Vidigal: Loophole or Fire Alarm? The Consensus Requirement for the Appointment of Appellate Body Members and the Institutional Design of the WTO

Geraldo Vidigal (Univ. of Amsterdam - Law) has posted Loophole or Fire Alarm? The Consensus Requirement for the Appointment of Appellate Body Members and the Institutional Design of the WTO (Legal Issues of Economic Integration, forthcoming). Here's the abstract:

The past four years have shown that, in contrast to previous assessments that saw the WTO dispute settlement organs as exercising irresistible authority over the WTO Agreements, a WTO Member can single-handedly derail the functioning of the WTO by obstructing appointments to the Appellate Body. This paper investigates the origins and character of this feature of the WTO Agreements and examines possible means to overcome it, arguing that merely appointing seven new Appellate Body members will not be sufficient to ensure the future operation of the organization. If Members wish to avoid obstruction of appointments becoming a regularly employed negotiation tactic, they must explicitly establish that this possibility is not an integral feature of the institutional design of the WTO – a fire alarm that Members can resort to in case they are dissatisfied with developments within the organization – but an unwarranted loophole in the WTO institutional structure. Among the possible courses of action available to address it, the one that is likely to be both politically feasible in the short term and free from doubt regarding its legal effects is a decision, made by consensus by the Membership, to clarify the relationship between the general decision-making authority of the Ministerial Conference and the provisions governing the appointment of Appellate Body members.

Kucik & Puig: Extending Trade Law Precedent

Jeffrey Kucik (Univ. of Arizona - Political Science) & Sergio Puig (Univ. of Arizona - Law) have posted Extending Trade Law Precedent. Here's the abstract:

Precedent is celebrated as a fundamental feature of dense legal systems as it creates predictability, builds coherence, and enhances the authority of courts and tribunals. But, in international adjudication, precedent can also affect interstate cooperation and ultimately the legitimacy of international organizations. Wary of this, most international dispute settlement systems are designed so that rulings do not set obligatory precedent. In this Article, we describe the role of precedent in the Appellate Body (AB) of the World Trade Organization (WTO) to explain how precedent can affect compliance with the decisions of international courts and tribunals (ICs). We make two main contributions. First, we show that there can be precedent without a formal stare decisis rule. In theory the AB has a rule against binding precedent. Based on empirical evidence, however, we show that the AB has in fact a strong norm of relying on prior decisions. Second, we show that over time, the widening of legal commitments can result from extending precedent to new situations and this has an impact on the ability or willingness of states to comply. Our findings have implications for the WTO and beyond. For the WTO, we note that efforts to better define the value of precedent is unlikely to resolve the general mistrust of the AB and therefore, we propose other solutions to control the drift resulting from precedent. Beyond the WTO, we note that international scholars should account for the inter-temporal dimension of legal commitments in analyzing and explaining compliance with international law.

Hoekman & Mavroidis: To AB or Not to AB? Dispute Settlement in WTO Reform

Bernard Hoekman (European Univ. Institute) & Petros C. Mavroidis (Columbia Univ. - Law) have posted To AB or Not to AB? Dispute Settlement in WTO Reform. Here's the abstract:

Recent debates on the operation of the WTO’s dispute resolution mechanism have focused primarily on the Appellate Body (AB). We argue that this neglects the first-order issue confronting the rules-based trading system: sustaining the principle of de-politicized conflict resolution that is reflected in the negative consensus rule for adoption of dispute settlement findings. Improving the quality of the work of panels by appointing a roster of full-time professional adjudicators, complemented by reforms to WTO working practices that reduce incentives to resort to formal dispute settlement, can resolve the main issues that led to the AB crisis. Effective, coherent, and consistent WTO dispute resolution need not include an AB. An appropriately redesigned single-stage process can serve just as well, if not better.

Conference: BIICL WTO Conference 2020

On October 22-23, 2020, the British Institute of International and Comparative Law will host virtually its 2020 WTO Conference. The program is here. Here's the idea:

This is a pivotal moment for trade affairs and a critical time to take stock and reflect on the future of global economic governance and connectivity. The conference will bring together leading academics and practitioners to explore emerging ideas and the most recent developments, at a critical time for international trade law. This year, amidst a global pandemic, the conference will take place virtually over two half days: 22 October 12.00-17.00 and 23 October 09.00-13.00 (BST) BIICL will host 6 virtual panels around the world to cover strategically important geographical areas where major developments, discussions and decisions impacting international trade are taking place.

Alter: Contracting v. Multilateralism in Global Economic Governance: Before, during and after the WTO

Karen J. Alter (Northwestern Univ. - Political Science; Univ. of Copenhagen - iCourts) has posted Contracting v. Multilateralism in Global Economic Governance: Before, during and after the WTO (in International Economic Dispute Settlement: Demise or Transformation?, Manfred Elsig, Rodrigo Polanco & Peter van den Bossche eds., forthcoming). Here's the abstract:

This chapter, for a book focused on the future of the World Trade Organization, discusses three ways that global economic law and corresponding transnational dispute settlement systems have been constructed across time: via private contracting, inter-state contracting, or through principled multilateralism. Offering a global capitalism and law perspective, the chapter compares the ideal type of each model to the historical practice, identifying what multilateralism provides that contracting does not. The larger argument is that all three modes of law-making should and will co-exist. We should therefore be thinking about which mode of law-making is best for a particular issue or context, and how we might use the other modes to address problems that arise in each approach. The chapter then considers how contracting can supplant the WTO, and the tradeoffs associated with such an outcome.

Vidigal: Re-Imagined Communities: The WTO Appellate Body and the Communitization of WTO Law

Geraldo Vidigal (Univ. of Amsterdam - Law) has posted Re-Imagined Communities: The WTO Appellate Body and the Communitization of WTO Law. Here's the abstract:

Do the WTO Agreements create a mere multi-party contract, establishing bundles of bilateral legal relations that pairs of WTO Members remain free to shape and reshape on the basis of mutual consent? Or do they establish a community, a common legal system whose rules can only be modified pursuant to the legal regime’s collectively agreed procedures? By establishing a common institutional framework for the negotiation of trade relations, the WTO Agreements set up a forum in which decisions can be made collectively affecting all Members. On the other hand, the early years of the WTO saw a controversy with respect to the character of this forum, if merely an opportunity for bilateral bargains or a legal community whose rules condition the bilateral relations among the Members. This chapter argues that the Appellate Body’s reading of the function of adjudication and the institutional provisions of the WTO Agreements has resulted in a significant communitization of WTO law. Contrary to what some expected, this communitization did not result in a trade-focused regime. Instead, the approach adopted by the Appellate Body to the WTO Agreements puts on equal footing ‘trade’ and ‘non-trade’ goals. Trade-restrictive and even discriminatory measures are permissible as long as they find a justification in a non-trade goal that the community of Members determines to be legitimate. Crucially, the Appellate Body infers the views of this community not only from decisions of WTO bodies but also from other multilateral decisions and documents that, in its view, express a consensus or a common understanding regarding interpretations and legitimate non-trade concerns.

Qin: WTO Reform: Multilateral Control over Unilateral Retaliation – Lessons from the US-China Trade War

Julia Ya Qin (Wayne State Univ. - Law) has posted WTO Reform: Multilateral Control over Unilateral Retaliation – Lessons from the US-China Trade War. Here's the abstract:

Preventing trade wars is a key function of the WTO rule-based system. But as the United States and China waged the largest trade war in history, the WTO sat on the sidelines, unable to do anything to stop the fight. Why has the system failed so spectacularly? In a search for answers, this article examines the context of the US-China conflict and makes a number of findings. First, under WTO law, the burden of avoiding this trade war was placed on China, the victim of US aggressive unilateral tariffs; and contrary to China’s claim, its retaliatory tariffs cannot be justified by general principles of international law. Second, the WTO rule prohibiting unilateral retaliation was born out of a grand political bargain, but it embodies the wisdom of Adam Smith and achieves the goal of the Havana Charter to turn retaliation into an instrument of international order. Third, the WTO’s inability to prevent China’s resort to unilateral retaliation reveals a deficiency in its existing legal design, but that deficiency can be fixed procedurally as proposed herein. Given the importance of preventing large-scale trade wars in the future, improving multilateral control over unilateral retaliation should be a top priority in WTO reform.

Lo, Nakagawa, & Chen: The Appellate Body of the WTO and Its Reform

Chang-fa Lo, Junji Nakagawa, & Tsai-Fang Chen have published The Appellate Body of the WTO and Its Reform (Springer 2020). The table of contents is here. Here's the abstract:

This is the first book that critically examines the reform of the Appellate Body (AB) of the World Trade Organization (WTO) in light of the current crisis resulting from the U.S. blocking of the appointment of its members. The reform of the AB is critical, as the appointment crisis could lead to the demise of “the jewel in the crown,” which may even cause the dismantling of the WTO as a whole. This book covers various aspects of the crisis and its reform. Specifically, as the crisis cannot be fully understood without reviewing the role of the AB from the broader perspectives of the other functions of the WTO, the book examines the reform of the AB from the broader perspectives of the WTO governance. Additional focus is on the reform of the AB in relation to its specific functions. Available options are provided to address the AB crisis, as well as discussion of wider implications beyond the WTO. Contributed by world-renowned academics, experts, and practitioners in the field of international economic law, this volume provides a comprehensive analysis of the AB crisis and its solutions.

Pauwelyn & Pelc: Who Writes the Rulings of the World Trade Organization? A Critical Assessment of the Role of the Secretariat in WTO Dispute Settlement

Joost Pauwelyn (Graduate Institute of International and Development Studies) & Krzysztof Pelc (McGill Univ.) have posted Who Writes the Rulings of the World Trade Organization? A Critical Assessment of the Role of the Secretariat in WTO Dispute Settlement. Here's the abstract:

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The figure of the judge or adjudicator in international tribunals has been garnering growing attention. Yet we know relatively little about how adjudicators actually produce their rulings. Anecdotal evidence suggests that for all the attention panelists and Appellate Body (AB) members at the World Trade Organization (WTO) receive, the Secretariat plays an overlooked and increasingly important role, from selecting panelists and writing an initial “issues paper” for the adjudicators, to participating in internal deliberations and assisting in the drafting of the actual ruling.

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We examine this role in greater detail, and ask who, of the Secretariat vs. adjudicators, exerts more influence over the drafting of WTO panel reports? We rely on two different text analysis approaches to attribute authorship. In both cases, the findings are unambiguous: the WTO Secretariat exerts significantly more influence over the writing of WTO panel reports than panelists themselves. We then examine what factors have led to the Secretariat’s rise to prominence. Originally a response to “rogue” GATT panels in the 1980s, its functions grew over time as a result of the greater experience and expertise of its (permanent) staff, compared with (part-time) adjudicators, and its limited accountability. We also elaborate on how the Secretariat’s role matters, affecting the role of precedent, the low number of dissents, and the increasing length of proceedings and scope of rulings.

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Designed to keep “rogue” panels in check, the Secretariat may thus have contributed to the very “overreach” that members like the US are lashing out against. Correcting this “overreach” and resolving the current crisis at the WTO may then, paradoxically, require a greater voice for adjudicators, and a reduced role for the Secretariat.

Agon: International Adjudication on Trial: The Effectiveness of the WTO Dispute Settlement System

Sivan Shlomo Agon (Bar-Ilan Univ. - Law) has published International Adjudication on Trial: The Effectiveness of the WTO Dispute Settlement System (Oxford Univ. Press 2019). Here's the abstract:

Is the World Trade Organization (WTO) dispute settlement system (DSS) effective? How exactly is the effectiveness of this adjudicative system to be defined and measured? Is its effectiveness all about compliance? If not, what goals, beyond compliance, is the WTO DSS expected to achieve? Has it fulfilled these objectives so far, and how can their achievement and the systems effectiveness be enhanced in the future?

Building on a theoretical model derived from the social sciences, this book lays down the analytical framework required to answer these questions, while crafting a revealing insider's account of the WTO DSS-one of the most important and debated sites of the evolving international judiciary. Drawing on interviews with WTO adjudicators, WTO Secretariat staff, ambassadors, trade delegates, and trade lawyers, the book offers an elaborate analysis of the various goals steering the DSS's work, the diverse roles it plays, the challenges it confronts, and the outcomes it produces. Through this insider look at the WTO DSS and detailed examination of landmark trade disputes, the book uncovers the oft-hidden dynamics of WTO adjudication and provides fresh perspective on the DSS's operation and the undercurrents affecting its effectiveness.

Given the pivotal role the WTO DSS has assumed in the multilateral trading regime since its inception in 1995 and the systemic pressures it has recently come to face, this book makes an important contribution towards understanding and measuring the benefits (as well as the costs) this adjudicative body generates, while providing valuable insights into current debates on its reform.

Gao: Disruptive Construction or Constructive Destruction? Reflections on the Appellate Body Crisis

Henry S. Gao (Singapore Management Univ. - Law) has posted Disruptive Construction or Constructive Destruction? Reflections on the Appellate Body Crisis (in The Appellate Body of the WTO and Its Reform, Chang-fa Lo, Jinji Nakagawa, & Tsai-yu Lin eds., forthcoming). Here's the abstract:

Over the past few months, the blockage of the Appellate Body appointment process by the United State (hereinafter U.S.) has emerged as the biggest existential threat to the World Trade Organization (hereinafter WTO). In response to the criticisms from other WTO Members, the U.S. justified its action as a way to raise people’s attention on long-standing problems in the Appellate Body (hereinafter AB). Are the U.S. criticisms valid? Even if assuming that the U.S. allegations are correct, is the specific approach that the U.S. has taken legitimate? Drawing from both the treaty text and jurisprudence of WTO law, this Chapter argues that the U.S. criticisms, especially those concerning the systemic issues in WTO dispute settlement, are deeply flawed. Moreover, the paper also argues that, regardless of the validity of the substantive claims of the U.S., the U.S. has chosen the wrong approach by holding hostage the entire AB appointment process. The paper concludes with practical suggestions on how to overcome the AB crisis and restore its functions.

Wagner: The Impending Demise of the WTO Appellate Body: From Centrepiece to Historical Relic?

Markus Wagner (Univ. of Wollongong - Law) has posted The Impending Demise of the WTO Appellate Body: From Centrepiece to Historical Relic? (in The Appellate Body of the WTO and Its Reform, Chang-fa Lo ed., forthcoming). Here's the abstract:

The current crisis engulfing the multilateral trading system has crystalized in the dispute over the (re-)appointment of the members of the World Trade Organization’s Appellate Body. While the legislative arm of the organization has never lived up to its potential, its dispute settlement arm with the Appellate Body at its apex was seen as a lodestar for other international courts and tribunals. The United States has taken issue not only with individual decisions of the Appellate Body (as well as individual Appellate Body members), but with the institution as such. The article recounts the important institutional redesign that has led to the Appellate Body becoming the World Trade Organization’s institutional “centerpiece”. These very same developments are now destined to lead to the Appellate Body’s downfall with potential reverberations for the entire World Trade Organization’s dispute settlement process. Moreover, it threatens the institution as a whole, unless some last minute compromise can be found between various competing visions of global economic governance.

Mitchell & Mishra: Regulating Cross-Border Data Flows in a Data-Driven World: How WTO Law Can Contribute

Andrew D Mitchell (Univ. of Melbourne - Law) & Neha Mishra (Univ. of Melbourne - Law) have posted Regulating Cross-Border Data Flows in a Data-Driven World: How WTO Law Can Contribute (Journal of International Economic Law, forthcoming). Here's the abstract:

While the free cross-border movement of data is essential to many aspects of international trade, several countries have imposed restrictions on these data flows. The pre-internet rules of the World Trade Organization (‘WTO’) discipline some of these restrictions, but they are insufficient. Unfortunately, so are the electronic commerce chapters in modern preferential trade agreements. This article argues that reformed WTO rules, that take account of the policy challenges of the data-driven economy, are required. These reforms would facilitate internet openness while ensuring consumer and business trust, promote digital inclusion of developing countries and incorporate clear exceptions for legitimate domestic policies.

Conference: BIICL WTO Conference 2019

On May 31, 2019, the British Institute of International and Comparative Law will host its 2019 WTO Conference. The program is here. Here's the idea:

The 2019 WTO Conference will examine the implications of recent global developments, including current challenges to multilateralism, regional and bilateral agreements and the intersection between trade and human rights. The unprecedented challenges in international trade law posed by the ongoing crisis at the WTO and by Brexit constitute an unparalleled opportunity to bring together worldwide expertise and innovative analysis.

Vidigal: Living Without the Appellate Body: Hegemonic, Fragmented and Network Authority in International Trade

Geraldo Vidigal (Univ. of Amsterdam - Law) has posted Living Without the Appellate Body: Hegemonic, Fragmented and Network Authority in International Trade. Here's the abstract:

The Appellate Body has asserted extensive authority over the rules governing global trade relations, proclaiming its ultimate authority to determine the prevailing interpretation of the rules of the World Trade Organization (WTO) as well as to control the extent to which extra-WTO norms can validate deviations from WTO rules. Its dominance over the trade regime is now threatened by two developments: the multiplication, sophistication and increased significance of regional trade agreements and the crisis over Appellate Body appointments. Examining these developments, this paper argues that the Appellate Body’s ‘hegemonic authority’ over the trade regime could be replaced by ‘fragmented authority’, with various adjudicators making decisions independently without possibility to refer divergences to a centralizing authority. The continued coherence of the trade regime may depend on the ability of trade adjudicators to establish ‘network authority’, providing the interpretive community that operates the trade regime with security and predictability as regards the application of norms. Three elements may be key for this: references in regional trade agreements to WTO rules and jurisprudence, the predisposition of adjudicators to pursue coherence and follow past decisions, and the existence of repeat players in trade adjudication who are themselves Members of this interpretive community.

Shaffer: A Tragedy in the Making?: The Decline of Law and the Return of Power in International Trade Relations

Gregory Shaffer (Univ. of California, Irvine - Law) has posted A Tragedy in the Making?: The Decline of Law and the Return of Power in International Trade Relations (Yale Journal of International Law, forthcoming). Here's the abstract:

It is the end of an era—potentially the close of a semblance of the rule of law in international trade relations. This article assesses the U.S. challenge to the Appellate Body and binding dispute settlement system of the World Trade Organization. Part I examines the decline of law and return of power in international trade relations. Part II explains the rationales behind the U.S. challenge to the WTO judiciary in terms of domestic politics, the rise of China, and concerns over a fundamental imbalance between WTO political and judicial processes. Part III analyzes the potential and most likely future of WTO dispute settlement—either (1) the replacement of the Appellate Body with member agreement to binding dispute settlement, potentially with ad hoc appeals, on only a reciprocity basis, thus potentially excluding the United States; or (2) reversion to the former GATT system where parties can effectively veto the adoption of a panel report. For over two decades, the Appellate Body operated as an authoritative, quasi-constitutional, international court to resolve conflicts and develop jurisprudence. In retrospect, it was a remarkable experiment in international relations. The United States and the world may soon regret its demise.

Vidigal: Westphalia Strikes Back: The 2018 Trade Wars and the Threat to the WTO Regime

Geraldo Vidigal (Univ. of Amsterdam - Law) has posted Westphalia Strikes Back: The 2018 Trade Wars and the Threat to the WTO Regime. Here's the abstract:

The regime that has governed trade relations among the world’s largest economies since the creation of the World Trade Organization in 1995 is now under threat. While WTO Members adopting trade-restrictive measures on doubtful legal grounds is not a novelty, two developments make the current crisis unique. First, Members are reacting to perceived WTO-inconsistent conduct by imposing countermeasures, based on their own assessment that the justifications put forward are ill-founded. Second, acting on long-standing grievances against activism on the part of the Appellate Body, the United States has blocked all appointments of new members to the organ. Under present conditions, by the time any panel reports concerning these disputes are issued the Appellate Body will be non-operational. These developments undermine the core bargain underlying the WTO regime: the commitment by sovereign entities to entrust decisions regarding permissible and impermissible conduct to authoritative decision-making and to react to other Members’ conduct only following an institutional authorization to do so, when, within the Westphalian international order, they retain the ability to react unilaterally. After reviewing the development of the multilateral trade regime, this paper examines how the 2018 trade wars represent a breakdown of this core commitment and will potentially lead to fragmentation of the WTO regime. Members seeking to preserve the regime are faced with a paradox: overcoming the United States’ block through non-consensual procedures would undermine another commitment: that of decision-making by consensus. Without an Appellate Body or an alternative arrangement to reconstruct an authoritative institution, the WTO regime may devolve into one of Westphalian, de-institutionalized dispute resolution.

Paine: The Functions of the WTO's Dispute Settlement Body: A Distinctive Voice Mechanism

Joshua Paine (Max Planck Institute Luxembourg for International, European and Regulatory Procedural Law) has posted The Functions of the WTO's Dispute Settlement Body: A Distinctive Voice Mechanism. Here's the abstract:

This paper analyses the functions performed by the WTO’s Dispute Settlement Body (DSB), that is, the diplomatic body, consisting of representatives of all WTO members, which administers the dispute settlement system, including by establishing panels, adopting panel and Appellate Body reports, monitoring implementation of rulings, and authorising the suspension of concessions. Of course, because the reverse consensus rule applies to these decisions, their outcome is in practice a foregone conclusion. However, it would be wrong for this reason to treat the DSB as a formality, not worthy of further analysis. Instead, this paper suggests that having the DSB may serve a number of important functions within the wider legal and political processes of the WTO. Specifically, the paper focuses on three functions performed by the DSB. First, the paper analyses the DSB’s role as a crucial ‘voice’ mechanism which provides WTO members with a centralized forum for expressing (dis)satisfaction with the performance of adjudicators. This section draws on the framework of ‘exit, voice and loyalty’, originally developed by Hirschman as a way of conceptualizing member dissatisfaction with an organization’s performance. This section analyses the two most striking episodes of the DSB operating as a voice mechanism in the WTO’s history: the widespread member backlash over amicus curiae briefs a generation ago, and the United States’ blocking of Appellate Body (re)appointments from 2016 to present. Second, the paper considers the DSB’s compliance-monitoring function. On its face, this is a key respect in which WTO dispute settlement differs from many international courts and tribunals, where there is often no centralized mechanism for monitoring post-judgment compliance. Third, the paper analyses the DSB’s function as a mechanism for socializing members into the complex field of WTO dispute settlement, alongside other avenues for learning such as third party participation in disputes.

Megiddo: The U.S. Approach to International Law: A View from Below

Tamar Megiddo (Hebrew Univ. of Jerusalem - Law) has posted The U.S. Approach to International Law: A View from Below. Here's the abstract:

Despite its central contribution to the construction of the global legal order, the United States has long been perceived to exclude itself from its reach. Its exceptionalist image has been reinforced by statements of political leaders, federal law provisions and court decisions. This article argues, however, that in order to appropriately assess a state’s approach to international law, one must consider not only the position of its formal government, but also the interpretation, application, and challenge of international law by sub-state actors.

Studying a U.S. policy-making process initiated pursuant to a World Trade Organization ruling, the article surveys interventions by government officials, consumers, producers and civil society organizations. It shows, contrary to the exceptionalist image, that U.S. actors of all stripes invoked and relied on international law extensively, thereby carving a space for it as a non-negligible consideration in the process. The article thus submits that accounting for non-state stakeholders is imperative in evaluating the regard for international law in a state and possibly also the domestic impact of international law.

Harpaz: China and the WTO: On a Path to Leadership?

Marcia Don Harpaz (Hebrew Univ. of Jerusalem) has posted China and the WTO: On a Path to Leadership? (in Handbook of the International Political Economy of China, Ka Zeng ed., forthcoming). Here's the abstract:

This chapter considers whether China has embarked on a path to WTO leadership since its historic accession in 2001. I argue that China is increasingly displaying the will to lead, an essential prerequisite for state leadership. China has become progressively more proactive, making independent proposals, joining undertakings initiated by other members, submitting numerous notifications, and regularly filing formal dispute settlement complaints despite its historical aversion to international adjudication.

But does its growing participation signal leadership? China's trajectory towards WTO leadership is analyzed by identifying signs of its will to lead in the WTO--in its rhetoric, its participation and its initiatives. I maintain that indications of China's will to lead are evident, for example, in its strong support of globalization and the multilateral trading system (not trivial given US policy since the advent of Trump), China's continuing endorsement of the Doha Round negotiations (in contrast to other members that have declared the talks dead), and its initiation of talks on investment facilitation and active participation in talks on electronic commerce, among other things. At the same time, other factors are holding it back. For one, it is still learning how to lead in the WTO, despite moving considerably up the learning curve. More significantly, evidence of the willingness of other members to follow is presently limited. The essay aims at offering insight into China's behavior as a leader in the WTO, and the future leadership role China may play in the changing international trade environment, in which China paradoxically is taking over as the champion of an open global trading system, and possibly replacing US leadership in global economic governance.