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FRIDAY, DECEMBER 28, 2018
Click HERE for Wednesday's Christmas quote from Queen Elizabeth.
Correction: We are grateful to the expert reader who pointed out to us that
Appellate Body members do not recuse themselves from cases where their home country is a disputant. The sentences that suggested otherwise have been removed from this version of the TTALK Quote for December 28.
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THE APPELLATE BODY AND THE WTO'S WHEEL IN SPIN
"As long as the Donald Trump administration is in, it is important, as Bob Dylan would say, to "keep the wheel in spin" and not to reach a fundamental conclusion.
"Because a fundamental conclusion will either be something that Canada finds very unpleasant or that the United States will not participate in."
Richard O. Cunningham
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Dick Cunningham of Steptoe & Johnson was both the host and one of the four presenters at this year's Annual Experts Meeting of the Canada-U.S. Law Institute. While the focus was, understandably, on U.S.-Canada relations, Mr. Cunningham's presentation put that relationship squarely in the context of two of the major themes of contemporary trade policy. One of those has to do with the Trump Administration's determination to change China's behavior in trade, the U.S.-China trading relationship, or both. Another is the looming crisis at the WTO, where the work of the Appellate Body will grind to a halt next year if the United States keeps to its policy of blocking new appointments. We took note of Mr. Cunningham's comments on China in the TTALK Quote for November 30. Our focus today is on what he said about the Appellate Body.
The two are linked of course. The United States has taken extraordinary, unilateral action against imports from China because it has concluded that the multilateral system, the WTO, is incapable of effectively addressing the challenges China poses. Beyond that, however, the United States is not happy with the way the WTO dispute settlement has evolved and, in particular, with the conduct and decisions of the Appellate Body.
As currently set up, the Appellate Body is supposed to have seven members, each chosen by the Dispute Settlement Body, that is, the members of the WTO, and each to serve for four years. The problem is that the Appellate Body is now down to just three members - the minimum for a quorum - and the terms of two of them are set to expire next year.
The United States may not be alone in its displeasure with the Appellate Body, but it does appear to be alone it its willingness to block new appointments and so to let the clock run out on the current system. In the meantime, Canada and others are scrambling to try to find a pathway back to consensus for new Appellate Body members. In late October, for example, Canada's Minister of International Trade Diversification, Jim Carr, convened a meeting of concerned, like-minded countries. That was the Ottawa Ministerial on WTO Reform. (Neither China nor the U.S. was invited.) Mr. Cunningham praised the meeting, the effort, and the proposals it produced. "But," he said, "one has to understand that [the list of proposals it produced] is not fundamental to what the U.S. wants to achieve."
And just what does the United States want? Mr. Cunningham put it this way:
America's Quarrel With The WTO.
[The list from the Ottawa meeting] doesn't directly address things the United States really wants to achieve, which is the gap filling, to get the Appellate Body not to interpret in between the lines. I would say, not to apply general provisions of an agreement to specific facts. They would say, making up new law as you go along. It does not deal with the idea that WTO decisions of the Appellate Body are now beginning to have precedential effect. The U.S. doesn't like that. The U.S. feels that the way this was run in the GATT era was better, which is, dispute settlement resolves a specific dispute between two specific countries, and it is the resolution of that dispute. It doesn't necessarily have any effect on the policies of other countries. It doesn't elaborate the rules. It may not even bind the losing party in that dispute as to what it can or cannot do in another case involving pretty much the same facts.
I think it will be a cold day in hell when Canada and most of the rest of the WTO would agree to those sorts of changes in dispute settlement because that guts the system. But I think Canada has started on feelers toward cooperation among countries that the U.S. can have some involvement with. It is very important to do this.
As long as the Donald Trump administration is in, it is important, as Bob Dylan would say, to "keep the wheel in spin" and not to reach a fundamental conclusion. Because a fundamental conclusion will be either something that Canada finds very unpleasant or that the United States will not participate in.
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Let's start with the obvious. Mr. Cunningham's decision to look to Bob Dylan for advice on this matter was inspired. The reference is to The Times They Are A-Changin'. You will find links below both to the lyrics and to a recording. To refresh your memory vis-à-vis the idea at issue, Dylan sings:
And don't speak too soon
For the wheel's still in spin
And there's no tellin who that it's namin'
For the loser now will be later to win
For the times they are a changin'
We are not going to get into the business of winners and losers here. As for the spin, we would note that the issue got some significant attention at the WTO General Council meeting on December 12, when China, the EU and others made proposals for breaking the deadlock over Appellate Body appointments. Those proposals are not likely to go anywhere, at least for the time being, and perhaps that is just as well, for the time being.
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Mr. Cunningham's Presentation is a link to our transcription of Dick Cunningham's remarks at the 2018 Annual Experts Meeting of the Canada-U.S. Law Institute.
A Joint Communique is the communiqué issued by participating countries on October 25 at the close of the Ottawa Ministerial on WTO Reform. The signatory countries were Australia, Brazil, Canada, Chile, European Union, Japan, Kenya, Korea, Mexico, New Zealand, Norway, Singapore, and Switzerland.
The Times They Are A-Changin' is a link to the lyrics for this song by Bob Dylan. If you want to hear him sing it, click here.
Council Meeting Summary is a link to a WTO Summary of the General Council Meeting on December 12, 2018. This summary includes links to documents submitted by the EU, China, and others with proposals for addressing the impasse over the Appellate Body.
Searching for Partners is the TTALK Quote from November 30, in which Dick Cunningham discusses America's search for partners in parallel with its quarrel with China.
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©2018 The Global Business Dialogue, Inc.
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R. K. Morris, Editor
Joanne Thornton, Associate Editor
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