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THURSDAY, JANUARY 3, 2019
Click
HERE for the December 28 quote on the WTO from
Richard Cunningham.
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THE WTO: PERSPECTIVES ON THE APPELLATE BODY
"A former Appellate Body member accused the United States of asphyxiating the WTO's Appellate Body through refusing to allow its vacancies to be filled. The U.S. view might be that its actions are more of the nature of assisting a suicide."
Alan Wm. Wolff
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Alan Wolff is a Deputy Director-General of the World Trade Organization - one of four. On December 17, he was in Washington where he spoke at the Peterson Institute for International Economics. His topic was a broad one, namely "The Future of the WTO and the Multilateral Trading System." Our focus today is on what Ambassador Wolff said about the WTO Appellate Body and, more broadly, about the future of the WTO's dispute settlement system.
We'll get to those comments in a moment. First, it is important to set the stage with some of the more overarching comments he made about the multilateral trading system.
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COMMENT ON WOLFF AND THE WTO
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Let's Let's begin with some impressions. Ambassador Wolff may still be new to the role of WTO official, but he is hardly new to the WTO. He has spent a lifetime dealing with it and its predecessor the GATT, both as a U.S. government official, a former Deputy USTR, and as one of America's leading trade lawyers. As the phrase goes, he hit the ground running when he took up his current responsibilities in October 2017 and has been a whirlwind of activity since, including presentations at the Global Business Dialogue. Our strong impression is that the WTO has no more effective advocate than Alan Wolff. He believes in the organization and its centrality to modern life, and he is upbeat about its future. These are important themes and we expect to return to them, perhaps with reference to this same Alan Wolff speech of December 17, 2018.
Here we shall highlight just a few short excerpts:
"Global commerce can only thrive with certainty. Bilateral and regional agreements can provide a patchwork of rules and compliance mechanisms. ... But for global trade there is one only one place where rules of general application can be crafted and applied, and that is at the WTO."
"... National politics will ultimately align with the underlying reality that it is the fundamental interests of all countries to have a well-functioning world trading system."
And this more personal statement:
"I am decidedly optimistic about the future of the multilateral trading system and the WTO."
Ambassador Wolff has discussed his long-term optimism about the WTO on several occasions and in connection with different facets of the organization. One of those which he mentioned in his Peterson Institute speech was product standards. He said:
"Product standards, much more threatening to trade than tariffs, are within an area of the WTO characterized by excellent cooperation, with countries notifying proposed standards in draft, consulting with other countries, and paying attention to comments received - fostering trade, both for imports and exports."
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COMMENT ON WOLFF AND THE APPELLATE BODY
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So why are we focusing on the Appellate Body? Because it is important and because a failure to address Appellate Body issues poses a threat to the system as a whole. Ambassador Wolff put it this way:
Most commentators would agree that the two most pressing challenges facing the world trading system are the U.S.-China exchanges of tariffs, and the termination of the WTO's Appellate Body.
Up to this point, we have been relying on the text Ambassador Wolff prepared for his Peterson Institute speech, which is available on the WTO website. We are going to skip ahead now to the Q and A from that event. The first question from the audience picked up on the assisted suicide line in today's featured quote and focused particularly on the practice of having Appellate Body members continue to work on certain cases even after their terms have expired. In his response, Ambassador addressed not just that issue but the broader litany of U.S. complaints about the Appellate Body.
He described the Appellate Body as an "odd construct." It has in effect decided to relitigate all of the disputes that were the subject of panel reports, and it, the Appellate Body, has the final word. Formally, the Appellate Body reports to the Dispute Settlement Body, i.e., the membership, but as things stand the Dispute Settlement Body is effectively powerless to do anything other than rubber stamp Appellate Body decisions.
Our transcript of the last few paragraphs of Ambassador Wolff's response to that Appellate Body question read as follows:
The system did not have three branches of government, nor even two. It had one. And they [the Appellate Body] decided that they knew the answers. And to some, that is exactly why they are there.
... There was a European chief legal officer of a foreign ministry who came by and he said, "But I like their decisions."
I said, "Good. Put them in a scrapbook and you can take them out and look at them every now and then, but you're not going to have an Appellate Body." Is there room for some pragmatism? You know, the system stopped working, and the fundamental answer is if one big member complains - one very large member and it's important to the system - [complains] over the course of three or four administrations, complains that the system is not appropriate, [that] they're coloring outside the lines, eventually a populist administration comes in and they say, "It's over. Game done."
Can there be a solution? I really believe there can be, but it has to be thought through, and the beginning of thinking is really taking place, proposals are on the table, which is, I think, you know, really superb.
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Another way to consider the Appellate Body issue is to hold up the phrase "rules-based trade" and ask: Does it refer to a shared belief among all of the 164 members of the WTO? Or is it simply a mantra in justification of the status quo? If major members do not believe that the rules being applied are the rules to which they agreed, then it is not a shared belief. And, as a mantra, the phrase will not suffice, at least not for the United States, if the Administration believes that the status quo, i.e., the way the Appellate Body has handled trade remedy cases, has not served American interests. As Ambassador Wolff put it, "a court requires legitimacy," and for the WTO legitimacy comes from the membership. The physician, the Appellate Body, cannot heal itself.
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To Maintain and Improve the System is a link to Ambassador Wolff's December 17 speech at the Peterson Institute for International Economics as published on the WTO website.
At the Peterson Institute takes you to the video of this event as published on the website of the Peterson Institute for International Economics. This includes both the full video and audio recordings of this event.
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©2019 The Global Business Dialogue, Inc.
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Tel: (202) 463-5074
R. K. Morris, Editor
Joanne Thornton, Associate Editor
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