There are two instances where there used to be two instances of dispute settlement at the WTO and this was kind of always considered the “Crown Jewel” of the WTO as an organization.
So how did it work? Well first of all, if you were a Member State of the WTO and you felt that your rights had been violated under one of the WTO’s covered agreements, you could in essence, bring one of the other Member States of the WTO to court and you’d bring them to basically the trial level, you’d bring them to a panel, and if you didn’t like the result of that panel’s decision, you could appeal to the WTO’s Appellate Body.
The Appellate Body is composed of seven people and they’re actually a standing body, which is unusual in the history of WTO and GATT dispute settlement. However, here’s where the crisis has arisen.
Since the Trump Administration came into power in the United States, they have systematically blocked appointments of new members to the Appellate Body and now there are no more jurists to hear disputes at the Appellate Body and so that means that the WTO no longer has two instance dispute settlement system. And it actually has also affected the trial level, the panel level of dispute settlement at the WTO as well because a panel report isn’t able to be formally adopted if it’s still under appeal. So if you lose at the trial level you can just appeal what’s called “Into the void” to the non-existing Appellate Body mechanism and have your judgment kind of stuck in legal limbo forever. So not only has the United States kind of gotten rid of this the appellate level of judicial review, but they’ve also in essence, made it very difficult for states to have binding dispute settlement at the trial level as well.
One of the critiques that the United States has levied at the Appellate Body is that its jurisprudential acquis has been too favorable to State-led capitalist countries. That is, they’re worried that the Appellate Body has been too soft on China in the way that it has interpreted the rules of the WTO. And in particular, the United States has been very critical of the way that the Appellate Body has interpreted the WTO rules on anti-dumping and other types of trade remedies especially in response to State subsidies.
The critique is too easy on China and so the question is “Is that critique valid?” There is some validity to the argument but not in the way that the United States has presented the argument. So the US has argued that the problem with the Appellate Body’s approach to China is that it represents overreach or judicial activism that the Appellate Body has sort of filled in gaps in the text of the WTO’s legal agreements and in so doing, kind of arrogated themselves to kind of a law maker rather than a law interpreter or a law applier and that is the way in which they kind of been overly permissive of state-led capitalism.
We’ve in our writing, we’ve said that there may be some truth to the US claim that the trade remedies cases were wrongly decided but not for the reasons that the United States has identified. We’ve suggested that what the Appellate Body has done is simply to kind of fulfill its role as an adjudicator. They’ve identified and kind of helped develop a comprehensive and coherent theory of WTO law and that’s simply what judges do when they are independent, impartial, adjudicators tasked with coming up with a coherent theory of how a complex body of law fits together.
We’ve also of course, been critical of the claim that the WTO should necessarily be giving reigning in State-led capitalism because our pluralist account suggests that states can have all manner of domestic economic arrangements, so long as they don’t run afoul of the kind of specific economic harms identified in the WTO’s covered agreements. There’s nothing in principle wrong with various types of domestic political economy.
