Who controls WTO dispute settlement? Reflections on the Appellate Body’s crisis from a socio-professional perspective

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Last month marked a crucial moment in the history of the World Trade Organization (WTO)’s dispute settlement system. On 10 December 2019, the terms of office of Appellate Body (AB) members Ujal Bhatia and Thomas Graham came to an end, thereby leaving the World Trade Court without the minimum complement of adjudicators necessary to carry out its functions.

As is well known, this paralysis was triggered by the United States (US)’ consistent veto on the appointment of new appellate judges, justified on grounds of the court’s ‘overreach’, its undue reliance on ‘precedent’, and its alleged disregard for the rules set forth under the Dispute Settlement Understanding (DSU). In November 2019, the US doubled down by threatening to freeze the WTO’s 2020 budget absent draconian cuts to the AB’s funding. Predictably, this prompted the vehement reaction of numerous other Members, which accused the US of holding the WTO appellate system hostage of its own concerns.

Much has been written about this institutional crisis. Yet, the notion of ‘crisis’ deserves some further… critical examination. The very utterance of the word is seldom value-neutral, but rather reflects the perceptions, the preoccupations, and sometimes the agenda of the utterer. If it is indeed true that the World Trade Court is at a critical juncture, then it bears asking: critical for whom? Who are the actors involved in the struggle? How do they articulate their claims and pursue their strategies? To what ends? And who stands to gain and who to lose from the present impasse?

The WTO as a conflictive socio-professional field

Scholars tend to appraise the ongoing conflict in either of two ways. Some consider it as a normative disagreement over the appropriate boundaries of WTO adjudication vis-à-vis the regulatory authority of Members. This narrative typically focuses on the extent of the AB’s implicit powers, the role of past jurisprudence in its legal interpretations, the viability of alternatives to the appellate process, and the like. Others conceive the conflict as part of a struggle for political supremacy against the evolving landscape of international economic relations. This narrative tackles issues like US-China trade wars, the breakdown of multilateralism, the resurgence of sovereigntist economic policies, etc.

To complement these accounts, I suggest that the ongoing struggle surrounding the AB reflects a confrontation between competing socio-professional groups within the WTO legal field. The multilateral trade regime is not only a legal or a political construct. It is also the site of a contest among social actors endowed with unequal professional and technical capital, who compete for supremacy in the system. To prevail in this struggle is to secure one’s authority, impose one’s vision of the law as the dominant paradigm—in one word, to control WTO dispute settlement. Exploring the interplay and power relations among the various socio-professional actors involved in WTO adjudication is, therefore, key to understanding understanding the tensions that currently agitate the field.

Seen from this angle, the competing factions striving for control are not the US vs. other WTO Members, not economic populism vs. technocratic integration – but, rather, the outer vs. the inner circle of international trade practitioners.

The broad group of official stakeholders

In the former camp, we find the official stakeholders in the system—foreign ministries, heads of delegation, etc.—who, having designed the architecture of the dispute settlement mechanism, continue to exercise some political oversight over its activities. Among other things, these actors engage in complex (if recently fruitless) diplomatic negotiations for the appointment of new AB members; comment on the content of reports during diplomatic meetings; are empowered to issue authoritative interpretations of the rules contained in the covered agreements; set the agenda for institutional reform; and the like. These various forms of control ensure the continued engagement and goodwill of official stakeholders vis-à-vis WTO adjudication, while making them the ultimate arbiters of the legitimacy of the system.

At the same time, this class of actors has a relatively limited say on the day-to-day outcomes of the adjudicative process. On the one hand, the formal decision-making procedures of the WTO make it difficult for trade diplomats to take concerted action and mandate specific legal conclusions. On the other hand, the compulsory jurisdiction accorded to panels and the AB under the DSU shields the content of reports from overt political interference. Hence, official stakeholders have traditionally served as the external audience of WTO adjudicators—a looming presence that observed the unfolding of the dispute settlement process from a certain distance and intervened only when the circumstances so required.

The small club of professional trade litigators

On the other side of the fence, we find the inner circle of professional trade litigators. A tight community of dispute settlement practitioners—comprising panelists, AB members, government lawyers, law firms, Secretariat staff, and specialized academics—has emerged over the years which is in charge of running the WTO judicial machinery in its routine operations. This exclusive club of legal experts has progressively developed a set of assumptions, disciplinary practices, and sensibilities that have profoundly shaped the form, ethos, and role of trade adjudication.

Ostensibly, the various participants in the professional community occupy well-defined positions and compete with one another for relevance and persuasiveness. Government litigators and private attorneys routinely present panels and the AB with factual and legal arguments through submissions and pleadings; Secretariat officers assist the adjudicators by conducting legal research, circulating internal memoranda (called ‘issues papers’), attending deliberations, and drafting the final reports; trade scholars dissect the minutia of rulings, identify patterns in jurisprudence, and suggest solutions going forward.

In practice, however, the boundaries between these roles are often more porous and less defined than they first appear. The members of the club strive to maintain a dense network of personal contacts and friendly professional relationships. A revolving door exists between the bench, the Secretariat, government departments, law firms, and research centres. Throughout their careers, trade law practitioners swap affiliations frequently—and sometimes even don multiple hats at once.

Importantly, the members of the inner circle are driven by different interests from those of official stakeholders. While the latter play the dispute settlement game in pursuit of their national interests (and possibly on behalf of their domestic industries), the former derive their reputation and prestige from the smooth and efficient functioning of the dispute settlement mechanism itself. Thus, although trade practitioners may disagree over the substance of this or that case, they all share a self-interest in defending WTO adjudication, extending the reach and pervasiveness of its powers, and constantly reasserting its ‘courtness’.

When circles collide…

Thanks to its cohesiveness and esprit de corps, the inner circle has achieved considerable influence and managed to largely insulate its internal practices from external interference. The same handful of counsel appear at most panel and AB hearings alongside their state clients; the Secretariat’s importance as the ‘guardian of jurisprudence’ has steadily grown over time; scholarly production in the field is densely populated by authors who have direct or indirect stakes in the WTO judicial system; and so forth. Arguably, these practices are so pervasive that the community of trade litigators has progressively replaced official stakeholders as the immediate audience of WTO adjudicators. When a panel or the AB issues a ruling, it is perhaps ‘speaking’ more directly to the professionals operating in the field—government lawyers, private attorneys, Secretariat divisions, academics, etc.—than to the broad WTO Membership.

At the same time, this socio-professional closure has been met with increasing concern by some official stakeholders, who feel excluded from the day-to-day business of WTO dispute settlement. If this is true, then the ongoing offensive against the AB could be seen as a radical attempt by some powerful Members (in primis the US) to take back control of a process that has long eluded them. In this sense, it is no surprise that a recurring theme underlying recent diplomatic talks is the role of the AB Secretariat vis-à-vis appellate judges. This backlash poses a formidable threat to the community of trade litigators, which is mobilizing to anticipate future developments and mitigate their impact on its career prospects. Tellingly enough, one of the most credible proposals for reform of appellate proceedings found its origin not in a Member state delegation, but rather in a preeminent trade law firm.

Only time will tell how this socio-professional struggle will unfold and how it will transform the WTO field. One thing, however, seems certain: neither faction will be able to control the system alone, without a modicum of support from the other side. Official stakeholders will continue to need trade legal experts to handle the technical complexities of trade adjudication; experts will continue to need some political accountability to maintain their legitimacy in the long haul. Hence, unless the inner and the outer circle of trade professionals engage in a frank and constructive exchange, it is highly unlikely that the WTO will come out of its—okay, let’s use the word—crisis.


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Kishor Dere says

January 16, 2020

Thank you Dr. Tommaso Soave for highlighting the unique role of competing socio-professional groups within the WTO
legal field. It is quite likely that they would all ponder over the current struggle in/around the AB and gradually build a coalition of public-spirited WTO stakeholders.