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From Afterthought to Centerpiece: the WTO Appellate Body and Its Rise

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From Afterthought to Centerpiece: the WTO Appellate Body and Its Rise Allrightsreserved. Nopartofthispapermaybereproducedinanyform withoutthepermissionoftheauthor(s). ThisWorkingPaperseriesfromtheFacultyofLaw,UniversityofMaastricht,aimstofurther excellenceinscholarship.ItallowsMaastricht-basedauthorstobringtheirwork-in-progressto awideaudience,facilitatingfruitfuldiscussionandcriticalinputonnascentideasandprojects tothebenefitofbothauthorandreader.Tothisend,readersareencouragedtotreattheseries asinteractiveandtocontactauthorswiththeircomments. Thosewishingtosubmitpapersforconsiderationareinvitedtosendworkto [email protected] . Oursubmissionguidelinesandfurtherinformationareavailableat http://www.unimaas.nl/maastrichtworkingpapers ©PeterVandenBossche PublishedinMaastricht,October2005 FacultyofLaw UniversiteitMaastricht Postbox616 6200MD Maastricht TheNetherlands Authoremail:[email protected] ThispaperistobecitedasMaastrichtFacultyofLawWorkingPaper2005/1 1 FromAfterthoughttoCenterpiece TheWTOAppellateBodyanditsRisetoProminence intheWorldTradingSystem PeterVandenBossche 1 TableofContents 1 Introduction .................................................................................................................... 3 2. TheHumbleOriginsoftheAppellateBody .................................................................. 4 2.1 UruguayRoundnegotiationsondisputesettlement............................................... 5 2.2 EstablishmentoftheAppellateBody..................................................................... 7 3. TheRoadtoProminence.............................................................................................. 13 3.1 CompositionoftheAppellateBody..................................................................... 14 3.2 WorkingProceduresforAppellateReview .......................................................... 16 3.3 EmbracingtheViennaConventionrulesoftreatyinterpretation ........................ 19 3.4 Frequentandbroadrecoursetoappellatereview................................................. 22 3.5 Usemadeoftheauthorityofappellatereview..................................................... 27 3.6 CaselawoftheAppellateBody........................................................................... 32 4 Conclusion.................................................................................................................... 37 Abstract This paper deals with the Appellate Body of the World Trade Organization and its rise to prominence in the world trading system. The Appellate Body was not conceived by the UruguayRoundnegotiatorsasthecenterpieceoftheWTOdisputesettlementsystem.Itwas more an afterthought, linked to the introduction of the quasi-automatic adoption of panel reportsunderthenewdisputesettlementsystem.Inlittletime,however,theAppellateBody grew into the most important and authoritative organ of WTO dispute settlement. The Appellate Body is now, in all but name, the World Trade Court. The significance of its 1 ProfessorofInternationalEconomicLawandHead of the Department of International and European Law, Maastricht University ( [email protected] ); and former Counsellor and Acting Director(1997-2001),WTOAppellateBodySecretariat,Geneva.TheauthorthanksSergeyRipinskyand Stefanie Bledoug for their able assistance. This paper is partly based on Chapter 3 on‘WTO Dispute Settlement’,ofP.VandenBossche, TheLawandPolicyoftheWorldTradeOrganization:Text,Cases andMaterials (CambridgeUniversityPress,2005),173-306. 2 contributiontothedevelopmentofinternationaltradelawisgenerallyrecognized.Criticseven accusedtheAppellateBodyofhavingengagedinjudiciallegislation.Thispaperdoesnotseek toassesswhethertheAppellateBodydidindeedexceeditsjudicialmandate.Thepurposeof thispaperistorecalltheunassumingoriginsoftheAppellateBodyandtodiscussthefactors thathavecontributedtoitsrisetoprominenceoverthelastdecade.Thesefactorsaremultiple andoftencloselyrelated.TheyincludethefirstandsubsequentcompositionsoftheAppellate Body; the Working Procedures for Appellate Review; the early embracement and consistent application of the rules of interpretation of the Vienna Convention; the frequent and broad recourse to appellate review; the manner in which the Appellate Body used its authority of appellatereview;and,finally,thecaselawoftheAppellateBodytodate,andinparticularthe caselawbalancingfreetradeandothersocietalvaluesandthecaselawensuringthefairness and effectiveness of the WTO dispute settlement system. It is important to identify and correctlyappreciatethesefactorsbecausetheAppellateBodywillretainitscurrentstatusand roleintheworldtradingsystemonlytotheextentthatthesefactorscontinuetobesufficiently present. Keywords: InternationalDisputeSettlement,WorldTradeOrganization,WTOdispute settlement,AppellateBody,WorldTradeCourt 1. Introduction SinceFebruary1996,whenthefirstappealwasfiled,theAppellateBodyoftheWorldTrade Organization has heard and decided 65 appeals from panel cases. 2 The body of case law generatedbytheAppellateBodyoverthepastnineyearsis,bothinquantitativeandqualitative terms,impressive.From1996tot2004,theAppellateBodyhasissuedtwiceasmanydecisions astheInternationalCourtofJusticedidduringthesameperiod. 3TheAppellateBody’scase law is highly authoritative and has made a significant contribution to the development of internationaltradelaw.ThedecisionsoftheAppellateBodyin,forexample, EC–Bananas and US–Shrimp, haveeffectivelyputanendtopoliticallyaswellaseconomicallycomplex andsensitivedisputesbetweenWTOMembers.BothpanelsandpartiesinWTOdisputeshave shown, and continue to show, much deference to the case law of the Appellate Body. The Appellate Body is undoubtedly the most important organ of WTO dispute settlement. The AppellateBodyis,allbutinname,theWorldTradeCourt. 4Inrecentyears,afewauthorshave accusedtheAppellateBodyofexceedingtheauthorityconferredtoitandengaginginjudicial 2 See http://www.worldtradelaw.net/dsc/database/abreports.asp , visited on 6 March 2005. This number includestheappealin India–Autos ,whichwaswithdrawnduringtheappellatereviewproceedings.This papercoverstheperiodfrom1January1996to31December2004. 3 Seebelow,section3.4. 4 It was Claus-Dieter Ehlermann, a former member and Chairman of the WTO Appellate Body, who referred in a 2002 article in the Journal of World Trade to the Appellate Body as the ‘World Trade Court’ (see C.-D. Ehlermann, ‘Six Years on the Bench of the “World Trade Court”: Some Personal ExperiencesasMemberoftheAppellateBodyoftheWTO’(2002)36 JournalofWorldTrade 4,605- 639. 3 legislation, especially in cases on dumping and safeguard measures. 5 More generally, WTO Members, when loosing a case, allege not seldom, that the Appellate Body has added to or diminishedtherightsandobligationsofMembers. 6Thispaperdoesnotseektoverifywhether thisisindeedthecase. 7Theseaccusations,andthe‘emotional’termsinwhichtheyareoften expressed,are,however,clearevidenceoftheimportancethattheAppellateBodyanditscase lawnowhaveintheWTOsystem.Thekeyquestionaddressedinthispaperiswhatexplains theprominentstatuswhichtheAppellateBodyanditscaselawhaveachievedsince1996.Was the ‘success’ of the Appellate Body ‘predetermined’ by its constituent instruments or is it primarilytheresultofotherfactorsthathaveaffectedtheAppellateBodyanditscaselawin thepastnineyears? 2. TheHumbleOriginsoftheAppellateBody The Understanding on the Rules and Procedures for the Resolution of Disputes, commonly referred to as the Dispute Settlement Understanding or DSU, provided in Article 17 that ‘a standing Appellate Body shall be established by the [WTO Dispute Settlement Body]’. Pursuanttothismandate,theDisputeSettlementBody,orDSB,setuptheAppellateBodyby itsDecisionof10February1995ontheEstablishmentoftheAppellateBody. 8Article17of the DSU and the DSB Decision of 10 February 1995 are the constituent instruments of the AppellateBody.DidtheUruguayRoundnegotiators,whoreachedagreementontheDSUand prepared the DSB Decision, already conceive the Appellate Body as the centerpiece of the WTOdisputesettlementsystemthatitisnow? 5 See, e.g., J. Greenwald, ‘WTO Dispute Settlement: An Exercise in Trade Law Legislation’ (2003) 6 JournalofInternationalEconomicLaw ,113-124. 6 Suchstatementsare,forexample,madeintheDisputeSettlementBodyontheoccasionoftheadoption ofthereport. 7 Thishasalreadybeendoneinaveryconvincingmannerbyothers.See,e.g.,W.Davey,‘HastheWTO DisputeSettlementSystemExceededitsAuthority?’(2001)4 JournalofInternationalEconomicLaw , 79;andR.Howse,‘TheMostDangerousBranch?WTOAppellateBodyJurisprudenceontheNatureand Limits of the Judicial Power’ , in Th. Cottier and P. C. Mavroidis (eds.), The role of the judge in international trade regulation: experience and lessons for the WTO (University of Michigan Press, 2003), 11. See also J. Durling, ‘Deference, but Only When Due: WTO Review of Anti-Dumping Measures’(2003)6 JournalofInternationalEconomicLaw ,125-147. 8 WT/DSB/1,dated19June1995.In1994,thePreparatoryCommitteefortheWTOmadeanumberof recommendationsconcerningthe‘EstablishmentoftheAppellateBody’.Itweretheserecommendations whichtheDSBadoptedinFebruary1995. 4 2.1 UruguayRoundnegotiationsondisputesettlement 2.1.1 GATTdisputesettlementandtheconsensusrequirement TheGATT1947didnotprovideforanelaboratedisputesettlementsystem.Infact,theGATT 1947 contained only two brief provisions relating to dispute settlement: Articles XXII and XXIII. On the basis of these provisions, the GATT Contracting Parties built, in a very pragmaticmanneroveraperiodofdecades,afairlysophisticatedandsuccessfulsystemforthe resolutionoftradedisputes. 9However,theGATTdisputesettlementsystemhadsomeserious
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