WTO: Dispute Settlement Body Meeting

Posted Friday, January 26, 2024 11:18 pm

Led by Ambassador Petter Ølberg (Norway) the Dispute Settlement Body met Janyary 26.

Dispute Settlement Reform Discussion:

Since there is no consensus on formalization of the informal process at this point in time, the Chair suggested that members allow the informal process on reform to continue to do as much work as possible to achieve a successful outcome.
Deputy Permanent Representative of Guatemala, Marco Molina, in his capacity as convenor, updated on the state of play in informal discussions, emphasizing the progress in the consolidated draft text and the appeal/review mechanism.
United States' Stance on Various Disputes:
- DS597 (Hong Kong, China): The US reiterated its disagreement with the panel's rejection of its national security justification regarding origin marking requirements for Hong Kong China imports, for the eighth time.
- Appellate Body Appointments: The US opposed the proposal by 130 WTO members to commence the appointment process for the Appellate Body, marking the 73rd instance of such a blockage.
- DS56 (Türkiye): The US, Türkiye, and four other members commented on the panel ruling in the US challenge to Türkiye's duties on US imports.
Member States' Comments:
- Twenty-six members expressed views on dispute settlement reform. Diverse perspectives emerged on the potential outcome at the upcoming 13th Ministerial Conference (MC13).

Discussion on Dispute Settlement Reform

Consolidated Draft Text: Molina reported that the fifth iteration of the text is under review, with the sixth to be circulated soon. A final review is expected by early February.
Appeal/Review Mechanism: Discussions are ongoing, focusing on refining concepts to address member concerns.

DS597 United States – Origin Marking Requirement (Hong Kong, China)

US Position: The US justified its measure based on essential security and criticized the human rights situation in Hong Kong, China.
Hong Kong and China's Response: Both criticized the US for repetitive agenda items and for its characterizations of Hong Kong, China.

Appellate Body Appointments

Proposal by 130 Members: Reintroduced for the 73rd time, emphasizing the need for a functioning Appellate Body.
US Response: Continued opposition, citing unresolved concerns with the WTO dispute settlement system.

Surveillance of Implementation

Status Reports: Presented by the United States (DS184, DS160, DS464, DS471), the European Union (DS291), and Indonesia (DS477, DS478).

Other Business

DS561 (Türkiye): Discussion deferred due to Türkiye's appeal of the panel's findings. Currently, 31 panel rulings are pending review.

MC-13 Prospects Beak

The prospects for restoring the World Trade Organization's (WTO) two-tier dispute settlement system, particularly its final adjudicating limb, the Appellate Body, appear dim at the upcoming 13th Ministerial Conference. Nonetheless, there seems to be an effort to declare a partial victory at MC13, with expectations of continued negotiations post-conference. At the 12th Ministerial in 2022, ministers recognized the challenges and urgency of addressing issues related to the dispute settlement system and committed to achieving a fully functional system accessible to all members by 2024. This commitment followed informal discussions initiated by the United States with select countries post-MC12, now continued by a Guatemalan facilitator reportedly chosen by the U.S., according to knowledgeable sources.

WTO Director-General Ngozi Okonjo-Iweala, during a Brussels discussion on global trade challenges, highlighted dispute settlement reform as a potential achievement of MC13. She remarked on the complexity and time required for such reform. European Commission Executive Vice President Valdis Dombrovskis echoed the sentiment, emphasizing the necessity of a functional dispute settlement system for the WTO's legitimacy and the avoidance of further erosion of the rules-based trading system.

However, current informal discussions suggest the U.S. may only agree to a non-binding, toothless Appellate Body, contrary to the WTO's enforcement function needs. This stance leads several representatives from developing countries to question the value of negotiating multilateral agreements at the WTO.

The facilitator, Marco Molina of Guatemala, recently issued a revised draft ministerial decision, indicating ongoing work on the Appeal/Review mechanism. He planned extensive meetings to review changes and discuss the mechanism, signaling significant revisions to the chapter on compliance.

The current draft ministerial decision contains a controversial Chapeau, focusing on dispute resolution and not explicitly mentioning the binding nature of the dispute settlement understanding. It also seems to suggest a shift from the negative consensus principle, potentially allowing any member to decline adoption of dispute settlement body recommendations. This language raises concerns about the effectiveness and binding nature of the dispute settlement system post-reform.

WTO: Dispute Settlement Body Meeting

Discussion on Dispute Settlement Reform

DS597 United States – Origin Marking Requirement (Hong Kong, China)

Appellate Body Appointments

Surveillance of Implementation

Other Business

MC-13 Prospects Beak

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