2.1 The Success of wto Dispute Settlement

One of the most notable features of the wto is its dispute settlement system. Its establishment in 1995 was one of the main achievements of the Uruguay Round of Multilateral Trade Negotiations (1986–1994).³ With its compulsory jurisdiction, mandatory pre-litigation consultations, appellate review, strict time frames for proceedings, and surveillance and enforcement of compliance, the wto dispute settlement system is in many respects unique among international dispute resolution systems.

Since its initiation in 1995, the wto dispute settlement system has been the most frequently used system for the resolution of State-to-State disputes. To date, wto Members have brought 618 disputes to the wto for resolution.⁴ To date, the wto dispute settlement system has been used, as a party or third party, by 111 of the 164 wto Members, and it has been used by developed and developing countries alike.⁵ While the United States (‘US’) and the European Union (‘EU’) have been the most frequent complainants (as well as the most frequent respondents), the system has often been used by other wto Members to see legal rights prevail over economic and other might.⁶ On 1 September 2023, a total of 290 panel reports and 148 ab reports had been issued and circulated.⁷ When compared with other state-to-state dispute resolution systems, such as the International Court of Justice (‘icj’) or the International Tribunal for the Law of the Sea (‘itlos’), this reveals a very high level of activity. In the period from 1 January 1995 to 1 September 2023, the icj rendered 90 judgments and 7 advisory opinions.⁸ The itlos, an international tribunal with jurisdiction limited to a specific field of international law like the wto dispute settlement system, has rendered in total 30 judgments, advisory opinions and orders of removal since its establishment in 1996.⁹ While the law applied by wto panels and the ab is highly technical, the issues raised in many wto disputes are often politically sensitive, as they concern the legality under wto law of domestic legislation and policies for the protection of core societal values and interests, such as public health, public morals, environmental protection, employment, economic development and national security. The rulings in many wto disputes have attracted much interest, receiving high praise as well as sharp criticism from wto Member governments, economic operators, and civil society. Finally, but most importantly, it should be noted that the wto dispute settlement system has not only been used frequently and has ‘produced’ many rulings on politically sensitive issues, but it also has an excellent record of compliance with its rulings.¹⁰

2.2 A Crisis Looming since Long

While in the early years of the wto dispute settlement system, wto Members often expressed their satisfaction with its functioning, there were, nevertheless, a number of crisis moments (e.g., the Helms-Burton Act national security crisis in 1997, the Articles 21.5/22.6 dsu sequencing crisis in 1999, and the amicus curiae brief crisis in 2000).¹¹ Also, while expressing satisfaction with the operation of the dispute settlement system, wto Members tabled many proposals for its reform, both before and during the early stages of Doha Round negotiations in the first half of the 2000s.¹² Some of these proposals were aimed at a further judicialization of the system, while others reflected a desire to introduce greater Member (i.e., political) control over wto dispute settlement. Note that Claude Barfield of the American Enterprise Institute, wrote in 2001 that the wto dispute settlement system is ‘substantively and politically unsustainable’ and that its powers would have to be curbed. Further, Claus-Dieter Ehlermann, the first European ab member, stated in 2002 that the wto dispute settlement system is threatened by a dangerous institutional imbalance between the weak legislative and the successful judicial branch of the wto.¹³

From the beginning of the 2010s, the wto dispute settlement came under an ever-increasing pressure. A major crisis was looming for several, related reasons.¹⁴ First, the workload of panels and the ab significantly augmented due to the increased size and the complexity of the disputes brought to the wto for resolution, while the financial and other resources made available for dispute settlement fell short. Second, the paralysis of the ‘legislative’ branch of the wto made Members seek change to wto law through adjudication, rather than negotiations. This paralysis also made it impossible for Members to ‘correct’ alleged errors by the ab in the interpretation of wto law. Third, some Members, and in particular the US, increasingly made antagonistic allegations of judicial overreach by the ab and accused it of unacceptable disregard of procedural rules, in particular the 90-day time frame for appellate review. Fourth and finally, the US took overt as well as covert action affecting the independence and impartiality of ab members, primarily in the context of the process of reappointment of ab members. While its gravity was unexpected, the current crisis had been looming for years.

2.3 The Existential Crisis

The current crisis was triggered by the blockage of the Trump administration of the process of appointment (or reappointment) of ab members. Due to this blockage, the ab, ordinarily seven strong, had only one member left on 11 December 2019 and was thus rendered unable to hear and decide any new appeals filed from then onwards.¹⁵ Subsequently, the term of the one remaining member expired on 30 November 2020. Since then, the ab has been a court without judges.

The US has blocked the appointment process because it has fundamental concerns regarding the ab and its functioning.¹⁶ The most significant of these concerns is that the ab added to or diminished the rights and obligations of wto Members under the wto agreements. It accuses the ab of ‘judicial activism’ on matters relating to anti-dumping measures, subsidies, countervailing measures, safeguard measures and technical barriers to trade. The US argues, in particular, that the ab case law limits its ability to counteract the importation of goods, which harms its domestic industry, and contends that other Members use litigation to obtain what they have not achieved through negotiation. In addition, according to the US, the ab disregarded the rules of wto dispute settlement by:

1. (1)exceeding the mandatory 90-day time limit for appellate review (without the consent of the parties);
2. (2)allowing outgoing ab members to complete work on appeals to which they had been assigned before the end of their term;
3. (3)issuing ‘advisory opinions’ on issues not necessary to resolve the dispute;
4. (4)reviewing factual findings of panels and, in particular, panel findings on the meaning of the respondent’s domestic law; and
5. (5)treating its rulings as binding precedent.

It should be noted that most of these concerns regarding the functioning of the ab had already been raised by the US under the Obama and the George W. Bush administrations respectively. However, only the Trump administration saw fit to paralyse the ab and deprive wto Members of appellate review of panel reports.

The US blockage of the appointment process of ab members, however, did not only paralyze the ab but also plunged the entire wto dispute settlement system into an existential crisis. Pursuant to Article 16.4 of the dsu, when a panel report is appealed, it can only be adopted by the wto Dispute Settlement Body (‘dsb’), and become legally binding, once the ab has completed its appellate review. To prevent adverse rulings in panel reports from becoming legally binding, the losing parties in wto disputes have since December 2019 systematically appealed panel reports to the dysfunctional ab. This has been most appropriately referred to as ‘appealing into the void’ and, as a result, most disputes brought to the wto in recent years have remained in a legal limbo, i.e., unresolved. Only five of the 29 panel reports circulated since 11 December 2019 have been adopted by the dsb.¹⁷ Twenty of the panel reports were appealed into the void.¹⁸ With regard to the remaining four panel reports, parties are still to decide whether to appeal.¹⁹ It is obvious that in view of the significant risk of disputes remaining unresolved, there are few incentives for wto Members to have recourse to the wto dispute settlement system. Not surprisingly, the number of new disputes brought to the wto for resolution in 2020, 2021, 2022 and 2023 (as of 1 September) fell to 5, 9, 7 and 4 respectively, while in 2018, it was 39.²⁰ The end of appellate review by the ab has severely undermined the effectiveness and credibility of the entire wto dispute settlement system.

3.1 The Walker Process

Faced with a possible collapse of the wto dispute settlement system, no less than 22 wto Members and the African Group tabled, in the period from November 2018 to June 2019, either individually or jointly, position papers with proposals for the reform of the ab to address the concerns raised by the US. On 26 November 2018, the EU, China, Canada, India, Norway, New Zealand, Switzerland, Australia, the Republic of Korea, Iceland, Singapore and Mexico submitted a communication to the wto General Council (wt/gc/w/752/Rev. 2) setting out proposals for amendments to wto appellate review. On the same day, the European Union, China, and India submitted a second communication to the General Council (wt/gc/w/753) setting out proposals for additional amendments, particularly with regard to institutional issues concerning the ab. However, at the General Council meeting of 12 December 2018, the US curtly rejected these proposals as not addressing the concerns it had raised.²¹ Subsequently, Honduras (in January and February 2019, wt/gc/w/758, /759, /760 and /761), Chinese Taipei (in February 2019, wt/gc/w/763 and /763/Rev.), Brazil, Paraguay and Uruguay (in March and April 2019, wt/gc/w/767 and /767/Rev.), Japan, Australia and Chile (in April 2019, wt/gc/w/768 and /768/Rev), Thailand (in April 2019, wt/gc/w/769) and the African Group (in June 2019, wt/gc/w/776) submitted position papers to the General Council setting out further proposals, varying in detail and approach, for amending wto appellate review. Some of these position papers, such as the first position paper referred to above, i.e., the paper by the European Union, China, Canada, India, and others, were rather ‘sceptical’ about the legitimacy of the concerns raised by the US and made proposals which firmly safeguarded the key features of wto appellate review. Other position papers, such as the paper by Japan, Australia and Chile, or the paper by Brazil, Paraguay and Uruguay were more sympathetic to the US concerns and proposed to alter some key features of wto appellate review. Finally, the position paper of Thailand, or the position papers of Honduras tried to strike a middle ground. In parallel with formal discussions on these proposals in the General Council, Members engaged in frequent and informal discussions under the leadership of Ambassador David Walker of New Zealand, the Chair of the wto Dispute Settlement Body (the ‘Walker Process’) in 2019. However, the US did not actively participate in these discussions and did not put forward any specific proposals for changes to address the concerns regarding the functioning of the ab it had raised.

3.2 The Draft General Council Decision on the Functioning of the Appellate Body of October 2019

In October 2019, two months before the ab was expected to become dysfunctional, the discussions among wto Members on amending wto appellate review, i.e., the Walker Process, resulted in a draft General Council Decision on the Functioning of the Appellate Body.²² As stated by Ambassador Walker, the draft Decision was aimed at ‘seeking workable and agreeable solutions to improve the functioning of the Appellate Body’, in the hope of avoiding the paralysis of the ab as from December 2019.²³

The draft Decision inter alia, addressed: (1) the US concern regarding judicial activism by stating that, pursuant to Articles 3.2 and 19.2 of the dsu, ab rulings ‘cannot add to or diminish the rights and obligations provided in the covered agreements’; (2) the US concern regarding binding precedent by stating that precedent is ‘not created through wto dispute settlement proceedings’, but that consistency and predictability in the interpretation of wto law is ‘of significant value to Members’; (3) the US concern regarding advisory opinions rendered by the ab by stating that the latter may only address issues raised by the parties to the extent necessary to resolve the dispute; (4) the US concern regarding appellate review of panel findings on the meaning of municipal law by stating that the meaning of municipal law is to be treated as a matter of fact and, therefore, pursuant to Article 17.6 of the dsu, not subject to appellate review; (5) the US concern regarding the 90-day time frame for appellate review by stating that, pursuant to Article 17.5 of the dsu, the ab is obligated to issue its report within ninety days of the notice of appeal and that this time frame can only be extended with the agreement of the parties; and (6) the US concern regarding Rule 15 of the Working Procedures by providing that only the dsb can authorise outgoing ab Members to complete the disposition of an appeal after the expiry of their term in office, provided that the hearing in the appeal took place prior to the expiry of the term.²⁴

The draft Decision was a carefully constructed compromise, which preserved the core features of the wto appellate review while addressing US concerns. It was a good-faith effort of the wto membership (minus one) to avert the crisis. However, any hope that it would be successful in doing so was short-lived. At the General Council meeting of 15 October 2019, the US rejected off-hand the draft Decision as insufficient in addressing its concerns. According to the US, wto Members failed to discuss what it considered to be the most important question, namely, why did the ab come to feel it could operate outside of its mandate?²⁵

The US position on the functioning of the Appellate Body arguably reflects: (1) its strong disagreement with especially those parts of the ab case law which, in its view, restricts its ability to protect the domestic industry from import competition by using trade remedy measures; and (2) its desire to return to a pre-wto kind of dispute settlement that would not restrain the use economic power to ‘resolve’ disputes with other countries, and especially China.

In the months that followed this statement, the United States did indeed engage in multiple bilateral meetings with other wto Members to ensure, as Amb. Pagán explained, ‘a true reform discussion’ on wto dispute settlement that ‘reflects the real interests of Members’.³²

4.1 The Multi-party Interim Appeal Arbitration Arrangement

While committed to finding a solution to the ab crisis, but, having abandoned any hope of doing so any time soon, a group of Members, at the initiative of the European Union, reached in March 2020, an agreement on the Multi-Party Interim Appeal Arbitration Arrangement, commonly referred to as the ‘mpia’.³³ The mpia, which came into effect on 30 April 2020 among 19 Members, provides for a temporary alternative procedure for appellate review under Article 25 of the dsu and is intended ‘to preserve, in disputes among Members participating in the mpia, a functioning and two-step dispute settlement process, as envisaged by the dsu’.³⁴ On 1 September 2023, twenty-six wto Members were a party to the mpia, including Brazil, Canada, China, the EU, Japan and Mexico, i.e. six of the ten most frequent users of the wto dispute settlement system.³⁵

Under the mpia, which is a political rather than a legally binding arrangement, Members commit not to appeal panel reports to the paralysed ab (i.e., agree not to appeal panel reports into the void), but instead to resort to appellate arbitration under Article 25 of the dsu.³⁶ As stated in the mpia, appeal arbitrations under the mpia are to a large extent governed, with any necessary adjustments, by the provisions of the dsu and other rules and procedures applicable to appellate review under the dsu, such as the Working Procedures for Appellate Review.³⁷ At the same time, the mpia contains some procedural innovations to enhance procedural efficiency and streamline the proceedings, such as page limits, time limits, deadlines and the length and number of hearings as well as regarding claims under Article 11 of the dsu (i.e., claims regarding a panel’s failure to make an objective assessment of the facts).³⁸

Under the mpia, appeals are dealt with by three arbitrators selected randomly from a pool of ten. This pool of ten arbitrators is made up of persons of recognised authority and demonstrated expertise.³⁹ The appeal arbitrators are to review only issues of law, may only address the issues necessary to resolve the dispute, and cannot add to or diminish the rights and obligations provided in the covered agreements.⁴⁰ Pursuant to Article 25.3, second sentence, of the dsu, the appeal arbitration awards are final and binding on the parties.⁴¹ Article 21 of the dsu, regarding the surveillance of implementation, including compliance proceedings, as well as Article 22 thereof, regarding compensation and arbitration on the suspension of concessions, apply to arbitration awards emanating from Article 25 procedures, and therefore also to mpia procedures.

In its statement on the mpia at the dsb meeting of 29 June 2020, the US objected to any arrangement that would ‘perpetuate the failings’ of the ab.⁴² According to the US, the mpia ‘incorporates and exacerbates some of the worst aspects of the Appellate Body’s practices’, and it does so by:

1. (1)weakening the mandatory deadline for completing ab reports;
2. (2)contemplating appellate review of panel findings of fact;
3. (3)failing to reflect the limitation on appellate review to those findings necessary to resolve the dispute;
4. (4)promoting the use of precedent by identifying ‘consistency’ (regardless of correctness) as a guiding principle for decisions; and
5. (5)encouraging arbitrators to create a body of law through litigation.⁴³

The US considered that ‘the numerous departures from the dsu highlight that at least some Members prefer an appellate ‘court’ with expansive powers, instead of the more narrow appellate review envisioned by Members in the dsu’.⁴⁴

4.2 Appeal Arbitration under the mpia and Otherwise to Date

The mpia entered into force in May 2020. The first recourse to appeal arbitration under the mpia was, however, only in October 2022, when Colombia appealed the panel report in Colombia – Frozen Fries (ds591) (complaint by the EU).⁴⁵ In earlier disputes between mpia parties, such as Canada – Wine (ds537) (complaint by Australia) or Costa Rica – Avocados (ds524), the parties either reached a mutually agreed solution or the panel report was not appealed. The appeal arbitrators in Colombia – Frozen Fries circulated their award on 21 December 2022.⁴⁶

As noted above, appeal arbitration under the mpia ‘will be based on the substantive and procedural aspects of Appellate Review pursuant to Article 17 of the dsu’, but also provides for some novelties to enhance the procedural efficiency of appeal proceedings. The question thus arises of how much of the appeal arbitration procedure, as it was applied in Colombia – Frozen Fries, differed from the appellate review procedure under Article 17 of the dsu.⁴⁷ One must note that the appeal arbitrators issued their award within 74 days of the filing of the notice of appeal, i.e., well within the mandatory 90-day timeframe, and that the report was only 39 pages long. During the last ten years of its operation, the ab seldom managed to respect the 90-day timeframe and its reports were always much longer. Pursuant to paragraph 12 of the Agreed Procedures in Colombia – Frozen Fries, the arbitrators set a word limit on the appellant and appellee submissions of 27,000 words or 40 per cent of the word count of the appealed panel report, and on third participant submissions of 9000 words.⁴⁸ Such word limit on submissions may be helpful as it obliges parties to focus on the essence of their arguments on appeal. However, it may also necessitate the later filing of additional memoranda to clarify and elaborate arguments which were underdeveloped in the submissions.⁴⁹ The arbitrators in Colombia – Frozen Fries also set time limits of 30 to 35 minutes and 7 minutes on oral statements of the participants and third participants respectively.⁵⁰ This is, however, merely the continuation of a long-established ab practice.

Pursuant to paragraph 13 of the Agreed Procedures in Colombia – Frozen Fries, the appeal arbitrators also invited Colombia and the EU ‘to consider refraining from making [Article 11] claims’.⁵¹ The consideration of such claims that the panel failed to make an objective assessment of the facts, was notoriously time-consuming for the ab. In the event that a party would nevertheless decide to bring Article 11 claims, that party was requested to ‘set forth succinctly’ in its appeal: (1) whether and how the alleged panel error was raised before the Panel, in particular during the interim review stage; (2) in what way the Article 11 claim is an issue necessary for the resolution of the dispute; and (3) in what way the alleged panel error is not simply an appreciation of a factual issue (within the exclusive domain of panels).⁵² Colombia refrained in its appeal from making any Article 11 claims of error. However, whether this is because it was discouraged to do so by the arbitrators is an open question. Under paragraph 13, appeal arbitrators cannot prevent or prohibit parties from making Article 11 claims, but paragraph 13 may nevertheless be useful in limiting such claims by rendering it more onerous to make them.

Another noteworthy procedural novelty in the appeal arbitration procedure in Colombia – Frozen Fries is the pre-hearing conference. This pre-hearing conference was convened by the arbitrators six days before the actual hearing. The purpose of this pre-hearing conference was to assist the arbitrators in identifying the issues to be addressed at the hearing, and to avoid issues that are not within their mandate, were not necessary for the resolution of this dispute, or where not contested between the parties.⁵³ Also, the pre-hearing conference gave the arbitrators an opportunity to signal to the parties what they would like the parties to focus on at the hearing. Time will tell how useful such pre-hearing conferences are in narrowing down the issues that need to be discussed at the hearing.

The word limits on submissions, discouraging of Article 11 claims and the pre-hearing conference may all have contributed to the fact that the appeal arbitrators in Colombia – Frozen Fries were able to issue a short award in record time.⁵⁴ However, it should be noted that the appeal in Colombia – Frozen Fries was a small appeal in a dispute on one single measure raising only a few issues of limited complexity. It remains to be seen whether these procedural innovations will work as well in much larger appeals raising more complex and politically more sensitive issues. Also, small is not always beautiful and fast is often dangerous, certainly in the convoluted world of international trade disputes.

At present, there are eight disputes between mpia parties in which Agreed Procedures for Arbitration under Article 25 of the dsu have been adopted, and in which, if the panel report is appealed, appeal arbitration under the mpia will allow a dispute to be brought to a legally binding conclusion.⁵⁵ Whether the procedural innovations in the Colombia – Frozen Fries will also lead to shorter and faster reports in these cases, some of which are much more complex and politically sensitive, remains to be seen, but it is certainly worthwhile to try it out and, where necessary, further develop these and other procedural innovations.

Finally, it should be noted that apart from appeal arbitration under the mpia, appeal arbitration can also be made available on an ad hoc basis under Article 25 of the dsu in disputes involving one or more wto Members, which are not mpia parties. In EU – Steel Safeguard Measures (Turkey) (ds595) and Turkey – Pharmaceutical Products (EU) (ds583), the EU and Turkey (which is not an mpia party) agreed, in the course of the panel proceedings, that they would not appeal the panel reports to the paralyzed ab, but would instead, in case of an appeal, have recourse to ad hoc appeal arbitration under Article 25 of the dsu. The procedural rules for ad hoc appeal arbitration agreed to by the EU and Turkey in these disputes were almost identical to the rules under the mpia. However, there was one exception which related to the appeal arbitrators. In EU – Steel Safeguard Measures (Turkey) the arbitrators would be two former ab members and in Turkey – Pharmaceutical Products (EU) the reverse. Only the panel report in the latter case was appealed. The arbitrators in this appeal circulated their Award on 25 July 2022.⁵⁶ At the dsb meeting of 29 August 2022, the US, while observing that the Agreed Procedures for Appeal Arbitration between the EU and Turkey ‘provided for an arbitration that incorporated many of the most troubling practices of appellate review under the Appellate Body’, it nevertheless welcomed ‘the agreement of the parties on a way forward in this dispute’.⁵⁷

5.1 Main Features of the Molina Process

As mentioned above, the wto Members committed themselves, at the Twelfth Ministerial Conference in Geneva in June 2022, to conduct discussions ‘with the view to having a fully and well-functioning dispute settlement system accessible to all Members by 2024’.⁵⁸ While not much happened during the first six months after the Ministerial Conference, since February 2023, there have been frequent small-group and larger-group meetings of Members to discuss how to revive the wto dispute settlement system, and thus fulfil the June 2022 ministerial mandate. These informal meetings have been convened – at the request of a group of wto Members – by Marco Tulio Molina, the Deputy Permanent Representative of Guatemala to the wto, and are therefore commonly referred to as the ‘Molina Process’. As an indication of the intensity of this Process, in April and May 2023, Molina held no less that 57 meetings.⁵⁹ The ambition of Molina is to find ‘practical solutions’ to the wto dispute settlement crisis by the Ministerial Conference to be held in Abu Dabi in February 2024.⁶⁰

The Molina Process is different in several respects from the Walker Process, the informal negotiations conducted in 2019 to avert the paralysis of the ab. First, the Molina Process addresses the functioning of the entire wto dispute settlement system, and not only the functioning of the ab, as was the case for the Walker Process. This is a positive development, as many of the (real or perceived) problems with appellate review have their origin in, or are related to, problems with other elements of the wto dispute settlement. Second, unlike the Walker Process, the US is an active participant in the Molina Process. It is obviously only with the active participation of the US, that there can be any hope to overcome a crisis triggered by the US. Third, while in the context of the Walker Process, many Members, either individually or collectively, tabled position papers, which were publicly available, the 70-plus proposals made by Members in the context of the Molina Process are kept confidential. At the dsb meetings in March, May, and July 2023, Molina briefed, in general terms, wto Members on the informal meetings convened by him, but did not give any specific information on the reform proposals tabled by the Members.⁶¹

At the dsb meeting of 28 July 2023, Molina reported that Members had continued to ‘actively participate in the intense programme of meetings’ on dispute settlement reform, and had reached ‘an understanding on 80% of the issues under consideration’.⁶² According to Molina, these issues were ripe to move to the drafting process, which was to start over the summer break.⁶³ Another 10% of the issues under consideration were ‘close to reaching the level of maturity needed for the drafting process’.⁶⁴ However, on the remaining 10%, Molina reported that Members ‘still hold different conceptual views about how to tackle them’. He did not indicate which these highly controversial issues were but announced that he would continue his consultation efforts after the summer break with the aim of reaching a common understanding on these issues.⁶⁵ Molina reported to the wto Members that he was ‘convinced that despite the conceptual differences, members can find a solution at the technical level that can reconcile their interests and concerns’.⁶⁶ One would, of course, expect Molina to strike an optimistic tone, but wonders whether his optimism is justified.

5.2 Will the Molina Process Be Successful?

On a number of issues on the reform agenda, such as the use of alternative dispute resolution (adr) methods and the streamlining of the panel process, there may indeed be a growing consensus.⁶⁷ However, if the reporting from Ravi Kanth of The Third World Network, in April and June 2023,⁶⁸ on some of the core reform proposals of the US and the reactions of other Members to these proposals is accurate, the resolution of the wto dispute settlement crisis is still a long way off. Not surprisingly, the most controversial US proposal relates to the appellate review in wto dispute settlement.

First, the US would want to make appellate review optional. While it reportedly does not provide any details on how exactly this would be achieved, the general idea would be that a panel report could only be appealed when both parties would agree on this. Also, appellate review would no longer be done by a standing body, as the ab, but by an ad hoc review adjudicator or adjudicators selected via a mechanism agreed by the parties. It is unlikely that there will be many cases in which both parties will agree to allow for appellate review. In all but a few cases, one of the parties considers itself to be the ‘winner’ at the panel stage and will not initiate appeal proceedings which may endanger this ‘win’. It is a fact that in many ab proceedings, the ‘winning’ party cross-appealed some panel findings it did not agree with, but this party would not have cross-appealed in the absence of an appeal initiated by the ‘losing’ party. Moreover, in the (very) few disputes in which both parties would agree on appellate review, the parties would subsequently have to agree on whom to appoint as review adjudicator(s). It is unclear whether in case of disagreement between parties on the review adjudicator(s), it would be for the wto Director General to appoint her/him(them). More importantly, appellate review by an ad hoc adjudicator or adjudicators would not ensure the consistency of the case law, which is one of the main functions of appellate review. The EU and other major players in the wto, including China, Brazil, and India, have stressed that the wto dispute settlement system must be a system providing for effective appellate review of panel reports. A wto dispute settlement system providing for voluntary appeal review by an ad hoc adjudicator or adjudicators is therefore unlikely to be acceptable to them.

Second, adding insult to injury, the US reportedly proposes to reduce drastically the scope of appellate review. Pursuant to Article 17.6 of the dsu, the scope of appellate review by the ab comprises all ‘issues of law covered in the panel report and legal interpretations developed by the panel.’ The US proposes to limit appellate review to instances in which the appellant contends that the panel: (a) was guilty of gross misconduct, bias, or serious conflict of interest, or otherwise materially violated the rules of conduct; (b) seriously departed from a fundamental rule of procedure; or (c) manifestly exceeded its powers, authority or jurisdiction, and any of these acts by the panel materially affected the decision and threatens the integrity of the process. This is not truly an appellate review as it will not allow parties to challenge a panel’s interpretation and application of wto law but is much more in the nature of an annulment procedure, as it exists in icsid arbitration. Note, however, that under icsid rules, there are more and broader grounds for annulment than the US proposes. As this would only be an appellate review in name, this proposal on the scope of appellate review is, as the proposal on voluntary appellate review, unacceptable for the EU and many other wto Members.

Among the other reported proposals of the US, there are some that may receive a more positive reception from other Members. This is the case, for example, for the proposal to improve, and give more importance to, the interim review of panel reports, in the hope that this would allow for, and encourage, parties to settle disputes before a panel adopts and makes its final report public. Such an improved interim review would also empower panels to make better decisions as parties would point out mistakes and shortcomings in the interim report, which the panel could then subsequently address. While giving more importance to interim review would be useful, many Members may mistrust the US’ undeclared goal when making this proposal. Is it the US’ aim to reduce the instances in which panels clearly and publicly pronounce on what is and what is not wto-consistent, and increase the instances in which disputes do not get resolved on the basis of the law but through negotiations in which the US can fully exploit its economic and other powers?

Truly puzzling is the US proposal to give Members more power to correct what it considers erroneous interpretations of wto law, i.e., interpretations that add to or diminish the rights and obligations of Members. Already now, Members have the authority, pursuant to Article ix:2 of the wto Agreement, to adopt ‘authoritative interpretations’; pursuant to Article xii to amend existing provisions; or, finally, pursuant to Article ix:1, to adopt new rules. To date, Members have made no use of this authority to correct erroneous interpretations by the dispute settlement bodies, because the consensus among Members to correct the interpretations was always lacking. While the losing party in a dispute may consider certain interpretations of wto law to be erroneous, it is unlikely that the winning party in that dispute shares that opinion and joins the consensus to overturn an interpretation favorable to it. It is unclear how US wants to give more power to Members to correct what it considers wrong interpretations of wto law. But it is safe to assume that it would not advocate abandoning the firmly established wto practice of taking decisions by consensus.

The US has reportedly also advocated changes in the rules on panel composition and the Rules of Conduct so that only panelists with the appropriate level of expertise and integrity would serve on panels. No Member would disagree that panelists must have these qualifications, but many would argue that the integrity of panelists has certainly not been a problem in the past and that there is, therefore, no need for any rule change. With regard to the role of the wto Secretariat in supporting wto adjudicators, it has been reported that US wishes to limit that role to the administration of the proceedings and legal support that is responsive to the submissions of the parties (i.e., no ‘creative’ thinking on what the correct interpretation of the legal provision at issue is). Most surprisingly here is, however, that US calls for more legal expertise at the Secretariat. The wto Secretariat lawyers arguably constitute the most experienced group of international trade lawyers anywhere. Many wto Members are likely to consider this US proposal as a call for more lawyers who share the US government’s position on the interpretation and application of wto law.

Finally, the US has reportedly proposed to exclude, from the jurisdiction of the wto dispute settlement system, disputes relating to measures adopted for the protection of national security. The mere invocation of the national security exception would then place a challenged measure outside the reach of rules-based adjudication. While such limitation of jurisdiction may be appealing to some wto Members, other Members may be expected to object strongly to such limitation as it would give Members a blank cheque to adopt any trade restrictive measure they wish.