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The Office of the U.S. Trade Representative (USTR) has released its <a href="https://ustr.gov/sites/default/files/Report_on_the_Appellate_Body_of_the_World_Trade_Organization.pdf" target="_blank" rel="noopener noreferrer">Report on the Appellate Body of the World Trade Organization</a> (WTO), providing an in-depth assessment of the Appellate Body&rsquo;s alleged &ldquo;failure to comply with WTO rules and interpret WTO agreements as written.&rdquo; In a press release, USTR Robert Lighthizer stated, &ldquo;For more than 20 years, successive Administrations and the U.S. Congress have voiced significant concerns that the Appellate Body has failed to function according to the rules agreed by the United States and other WTO Members ... Unfortunately, the conduct of the Appellate Body has converted the WTO from a forum for discussion and negotiation into a forum for litigation. President Trump is committed to a trade agenda that benefits all Americans, and a reassessment of the WTO and its role is a key part of that agenda.&rdquo;
The report argues that &ldquo;the Appellate Body has added to U.S. obligations and diminished U.S. rights by failing to comply with WTO rules, addressing issues it has no authority to address, taking actions it has no authority to take, and interpreting WTO agreements in ways not envisioned by the WTO Members who entered into those agreements. This persistent overreaching is plainly contrary to the Appellate Body&rsquo;s limited mandate, as set out in WTO rules.&rdquo; The report offers numerous examples, including:
<ul>
<li>The Appellate Body consistently ignores mandatory deadlines for deciding appeals;</li>
<li>The Appellate Body allows individuals who have ceased to serve on the Appellate Body to continue deciding appeals as if their term had been extended by WTO members in the Dispute Settlement Body;</li>
<li>The Appellate Body makes findings on issues of fact, including issues of fact relating to WTO members&rsquo; domestic law, although members authorized it to address only legal issues;</li>
<li>The Appellate Body issues advisory opinions and otherwise opines on issues not necessary to assist the WTO Dispute Settlement Body in resolving the dispute before it;</li>
<li>The Appellate Body insists that dispute settlement panels treat prior Appellate Body interpretations as binding precedent;</li>
<li>The Appellate Body asserts that it may ignore WTO rules that explicitly mandate that it advise a WTO member to bring a WTO-inconsistent measure into compliance with WTO rules; and</li>
<li>The Appellate Body oversteps its authority and opines on matters within the authority of WTO members acting through the Ministerial Conference, General Council and Dispute Settlement Body.</li>
</ul>
The report also argues that the Appellate Body&rsquo;s overreaching has &ldquo;taken away rights and imposed new obligations&rdquo; on WTO members through erroneous interpretations of WTO agreements. It has done so by attempting to fill in &ldquo;gaps&rdquo; in those agreements and &ldquo;reading into them rights or obligations&rdquo; to which the United States and other WTO members never agreed. Overall, the report states that these failings have had &ldquo;dire consequences&rdquo; for the United States and for all WTO members and that the WTO dispute settlement system continues to lose the credibility required to function properly and maintain public support.
Because the WTO Appellate Body &ndash; a seven-member panel &ndash; has only one member due to the United States&rsquo; blocking of new appointments to the panel since 2017, it is currently unable to render any decisions. The report concludes that concerns and complaints about the dispute settlement system and Appellate Body have been ignored for far too long: &ldquo;Honest and candid dialogue about how and why the WTO arrived at the current situation is necessary if any reform is to be meaningful and long lasting. This will require WTO Members to engage in a deeper discussion of why the Appellate Body has felt free to depart from what Members agreed to. Without this understanding, there is no reason to believe that simply adopting new or additional text, in whatever form, will solve these endemic problems.&rdquo;

core/freeform

SmarTrade

Senior Legislative and Regulatory Policy Advisor

Scott E. Diamond

USTR’s Report Lambastes WTO’s Appellate Body for Failing to Follow WTO Rules and Agreements