When trade ministers of the Group of 20 industrialized and developing countries convene a two-day meeting at the end of this month, India will seek to insert strong language in the final declaration on preserving and safeguarding the World Trade Organization’s two-tier dispute settlement system, our correspondent writes.
G20 trade ministers are slated to meet August 25-26 in Jaipur, the pink city of India.
However, the United States is unlikely to support language on the two-stage dispute settlement system and restoration of the Appellate Body, given that Washington has effectively side-lined the AB by refusing to allow the selection of panelists.
The binding rulings of the AB since 1995, when the WTO was established, has been the raison d’etre of the Appellate Body said people familiar with the developments.
The two-day meeting in Jaipur will be preceded by a three-day senior officials meeting starting on June 21. The G20 officials/sherpas from 19 countries are expected to negotiate texts in which India, as the chair and host of the conference, will make every effort possible to bring convergence in areas including logistics; global value chains; WTO reforms; micro, small and medium enterprises and their importance after the COVID-19 pandemic and perhaps, issues concerning food security, according to people familiar with the developments.
The G20 comprises Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, South Korea, Mexico, Russia, Saudi Arabia, South Africa, Turkey, the United Kingdom and the United States, plus the European Union.
The texts to emerge after the negotiations may seem like balanced agreements of convergence in
these five areas, but they may not substantively address the real issues in the WTO reform, especially the dispute settlement system.
The continued divergences between the United States and one or two members on the one side, and developing countries like India, South Africa, Indonesia, Argentina Turkey, and Brazil on the other, seem somewhat irreconcilable. The latter may try hard to press for some real/fundamental outcomes in ensuring a robust dispute settlement system, but chances seem somewhat bleak, said people familiar with the ongoing discussions.
Dispute settlement reform was mandated by trade ministers at the WTO’s 12th ministerial conference in last June. Paragraph four of the Outcome Document of the MC 12 states somewhat ambiguously: “We acknowledge the challenges and concerns with respect to the dispute settlement system including those related to the Appellate Body, recognize the importance and urgency of addressing those challenges and concerns, and commit to conduct discussions with the view to having a fully and well-functioning dispute settlement system accessible to all Members by 2024”
The mandate does not explicitly state that the two-stage DSS must be restored as it existed up until December 2019. But a large majority of members continually underscore the importance of restoring the two-stage dispute settlement system with an unweakened Appellate Body.
Washington may say that it is ready for the restoration of the two-tier DSS but with an AB that has no teeth and no oxygen to rectify egregious trade measures adopted by any member, particularly the United States, said people familiar with the discussions.
The US stance to convert the AB into a vegetable has remained firm going by the continuity in both the Trump and Biden Administrations. President Trump’s former US Trade Representative Robert Lighthizer praised his successor Katherine Tai when she said the WTO is on very, very thin ice and that the integrity of the system is in doubt when two panels struck down measures imposed on grounds of national security considerations.
Instead of “killing the Appellate Body” as proposed by Ambassador Lighthizer, the Biden Administration may follow the famous song of killing softly, said a trade negotiator, who preferred not to be quoted.
In his latest book, “No Trade is Free-Changing Course, Taking on China, and Helping America’s Workers,” Mr. Lighthizer seems to play a victim card, said an official who read Ambassador Lighthizer’s book.
He says “More must be done to fix the WTO,” emphasizing that “no one is arguing that we should revert from a rules-based system to the so-called law of the jungle in trade relations.” But
Mr. Lighthizer continues that “sticking with the current WTO would actually entail betraying the core principles of a rules-based system, because this organization has shown itself to be chronically incapable of proceeding according to those principles.”
The Biden Administration with some degree of alleged sophistry, is essentially following the Trump Administration, say negotiators, who are involved in the DS reform discussions.
For example, Washington now is pursuing unilateral measures like the hundreds of billions of dollars provided for green industrialization as well as for transforming the semiconductor industries.
Ambassador Lighthizer is arguing that “the dispute settlement system should be scrapped.” He suggests a “a new one, modeled after commercial arbitration, should be put in its place. There should be a one-stage panel process with a vote of the WTO member states being able to overturn the decisions.
Further, the decisions should be the basis of party negotiations and not be binding. The strawman of the law of the jungle versus the status quo cannot obscure the fact that the current system is a massive failure on its own terms – and certainly with respect to US interests. The status quo is not an option.”
In the ongoing DS discussions, the United States seems to be following some of Mr. Lighthizer’s suggestions. Already, the United States proposal on the Appellate Review in the ongoing DS discussions was rebuffed in what is being seen as the US’ move to practically eliminate the Appellate Body, said people familiar with the developments
Earlier, at an informal discussion chaired by the facilitator in June, several countries like China,
the European Union, Canada, Australia, India, Pakistan and South Africa appear to have opposed the US proposal on Appellate Review, said participants familiar with the discussion.
During the plenary meeting, the facilitator, Marcos Molina of Guatemala, tried hard to see if the members could make progress on the US proposal, but his attempts proved to be in vain, said people who took part in the meeting.
The US proposal on Appellate Review, which is in the facilitator’s so-called yellow box of proposals that are supposed to be more refined for further discussions, calls for an “amendment to Article 17.2 to expedite the appointment of the Appellate Body” and also a “Mechanism agreed by the Parties.”
As per Article 17.2 of the Appellate Review in the WTO’s Dispute Settlement Understanding (DSU), “the DSB (dispute settlement body) appoint persons to serve on the Appellate Body for a four-year term, and each person may be reappointed once.
However, the terms of three of the seven persons appointed immediately after the entry into force of the WTO Agreement shall expire at the end of two years, to be determined by lot. Vacancies shall be filled as they arise. A person appointed to replace a person whose term of office has not expired shall hold office for the remainder of the predecessor's term.”
Under the “scope of appeal/review mechanism” in the facilitator’s yellow table, Washington proposed that the new AB would agree with the following conditions, including:
Comments
No comments on this item Please log in to comment by clicking here