WTO / Pushback to US Dispute Settlement Reforms

The United States has proposed significant reforms to the World Trade Organization's (WTO) dispute settlement system, potentially causing uncertainty and allowing political pressure to affect decisions, according to confidential documents obtained by our Geneva correspondent. Critics argue that these proposals may harm smaller WTO members.

The proposals cover the appeal/review mechanism and compliance in WTO's dispute settlement system. While they envision a reformed panel system, they aim to exclude the Appellate Body from any role in trade dispute adjudication. The US has rendered the Appellate Body dysfunctional for the past five years, drawing criticism from the European Union, China, Australia, New Zealand, Brazil, India, and the Africa Group, among others.

In response, New Zealand has reportedly expressed concerns that an ad hoc appeal mechanism would create uncertainty and allow political pressures to affect decisions, hurting smaller members. However, the US maintains that its proposal would improve members' confidence in panel decision-making.

Another proposal addresses the role of adjudicators in helping members resolve disputes. The US suggests limiting the review of issues in a final panel report only to cases where both parties agree, allowing them to select the review adjudicator.

The US has also proposed establishing a standard of review for questions of law, which would require an appellant to prove gross misconduct, serious procedural departures, or a manifest abuse of power by the panel. This would limit adjudicators' roles in altering members' rights and obligations while reducing the complexity, length, and cost of any review.

Regarding consistency, the US aims to return interpretative authority to WTO members and establish a mechanism for relevant committees to discuss treaty interpretations in reports. The US is also concerned about the level of Secretariat support and suggests establishing guidelines for staffing panels.

Despite these proposals, no consensus has been reached. Any changes to the dispute settlement system can only be decided by trade ministers at the WTO's 13th ministerial meeting in Abu Dhabi next year.