. Yes, the famous zeroing cases. That's the reason why the United States decided essentially to not reappoint highly competent, highly influential U.S. Appellate Body Members at the time when they were at the top of their game and really able to influence all of the members in the court or in the Body.
Mr. Bentes continued to describe the U.S. Government's interactions with and/or objections to other, non-U.S. panelists, including
Peter Van den Bossche. Mr. Van den Bossche is a European who just completed his second term on the Appellate Body. Obviously, his reappointment in 2013 was not blocked, but there was some back and forth before the U.S. allowed it to go through.
In 2016, the United States did block the reappointment of
Seung Wha Chang from the Republic of Korea, Mr. Bentes said.
As for the early departure from the Appellate Body of
Hyun Chong Kim, another member from the Republic of Korea, Mr. Bentes laid that departure at the feet of the United States, because Mr. Kim left the Appellate Body to lead the Korean delegation in the renegotiation of KORUS, the U.S.-Korea free trade agreement. Mr. Bentes did agree, however, that it was wrong of Mr. Kim to leave without first giving the 90-days notice required by WTO rules.
On Overreaching. A phrase that came up repeatedly during the GBD session on December 20 was
obiter dicta [
dictum in the singular]. With apologies for telling you what you already know, here is one definition:
Obiter dictum - Law - A judge's expression of opinion uttered in court or in a written judgment, but not essential to the decision and therefore not legally binding as precedent.
As Jennifer Hill (and others) explained, much of the obiter dicta in Appellate Body reports is disturbing in the sense that
it has been used as precedent, and so has contributed to what critics of the system described as overreach.
Mr. Bentes, however, was in general not sympathetic to the argument that the Appellate Body has harmfully overreached its authority. "I think people who are advocating that position," he said, "are really reading different Appellate Body reports than the ones that are coming out. ... I could list a number of instances in which the Appellate Body, in U.S. cases, exercised extreme, extreme restraint."
Dicta in a Financial Services Case. We'll conclude, however, with a case he cited more as an illustration of irony than of restraint, and the irony had to do with obiter dicta. Mr. Bentes explained:
Terry [Stewart] alluded to the case that was almost three-quarters obiter [dicta], the case called Argentina Financial Services, a dispute between Panama and Argentina about taxation of-essentially tax havens: a distinction between tax havens that exchanged tax information and those that did not exchange information, consistent with the OECD global forum on harmful tax competition.
One of the issues Argentina raised in that dispute was the prudential carveout on financial services. [This is] huge, hugely important systemic issue for the United States. And the obiter the United States now is so concerned about was really at the behest of the United States during the hearing. Appellate Body, we want you to address this because we are concerned that the interpretation that Panama is advancing is going to excessively narrow the United States' right to resort to the prudential carveout on financial services in the future. How do I know this? I was in the room. I was the lawyer for Argentina. And guess what? One day before the hearing we met with USTR to coordinate on this.
So the obiter the U.S. now criticizes saying Seung Wha Chang for doing, allegedly Seung Wha Chang for doing, was done at the request of the United States. People don't appreciate that very often.
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