There is no sign of loosening the US position that the WTO may be paralysed by his departure.

 There is no sign of loosening the US position that the WTO may be paralysed by his departure.

First Financial Journalist learns from authoritative channels that on September 30, WTO will continue to discuss the opening of the procedure for the selection/re-election of new judges in the Appellate Body at the regular meeting of the Dispute Settlement Mechanism. However, at the last regular meeting on August 15, although the number of WTO members supporting the speedy resolution of this issue has surged to 115, new members of the Appellate Body have emerged. There is no sign that the United States has loosened its position on the selection of personnel.

The Appellate Body is the Supreme Court responsible for adjudicating trade disputes in the WTO system.

Graham left on time on Dec. 10?

Graham has served in the Appellate Body under the WTO Dispute Settlement Mechanism since 2011. His second term of office will expire on December 10, but usually the Appellate Body judges whose term of office ends will leave office only after they have completed at least their WTO appeals.

But if Graham chooses to resign, it will accelerate the paralysis of the WTO Appellate Body by the end of the year. The reason is that, according to the relevant provisions of the WTO, each decision should be made by at least three judges, and after his departure, the WTO Appellate Body will have only two judges, and the second instance body will not be able to make a decision.

The Appellate Body is the Supreme Court responsible for adjudicating trade disputes in the WTO system. According to relevant laws, there are seven Permanent judges in the Appellate Body of WTO. However, in recent years, due to the deliberate obstruction of the United States in the initiation of the new / re-election process of the appellate body, since January 2018, there are only three justices left in the appellate body, respectively from China, the United States and India, which are also the most basic requirements for the operation of the appellate body.

Among them, the terms of office of Graham and Ujal Singh Bhatia, an Indian judge, will expire in December 2019, while that of Zhao Hong, a Chinese judge, will expire in November 2020.

Graham said in an interview in Geneva recently: No final decision has been made yet. I am closely following the progress of the situation.

Many WTO law experts interviewed by the First Financial Journalist pointed out that if the WTO appellate body as the final appellate body paralyses, it will in turn affect the panel of experts and eventually lead to the paralysis of the entire WTO arbitration mechanism.

Simply put, the principle of WTO arbitration is that the arbitration mechanism of WTO is a two-track system, the first layer is expert group, and the second layer is appellate body. If the appellate body is paralysed, most WTO appeals will become a dead cycle: usually the losing party will choose to appeal the report of the expert group, while in the case of paralysis of the Appellate body, the appeal will become a dead cycle. The final trial will never be available, and the losing party may arbitrarily reject the panel report without any restraint.

The situation of WTO is becoming more and more difficult because of the actions of the United States in recent years: on the one hand, in the past two years, only three of the seven judges of the Appellate Body are still working because of the deliberate obstruction of the selection/re-election process of the Appellate Body judges by the United States; on the other hand, it is during these two years that the number of cases accepted by WTO has increased sharply.

The first financial journalist consulted the WTO database and found that in 2016 and 2017, 17 disputes were accepted by the WTO, which is also the average value of the cases normally accepted by the WTO. However, in 2018, the number of disputes cases accepted by WTO has increased sharply to 39. According to incomplete statistics by journalists, at least 24 of them are related to the United States, and 16 cases have been added so far in 2019.

It is particularly noteworthy that according to the working rhythm and procedures of the Appellate Body, many major cases have been finalized, including the case of EU v. Boeing Subsidies to the United States (hereinafter referred to as DS353 case) and the case of Korea v. Japan on export restrictions (hereinafter referred to as DS590 case).

Among them, especially in the case of mutual suit of aircraft subsidies between the United States and Europe, the United States will receive the final ruling of WTO at the end of September this year, and retaliate against the EU with a total amount of about $11.2 billion. However, the EU must wait until the second half of 2020 before it can get the final ruling of DS353. At that time, the Appellate Body of WTO will be paralysed. The alliance will be forced to seek bilateral consultations and put itself at a disadvantage in the negotiations.

When discussing the prospects of the DS590 case between Japan and South Korea, Professor Fuyong Youxia of Waseda University also pointed out that it could only be settled through bilateral consultations based on the report of the panel of experts on the dispute settlement mechanism.

On September 30, the WTO will make another effort to open the new/re-election procedure for Appellate Body judges at the regular session of the Dispute Settlement Mechanism.

According to the First Financial Journalist, with the closing date of WTO Appellate Body approaching, the number of WTO members supporting breaking the deadlock has increased from 75 in mid-June to 115 in mid-August.

There are 164 WTO members, which means that nearly 70% of WTO members choose to express their dissatisfaction publicly.

On 15 August, Mexico, speaking on behalf of 115 members, reiterated its proposal to start the six vacancies electoral process in the Appellate Body: the four existing vacancies and the two vacancies that will occur on 10 December this year after the end of the second term of office in Graham and Bartia.

The representative of Mexico said that the large number of members submitting the proposal reflected the common concern of all parties about the current situation of the Appellate Body, which had seriously affected the operation of the Appellate Body and the operation of the dispute settlement mechanism as a whole, which was inconsistent with the best interests of the members. Members, including the European Union and Canada, expressed their support for the proposal made by the representative of Mexico.

However, the U.S. side said it could not support the appellate body to start the new member selection process, because the systemic problems previously discovered by the U.S. side have not been solved, and for 16 years the U.S. side has been pointing out its concerns about the judicial ultra vires behavior of the Appellate body.

According to the First Financial Journalist, at the meeting on September 30, in addition to the proposals to start the selection of judges in the Appellate Body, Canada and the EU will issue a joint statement to introduce the EU and Canadas proposals on interim appeal arbitration arrangements.

Earlier, at the end of July, the EU and Canada announced that if efforts to protect the appellate body from paralysis fail, the EU and Canada would establish ad hoc appeal arbitration procedures on the basis of WTO law.

Resolving the impasse in the Appellate Body remains a clear priority between the EU and Canada. If the current impasse persists, the Appellate Body will not be able to accept new appeals after 10 December 2019. Both sides said so in their statement.

The case of arbitration seems to be relatively small, so we can only go to arbitration. The advantage is that it is fast. Cheng Da, a researcher at the Institute of National Development and Strategies and a professor at the School of Economics, Renmin University of China, pointed out to the First Financial and Economic Journalist that as a temporary alternative, it is possible to temporarily help the WTO tide over difficulties, but in the long run, it is still necessary to adhere to the normative nature of the dispute settlement mechanism. Long-term and its legal status.

Source: First Financial Responsibility Editor: Guo Chenqi_NBJ9931