US Suddenly Discovers Why Supranational Tribunals Are A Problem, Just As It Starts Losing In Them

from the probably-just-a-coincidence dept

There's a bit of a battle going on in an obscure part of the World Trade Organization (WTO) called the Appellate Body, which has extremely wide-ranging powers within the WTO: It is a standing body of seven persons that hears appeals from reports issued by panels in disputes brought by WTO Members. The Appellate Body can uphold, modify or reverse the legal findings and conclusions of a panel, and Appellate Body Reports, once adopted by the Dispute Settlement Body (DSB), must be accepted by the parties to the dispute. Here's what's been happening, as reported by Bloomberg: The U.S. won't support the reappointment of Seung Wha Chang of South Korea to the World Trade Organization (WTO) appellate body, a U.S. official said at a meeting in Geneva.



"We do not consider that his service reflects the role assigned to the appellate body by WTO members in the WTO agreements," Deputy U.S. Permanent Representative Chris Wilson told members of the WTO dispute settlement body (DSB) May 23. "Any failure to follow scrupulously the role we members have assigned through these agreements undermines the integrity of, and support for, the WTO dispute settlement system." As the article explains, that's not going down too well with other WTO members, including Brazil, the European Union, Japan, and South Korea, who are traditionally allies of the US in trade matters. So what exactly has Chang done to incur the wrath of the US? The U.S. said it was troubled by four recent panel decisions that Chang was involved in because they "raised systemic concerns about the disregard for the proper role of the appellate body and the WTO dispute settlement system." Which seems to be a polite way of saying that Chang hasn't been toeing the US line. That's confirmed by the following section from a WTO news item about the DSB meeting where this argument took place: Canada, the European Union, India and Viet Nam added that the United States' statement of opposition [to Chang] based on previous Appellate Body decisions could create a dangerous precedent for other reappointment proceedings and affect an Appellate Body member's decision-making during their first term. Here's one of those panel decisions that the US doesn't like: In the fourth ruling -- which upheld China's allegations about U.S. duties on non-market economies -- the appellate panel "took a very problematic and erroneous approach" that risks turning the DSB into "one that would substitute the judgment of WTO adjudicators for that of a member's domestic legal system as to what is lawful under that member's domestic law," Wilson said. The interesting part is the bit at the end there, where the US complains that the WTO's dispute settlement system is effectively overruling national law. Techdirt readers will recognize that as a common complaint about the tribunals that adjudicate on disputes between investors and governments -- the so-called "investor-state dispute settlement" (ISDS) system, aka corporate sovereignty. Until now, the US has been a solid supporter of these tribunals, so it's rather significant to see it moaning about the problem of uppity adjudicators here. It raises the question why the US is unhappy with the DSB tribunal, but doesn't seem to have a problem with those used in ISDS.

It might have something to do with the fact that the US has never lost a corporate sovereignty case -- something it uses to justify the inclusion of ISDS in TPP and TAFTA/TTIP -- but is increasingly on the wrong end of decisions at the WTO. As to why the US never loses ISDS cases, Ante Wessels, writing on the FFII.org blog, has a provocative theory: he says the "Investor-to-state dispute settlement is a rigged system" that is tilted in favor of the US. Whether or not you agree with his analysis, it's certainly interesting to see how the US seems to be changing its mind on the value of supranational tribunals that can ride roughshod over domestic legal systems now that it finds itself on the losing side.

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Filed Under: corporate sovereignty, isds, seung wha chang, trade agreements, tribunals, us, wto