With 2022 more than one quarter over, the European Union remains the only WTO Member to file a new WTO dispute this year, and it has filed five requests for consultation. The United States has spent the first fifteen months of the Biden Administration seeking resolution to long-standing disputes but to date has filed no new cases (2021-2022). China had filed a number of disputes in 2021 and is the subject of various disputes filed in the 2021-2022 including two of the EU cases this year.
Two of the five cases filed in 2022 by the EU were against China and are reviewed in prior posts. On the intellectual property dispute, Japan, United States and Canada have requested to join the consultations. On the EU’s challenge to China’s actions on goods from Lithuania, six other Members have sought to join the consultations — Australia, Taiwan, Japan, United States, United Kingdom, and Canada.
The other three requests for consultations filed by the EU this year include one filed with the Russian Federation (DS608) concerning the exportation of wood products, one with Egypt (D609) concerning registration requirements relating to the importation of certain products and the latest one with the United Kingdom (DS612) concerning measures relating to the allocation of contracts for difference in low carbon energy generation.
The case against the Russian Federation deals with the termination of tariff-rate quotas on exports of wood products, other increases in export duties on wood products, reduction of the number of border crossing points for the exportation of wood products and the introduction of export restrictions or prohibitions on certain wood products by the Eurasian Economic Union. WTO inconsistencies alleged by the EU include Art. I:1, II:1(a), XI:1, XIII:1 of GATT 1994 and Paragraph 2, second sentence, of the Protocol on the Accession of the Russian Federation in conjunction with paragraphs 638, 668, and 1450 of the Report of the Working Party.
The request for consultations with Egypt involves challenges to Egyptian measures that apply to EU companies wishing to export to Egypt where registration requirements exist (29 categories of goods “including agricultural and food products, cosmetics, toys, textiles, garments, household appliances, furniture and ceramic tiles.”). The requirements are alleged to burdensome, non- transparent, costly and time-consuming and some registration applications have not been processed even after years. The Egyptian measures of concern raise questions about consistency with WTO GATT 1994 Articles XI:1, VIII:1(c), VIII:3, X:1, X:3(a); Art. 4.2 of the Agriculture Agreement and Articles 1.2, 1.5 3.3, 3.5(e) and 3.5(f) of the Import Licensing Agreement. The Russian Federation has sought to join consultations.
The most recent request for consultations with the United Kingdom involves local content requirements for incentivised low carbon electricity generation projects (e.g., offshore wind). “The measures at issue described above appear to be inconsistent with the United Kingdom’s obligations under the covered agreements, in particular Article III:4 of the GATT 1994, inasmuch as, by incentivising applicants to commit to and implement an ambitious percentage of Untied Kingdom content of the allocation of CfD, they accord less favourable treatment to imported goods than to like domestic goods.”
Of the five cases, the two against China are probably the most important systemically. The case about retaliation by China against Lithuania addresses a recurring problem with China punishing WTO Members who take positions with which China disagrees, The intellectual property case as described in a prior post is important to prevent China from blocking IP rights holders from obtaining the benefits of IP that the TRIPS Agreement safeguards.
The Russian Federation case may proceed but is overshadowed by Russia’s invasion of Ukraine and sanctions imposed by many countries, including by the EU. That said, the case deals with what appear to be clear violations of WTO obligations by Russia.
The case against Turkey is typical of a range of disputes over the years against countries who adopt a series of barriers to access to the market to protect domestic industries. While there can always be potentially relevant standards issues or health/safety issues, the actions of Egypt sound as though they simply slow down, limit or block import trade.
Finally, the case against the United Kingdom deals with the efforts of many countries to speed up adoption of renewable energy and reflect the important systemic issue of the interface between domestic incentives and WTO obligations on national treatment.
At the last Dispute Settlement Body meeting (March 28, 2022), many WTO Members continued to seek the reestablishment of a two tier dispute settlement process which the United States continues to block. The statements made appear to be identical or similar to those made over the last several years. The WTO news release on the meeting and the issue of the Appellate Body is copied below in relevant part.
“Appellate Body appointments
“Mexico, speaking on behalf of 123 members, introduced for the 52nd time the group’s proposal to start the selection processes for filling vacancies on the Appellate Body. The extensive number of members submitting the proposal reflects a common concern over the current situation in the Appellate Body which is seriously affecting the overall WTO dispute settlement system against the best interest of members, Mexico said for the group.
“The United States reiterated it was not in a position to support the proposed decision. The US continues to have systemic concerns with the Appellate Body, which it has explained and raised over the past 16 years and across multiple administrations. The US said it believes that WTO members must undertake fundamental reform if the dispute settlement system is to remain viable and credible. The dispute settlement system can and should better support the WTO’s negotiating and monitoring functions, the US said, adding that it looked forward to further discussions with members on these important issues.
“Around 20 delegations (including the EU for its 27 members and Nigeria for the African Group) took the floor to reiterate the importance of the WTO’s two-tiered dispute settlement system to the stability and predictability of the multilateral trading system. Several cited this issue as the top priority for reform of the organization and said the continued impasse was causing both commercial harm to members and systemic harm to multilateral trade.
“For the 123 members, Mexico again came back to say the fact a member may have concerns about certain aspects of the functioning of the Appellate Body cannot serve as pretext to impair and disrupt the work of the DSB and dispute settlement in general, and that there was no legal justification for the current blocking of the selection processes, which is causing concrete nullification and impairment of rights for many members.
“The DSB chair, Ambassador Athaliah Lesiba Molokomme of Botswana, noted the previous General Council chair has been working on the issue of restoring a fully functioning dispute settlement system within the context of preparations for the WTO’s 12th Ministerial Conference. She said she hoped members would be able to find a solution to this matter.”
I have reviewed in many prior posts the longstanding and well articulated concerns of the United States, concerns which have largely not been addressed in the process to date.
I have also in recent posts looked at individual disputes where the U.S. was the respondent and reviewed problems with the decisions.
Thus, it is unlikely that the twice delayed 12th Ministerial Conference to be held in Geneva June 13-15 this year will resolve the impasse on the Appellate Body. While it is possible that a process may be agreed to to examine the root problems and formulate possible solutions as part of the WTO reform agenda, even that may be optimistic in the current environment.
Existing disputes continue to proceed, with various resolutions possible in cases even among countries who have not signed up to the Agreement on the Interim Arbitration Process, although two dozen panel reports have been “appealed” but cannot be heard until/unless an Appellate Body is reconsituted. Such appeals have been taken by a number of Members including by Members who are parties to the interim process (e.g., EU on a panel report of a challenge to a trade remedy proceeding against the Russian Federation).
This Friday (April 8, 2022) , there is a Dispute Settlement Body meeting to consider a joint request by the Republic of Korea and the United States in the dispute involving UNITED STATES – SAFEGUARD MEASURE ON IMPORTS OF LARGE RESIDENTIAL WASHERS that would have the DSB adopt a decision that the panel report is adopted unless an appeal is filed by July 7, 2022 (essentially extending the time to appeal the panel report presumably to give the parties more time to consider a mutually acceptable resolution).
So whether there is a resolution to the Appellate Body impasse or not, WTO Members have ongoing options to address trade concerns including through Committee work, bilateral interactions and disputes through the WTO or through FTAs.
Terence Stewart, former Managing Partner, Law Offices of Stewart and Stewart, and author of the blog, Current Thoughts on Trade.
To read the full commentary from Current Thoughts on Trade, please click here.