Introduction
It has now been around three and a half years of induced paralysis to the WTO Appellate Body. The Appellate Body which is the apex adjudicating authority in the multilateral trade disputes has been defunct since December 10th, 2019. At the heart of this long-drawn halt of the Appellate Body is the consensus rule of the Dispute Settlement Body (DSB) which mandates that the decisions of the DSB are to be taken by consensus. The absence of consensus for the new appointments in the Appellate Body has led some to wonder whether WTO members could appoint members of the WTO Appellate Body by resorting to voting? This essay seeks to answer this question.
Default Dispute Settlement Body (DSB) Decision Procedure
A by-the-book approach to the question of whether members can be appointed to the Appellate Body by voting is that it violates the stipulations of the Dispute Settlement Understanding. Article 2.4, DSU, states, “Where the rules and procedures of this Understanding provide for the DSB to take a decision, it shall do so by consensus.”[1] There is no mention of voting in Article 2.4 or any other provision of the DSU. According to Article 17.2, “The DSB shall appoint persons to serve on the Appellate Body for a four-year term, and each person may be reappointed once.”[2] Reading these two provisions together, it can be inferred that when appointing members to the Appellate Body, the DSB is guided by Article 2.4, and therefore must appoint members by consensus. This has been the norm since the inception of the WTO, however, recent events discussed hereinafter have jeopardized not only this approach but the very existence of the Appellate Body, leading some to look into alternate modes of Appellate Body appointments.
The USA Deadlock
The current deadlock between the USA and the WTO dates back to May 11th, 2016 when Professor Seung Wha Chang was considered for reappointment to the Appellate Body. The USA blocked the reappointment on various grounds, including the Appellate Body’s repeated violation of its 90-day deadline for appeals, its penchant for wrongly giving its reports binding force on WTO members, and former members working on appeals after the expiration of their terms.[3]
By 2019, the Appellate Body was in crisis as two of its members, Ujal Singh Bhatia and Thomas Graham, were ending their terms by the end of the year.[4] This dropped the membership below the required number for proper functioning of the Appellate Body and with the USA’s stance, no members could be appointed or reappointed. Currently, with no acting members, the Appellate Body is in a state of paralysis, jeopardizing the entire WTO dispute settlement system. Appeals currently resting at the doorstep of the vestiges of the Appellate Body remain unresolved and consequently, the situation has opened the door for members to sidestep the WTO altogether, resorting to independent bilateral or regional trade agreements in the future.[5] For instance, 53 members have turned to the Multi-Party Interim Appeal Arbitration Arrangement (MPIA), which has emerged as an alternate to the to the Appellate Body.
This conundrum has led to debates over the option of majority voting which was heretofore considered a hypothetical scenario for academics to ponder.
Majority Voting: A Possible Solution?
The option of majority voting is not provided for in the Dispute Settlement Understanding. However, the Marrakesh Agreement Establishing the World Trade Organization (MAEWTO) enables the Ministerial Conference and the General Council to use majority voting in their decision-making processes as discussed hereinafter:
a) Empowering the Ministerial Conference:
As DSB remains crippled, the alternative of majority voting has gained popularity as a last-resort measure. This route seeks refuge within the technicalities of Article VI:1, Marrakesh Agreement Establishing the World Trade Organization (MAEWTO), which empowers the Ministerial Conference to “take decisions on all matters under any of the Multilateral Trade Agreements, if so requested by a Member, in accordance with the specific requirements for decision-making in this Agreement and in the relevant Multilateral Trade Agreement.”[6] The Ministerial Conference, on the request of a member, can make decisions on any matter under any Multilateral Trade Agreement, subject to the guidelines of the MAEWTO and the Multilateral Trade Agreements in question. Further, while dispute settlement falls under the purview of the DSB, the above-mentioned Article allows the Ministerial Conference to oversee “all matters”, including dispute settlement.[7]
MAEWTO’s Article IX states that decision-making is done by consensus. However, it adds “[d]ecisions of the Ministerial Conference and the General Council shall be taken by a majority of the votes cast, unless otherwise provided in this Agreement or in the relevant Multilateral Trade Agreement”[8], providing a legal loophole to end the current crisis.[9] This means the Ministerial Conference can take a majority vote unless an alternative is provided in the MAEWTO itself (however the MAEWTO does not provide such an alternative) or the relevant Multilateral Trade Agreements, namely, DSU.
At first glance, this route seems to lead back to the DSU’s Article 2.4 and consensus would prevail. However, Footnote 3 to Article IX, MAEWTO sheds new light on the matter, stating, “Decisions by the General Council when convened as the Dispute Settlement Body shall be taken only in accordance with the provisions of paragraph 4 of Article 2 of the Dispute Settlement Understanding.”[10] Accordingly, the General Council is restricted by Article 2.4, DSU, however, any mention of the Ministerial Conference is missing from the footnote. It can therefore be concluded that the Ministerial Conference is not subject to the DSU because if the drafters had intended this, they would have not avoided mentioning the Ministerial Conference. Consequently, the Ministerial Conference, when taking any decision under Article IV:1, MAEWTO does not have to abide by the DSU’s consensus rule, even if it appoints members to the Appellate Body.[11]
Further Article XVI:3, MAEWTO states that should a conflict arise between its own provisions and that of any Multilateral Trade Agreements, the former will prevail.[12] This means Article IX:1, MAEWTO which provides for majority voting, would overrule decision by consensus found in Article 2.4, DSU.
b) Empowering the General Council:
Another line of thought suggests circumventing the DSU’s provisions by placing the appointment of Appellate Body members on the agenda of the General Council. If the Appellate Body appointments are on the agenda of the General Council, then the latter would act in its own capacity, and could resort to a majority vote.
This approach has also taken another route via reliance on Article IV:3, MAEWTO, which holds that the General Council will discharge the DSB’s responsibilities as required. It has been argued that the General Council, when handling a dispute but acting in its own capacity, is not subject to the DSU because if it had to “always follow the consensus rule when it decide[s] on matters relating to dispute settlement [it] would essentially mean that, whenever the General Council decide[s] on issues relating to dispute settlement, it automatically becomes the DSB, even if it is not convened as the DSB as per Art. IV.3.”[13] To argue otherwise would be to treat two distinct bodies as the same and such an approach would render Article IV:3 redundant.
c) Technical Interpretations:
Yet another way to solve the impasse is to rely on the technical interpretations of relevant legal texts. As previously stated, Article 2.4, DSU holds that all of DSB’s decisions must be arrived at through consensus. Article 17.3 holds, “The DSB shall appoint persons to serve on the Appellate Body [emphasis added].” It is argued that ‘appointment’ does not classify as a ‘decision’ and is therefore not subject to the consensus rule.[14]
A similar approach relies on an alternate interpretation of Article IX:1, MAEWTO, which says, “Except as otherwise provided, where a decision cannot be arrived at by consensus, the matter at issue shall be decided by voting.”[15] Here, a prima facie reading suggests that voting will only be allowed if a consensus is not reached. However, this negates the first half of the provision “except as otherwise provided”. This approach argues that with a holistic analysis of the MAEWTO, “except as otherwise provided” references different forms of majority voting provided in other Articles of the agreement.[16] For instance, provisions of Article IX:2 and Article XII:2 require a three-fourths majority and two-thirds majority respectively. When considering the different forms of majority voting, it can be inferred that the ‘vote’ in Article IX:1 is a simple majority vote. Therefore, Article IX:1 can be interpreted as “except in situations where other voting requirements have been prescribed, where a decision cannot be arrived at by consensus, the matter at issue shall be decided by a simple majority vote.”[17] This is further evidenced by the last sentence of the same Article, which states, “Decisions of the Ministerial Conference and the General Council shall be taken by a majority of the votes cast, unless otherwise provided in this Agreement or in the relevant Multilateral Trade Agreement [emphasis added].” As shown above, the MAEWTO does provide recourse to different types of the majority voting.
Obstacles to Majority Voting
Despite there being various avenues through which a majority vote can be taken for the Appellate Body members’ appointment, there are just as many hurdles to accomplish this task.
a) The biggest concern is bypassing the USA through a majority vote could lead to the USA withdrawing its WTO membership.[18] However many legal arguments might back majority voting, the outcome will be a political one with political considerations taken into account.
b) Majority voting has always been the stepchild of the WTO decision-making process. Members would be wary that the move would open the floodgates where key issues would also be subject to majority voting.[19]
c) The consensus rule is preferred because it “preserves a balance between small and large Members, prevents large Members from weaponizing the organization against each other.”[20] Majority voting could lead to larger nations strong-arming the smaller ones.
Conclusion
Like most complex questions, there is no one-size-fits-all answer to this issue. While there is scope for technical and legal feasibility for majority voting, the operational and political feasibility of these is next to none. The consensus approach gives WTO a form of stability, even reliability, which most members would not give up. For example, the consensus approach ensures the decisions of the DSB, including the appointment of Appellate Body members, are based upon mutual consensus. On the other hand, majority voting tilts the scale in the favour of powerful nations having the muscle power to lobby for their own vested interests.
[1] Article 2.4, Dispute Settlement Rules: Understanding on Rules and Procedures Governing the Settlement of Disputes, Marrakesh Agreement Establishing the World Trade Organization, Annex 2, 1869 U.N.T.S. 401, 33 I.L.M. 1226 (1994).
[2] Article 17.2, Dispute Settlement Rules: Understanding on Rules and Procedures Governing the Settlement of Disputes, Marrakesh Agreement Establishing the World Trade Organization, Annex 2, 1869 U.N.T.S. 401, 33 I.L.M. 1226 (1994).
[3] Office of the United States Trade Representative, Report on the Appellate Body of the World Trade Organization (2020).
[4] Appellate Body Members, WORLD TRADE ORGANIZATION (May 10, 2022, 10:17 AM), https://www.wto.org/english/tratop_e/dispu_e/ab_members_bio_e.htm.
[5] William Alan Reinsch, Article 25: An Effective Way to Avert the WTO Crisis?, CENTER FOR STRATEGIC AND INTERNATIONAL STUDIES (May 9, 2022, 5:15 PM), https://www.csis.org/analysis/article-25-effective-way-avert-wto-crisis.
[6] Article IV, Marrakesh Agreement Establishing the World Trade Organization, Apr. 15, 1994, 1867 U.N.T.S. 154, 33 I.L.M. 1144 (1994).
[7] Alex Ansong, The Impasse in the Appointment of Judges to the WTO Appellate Body: Are There Any Viable Solutions? SSRN (May 11, 2022, 7:20 AM) https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3285268.
[8] Article IX, Marrakesh Agreement Establishing the World Trade Organization, Apr. 15, 1994, 1867 U.N.T.S. 154, 33 I.L.M. 1144 (1994).
[9] Matthew Yeo, Christophe Bondy, Alexandre Genest & Chloe Baldwin, Tensions Between Consensus and Voting in WTO Decision-Making – Part I: Appointing Appellate Body Members, STEPTOE GLOBAL TRADING POLICY BLOG (May 10, 2022, 5:32 PM), https://www.steptoeglobaltradeblog.com/2021/08/tensions-between-consensus-and-voting-in-wto-decision-making-part-i-appointing-appellate-body-members/.
[10] Footnote 3, Article IX, Marrakesh Agreement Establishing the World Trade Organization, Apr. 15, 1994, 1867 U.N.T.S. 154, 33 I.L.M. 1144 (1994).
[11] Supra note 10
[12] Article XVI:3, Marrakesh Agreement Establishing the World Trade Organization, Apr. 15, 1994, 1867 U.N.T.S. 154, 33 I.L.M. 1144 (1994).
[13] Henry Gao, A Rule-Based Solution To The Appellate Body Crisis And Why The MPIA Would Not Work, SINGAPORE MANAGEMENT UNIVERSITY (May 10, 2022, 9:26 PM), https://ink.library.smu.edu.sg/cgi/viewcontent.cgi?article=5236&context=sol_research.
[14] Jennifer Hillman, Three Approaches To Fixing The World Trade Organization’s Appellate Body: The Good, The Bad And The Ugly?, GEORGETOWN LAW (May 9, 2022, 12:17 AM), https://www.law.georgetown.edu/wp-content/uploads/2018/12/Hillman-Good-Bad-Ugly-Fix-to-WTO-AB.pdf.
[15] Article IX:1, Marrakesh Agreement Establishing the World Trade Organization, Apr. 15, 1994, 1867 U.N.T.S. 154, 33 I.L.M. 1144 (1994).
[16] Supra note 7.
[17] Supra note 7.
[18] Garima Deepak, WTO Dispute Settlement – The Road Ahead, 51 NYU JILP 981, 993 (2019).
[19] Supra note 18.
[20] Geraldo Vidigal, Appointing Appellate Body Members By Majority Would Undermine, Not Preserve The Rule Of Law, INTERNATIONAL ECONOMIC LAW AND POLICY BLOG (May 10, 2022, 1:17 PM), https://ielp.worldtradelaw.net/2020/07/guest-post-appointing-appellate-body-members-by-majority-would-undermine-not-preserve-the-rule-of-la.html.