The USA and Re-Appointment at the WTO: A ‘Legitimacy Crisis’?

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In recent weeks, it has been reported (for example, here, here, here and here) that the WTO faces a ‘legitimacy crisis’ in the wake of US opposition to the re-appointment to a second, four-year term of Mr Seung Wha Chang (South Korea) to the Appellate Body. In a joint statement of 12 May, US Permanent Representative to the WTO, Ambassador Michael Punke, and USTR General Counsel Tim Reif declared:

The United States is strongly opposed to appellate body members deviating from their appropriate role by restricting the rights or expanding trade agreement obligations […] The United States will not support any individual with a record of restricting trade agreement rights or expanding trade agreement obligations.

In their view, the Appellate Body member exceeded his powers during his mandate, and breached Art. 3(2) of the Dispute Settlement Understanding, which states that ‘[the] Appellate Body cannot add to or diminish the rights and obligations provided in the [agreements of the WTO].’ In other words, Mr Chang is accused of undue judicial activism.

In response, South Korea has reportedly declared its opposition to the re-appointment of any Appellate Body members. As a result, their number would fall from seven to five by June, since another member, Ms Yuejiao Zhang (China), finishes her second term on 31 May, and the Selection Committee has been unable to propose a candidate that would enjoy the membership’s consensus. All six sitting members of the Appellate Body have publicly supported Professor Chang (see here) praising his ‘independence and integrity’ and voicing their disquiet about the implications of the US position. The USA has chastised this move as another instance of undue judicial interference.

This standoff raises questions of general interest on procedures for the appointment of ‘judges’ – WTO Appellate Body members are not labelled ‘judges’, though this is arguably somewhat sophistic. As co-rapporteurs of the newly-created International Law Association Committee on the Procedure of International Courts and Tribunals we are involved in a four-year project to investigate the potential for procedural reform at inter-State courts and tribunals, including the WTO Dispute Settlement Mechanism.

The (Re)-Appointment Procedure

Appellate Body members are appointed by the Dispute Settlement Body (Art. 17(2) of the DSU), which comprises the representatives of all 162 WTO Members. DSB decisions are taken by consensus (Art. 2(4) DSU): the formal objection of any Member can block any appointment or re-appointment. Conversely, and as explored in the studies here, here and here, the judges of international courts and tribunals are typically constituted by appointment and/or election. Although appointment and/or electoral procedures raise other problems, they do offer the relative advantage of (usually) producing decisive outcomes.

Customarily, re-appointment of a sitting member of the Appellate Body is routine except in case of misconduct or infirmity; the WTO Rules of Conduct 1996 prescribe ethical rules on, inter alia, conflicts of interest and confidentiality. An important distinction between panellists and the Appellate Body members is that the former are barred from sitting on cases involving their State of nationality, whereas the latter are not. Appellate Body members, therefore, might directly displease their States of nationality; this was ostensibly the rationale behind the US refusal to support the re-appointment of Jennifer Hillman, a US member of the Appellate Body, in 2011.

Theoretically, the potential for WTO members to block candidates is high. One State can veto a particular candidate (the US position) or even block all candidates (the South Korean position). These vetoes would create a sede vacante situation. On the one hand, it could be said that the non-zero-sum nature of the veto power means that the likelihood of the present scenario arising is remote. This flows from the fact that the US position is tactically futile, as the South Korean counter-move arguably shows.

Criteria for (Re)-Appointment

Since the Appellate Body sits in three-person divisions, it is interesting that the USA has targeted Mr Chang. In its statement to the DSB of 23 May (see here at pages 11-19) they asserted, inter alia, that ‘the reports on which [Mr Chang] participated do not accord with the role of the Appellate Body.’ The USA cited the following cases:

  1. Argentina — Measures Relating to Trade in Goods and Services (Panama v. Argentina) (Case DS453, Appellate Body report of 14 April 2016).
  2. India – Measures Concerning the Importation of Certain Agricultural Products from the United States (USA v. India) (Case DS430, Appellate Body report of 20 March 2015).
  3. United States — Countervailing Duty Measures on Certain Products from China (USA v. China) (DS437, Appellate Body report of 18 December 2014); and
  4. United States — Countervailing and Anti-dumping Measures on Certain Products from China (DS449, Appellate Body report of 7 July 2014).

The US objection to Mr Chang is therefore stated to be based not on his voting record but rather upon (to paraphrase) his ostensibly ‘activist’ judicial technique. The essence of the US complaint is that he is alleged to have gone well beyond the issues necessary to decide the case and as argued by the parties in order to develop the law as he saw fit, producing unnecessarily verbose judgments riddled with obiter dicta in the process.

Yet, in the four reports cited by the USA nothing in the public record suggests that he was particularly responsible for the ‘activist’ aspects of the reports in question. Of the other panellists who served with Chang in the four cases (Van den Bossche, Zhang (thrice), Bhatia (thrice), Servansing) only Servansing is vulnerable (in 2018) to a re-appointment objection as the others are already into their second terms. On this point, the USA retorts:

We have also heard an argument that it is inaccurate to hold an individual Appellate Body member accountable for the reports that he signs because others have also signed the same report. The suggestion appears to be that because more than one person expresses the same views, none of the members should be held responsible for endorsing those views. This is not how the system works and does a disservice to each Appellate Body member who has worked hard to be sure that a report accurately reflects their views. In fact, in a number of instances an Appellate Body member has provided separate, individual views in a report.

The USA also maintains that the questions posed by Mr Chang during the hearings showed that certain objectionable excerpts of the Appellate Body’s reports were ultimately attributable to him.

At the DSB meeting of 23 May 2016 (summary minutes here), several WTO Members questioned the US attempt to attribute to an individual member the views of an Appellate Body division. This critique challenged the credibility of their motives. Several other States were more direct and blamed the US for retaliating against unfavourable decisions – in spite of the US reassurance that outcome did not matters. These Members clearly had in mind the infinite controversy involving the USA and ‘zeroing’. Brazil suggested moving to a longer single mandate to avoid undue interferences at the re-appointment stage.

A Single-Term System?

The chair of the DSB noted that further consultations were necessary to exit the deadlock. Recourse to diplomacy reveals the structural limits of the applicable procedural rules; the immediate standoff at the Dispute Settlement Body can only be resolved by one side or the other lifting their veto. Regardless of the immediate outcome concerning Mr Chang, we suggest that the negotiators could usefully consider two systemic reforms that would help to preclude such scenarios recurring while also promoting judicial independence: 1) a switch to a single-term system (e.g. of six years’ duration) as already proposed by Brazil; and 2) an extension of the ban on nationals sitting on cases affecting their State to the Appellate Body.

The concerns about the US position stem from the fear that the blocking of re-appointment due to displeasure concerning decision-making would condition judicial behaviour. Members might adopt more cautious positions on the law, inhibiting its progress with the times and thereby raising systemic costs. This factor is nothing new; for a discussion on the ‘limits of law-making’ by international judges with particular reference to the Appellate Body, see the aforementioned study here at pages 127-130.

The alternative solution is to introduce an electoral system instead of appointment; the USA makes a valid point when it says that the existing system (de facto automatic re-appointment) provides scant scope for WTO Members to express dissatisfaction with the performance of individual members. An electoral element might allow for these qualms to be expressed and would reflect the reality that such appointments inevitably have a political dimension: witness, for example, the tradition that the USA, EU and ‘Asia’ (Japan/China) always have a national on the Appellate Body. This arrangement is similar to the longstanding allocation of ICJ judgeships according to UN regional groupings with the permanent five members of the Security Council each ‘entitled’ to a judge; the same regional system is also used at the International Criminal Court. Election offers two benefits: 1) opposition to a candidate can be voiced without potentially arresting the entire system; and 2) a decisive outcome on each nomination is assured.

However, election is no panacea; anyone familiar with the murky, hybrid systems of national nomination/international nomination/election process for judgeships at the International Court of Justice or the national nomination/international vetting/election procedure for judgeships at the European Court of Human Rights – for instance – could point out flaws. Recent initiatives at the International Criminal Court and the European Court of Human Rights to introduce quasi-professional committees at the international level to vet nominees for judgeships are telling. Such committees usually have only advisory status, perhaps reflecting an inbuilt reluctance of politicians and diplomats to cede power over the process to professionals.

The switch from a two-term to a one-term limit was enacted in 2010 for the election of judges to the European Court of Human Rights with the entry into force of Protocol No. 14. Although the change is a welcome development, it did not address the pressure of subsequent employment, particularly in a field in which governmental patronage is crucial; some former Strasbourg judges have reportedly encountered difficulty in securing subsequent employment. The relatively low average age of Strasbourg judges, leaving greater scope for post-Strasbourg careers, plays a role. At the ICJ, where judges are older on average, there is no realistic prospect of change to the unlimited term system and there certain failed (and, perhaps, successful) re-election bids could be at least partly attributable to the way judges have behaved on the bench.

A single-term system could eliminate the inbuilt pressure for re-appointment based on perceptions by WTO Members of individual performance, yet it would not eliminate the potential for indirect pressure with respect to post-WTO career expectations. The extension of the nationality ban on individual cases to the Appellate Body would mitigate that pressure by removing the potential for an individual panellist (e.g. – the Jennifer Hillman example) to be directly involved in cases affecting their country of nationality.

Yet, objections to their judicial technique or philosophy could also, as in this case, be deployed against them should they have aspirations (for example) to join other international institutions and/or to serve at home. Nowadays, it is possible to build an international judicial career; there are several multi-institutional judges, not to mention the range of ad hoc judges and arbitrator crossovers. Although the politicisation of judicial appointments can be reduced through such procedural measures, it cannot be eliminated. The encroachment of professionals into the systems of appointment/election at other international courts and tribunals is a nascent trend and diplomats remain reluctant to relinquish their control. The procedural reforms that we propose cannot eliminate the risks to judicial careers, yet they can certainly reduce them while also eliminating the risk of systemic arrest that the WTO now faces. Negotiators in the standoff should not allow this crisis to go to waste.

The views expressed in this post are those of the authors alone and are not to be attributed to others.

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Dr Arman Sarvarian says

May 27, 2016

Please read the post here:

Debra Steger says

May 30, 2016

The Appellate Body has functioned as well as it has for over 20 years because of its small size and because the 7 members do not identify with their home countries in any way. The principle of collegiality works, and the Appellate Body members truly believe that they are responsible to the WTO membership as a whole, not to a particular WTO Member or constituency (like UN courts and the ECJ). If the appointment system was changed to make it more like the UN or ECJ, decision making in the Appellate Body would take far longer than 90 days, would be far less consensual, and would be less consistent. The idea of prohibiting nationals from sitting on cases involving their home countries would not work in the Appellate Body. Why? Three out of the 7 Appellate Body Members are from the three biggest users of dispute settlement: the US, the EU and China. Those three WTO members are involved in almost every case, if not as a party, as a third party. How could a division be composed without involving those three members? The other four ABMs would have to hear all the cases. As they are often from India, Korea, Japan and other major users, it would be impossible to compose divisions randomly, impartially and fairly - as required by the DSU. Expanding the number of ABMs is also not a solution because it would affect collegiality, the ability to decide within the punishing 90 day time limit required by the DSU, consistency, and the need to produce high quality decisions. One longer, non-renewable term, however, is an excellent idea which I have also recommended in recent publications. The UN Appeals Court has one, non-renewable term for its judges of 7 years. The ICJ has a term of 9 years, renewable.

Arman Sarvarian says

June 4, 2016

Thank you Professor Steger for your comments. I acknowledge the practical and political difficulties involved in extending the nationality ban to the AB. The biggest users of the system have no 'right' as such to a national on the AB, though as a political matter it would be difficult to deny them their de facto expectation. Perhaps expansion of the ABM while keeping three-member panels would enable the requirement of random composition to be met. I defer to your knowledge of the collegiality and deadline factors, though to an outsider there appears to be no obvious reason why a moderate expansion of the membership (e.g. - to eleven members) should disrupt this, given that panels would still be composed of three members.

Your objection of the major users being involved in most cases is a powerful one. I note that the major users' ABM would retain capacity to influence cases involving other major users, if not their own States (e.g. - the US Member on a case affecting Japan). So it is not as if their Members would become lame ducks overnight; they would only refrain from sitting on cases affecting their own State.

It may well be that you are right and the politics of this idea are not practicable. Yet, I note that the current system is not a solution either, as the Jennifer Hillman case illustrates. In addition, even if the re-election pressure on an ABM is removed by a switch to a single-term system, the post-ABM career pressure remains intact by virtue of being able to sit on cases in which their State is party. It is that issue that the nationality ban idea seeks to remedy.