Crisis in The WTO

CIGI Papers No.
194 — October 2018
Crisis in the WTO

Restoring the WTO Dispute
Settlement Function
Robert McDougall
CIGI Papers No. 194 — October 2018
Crisis in the WTO:

Restoring the WTO Dispute
Settlement Function
Robert McDougall
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Table of Contents
vi About the Author
vi About the International Law Research Program
1 Executive Summary
1 Introduction
2 The Context for Crisis in WTO Dispute Settlement
4 Innovation in Dispute Settlement under the WTO
8 Objections, Actions and Reactions
12 Options for Restoring the Dispute Settlement Function
17 Choice of Instruments
18 Conclusion
20 About CIGI
20 À propos du CIGI
About the Author About the International
Robert McDougall is a senior fellow with CIGI’s Law Research Program
International Law Research Program. His
focus is on international trade cooperation, The International Law Research Program (ILRP)
multilateral governance, China and the World at CIGI is an integrated multidisciplinary
Trade Organization (WTO), digital trade and research program that provides leading
dispute settlement. He is also a visiting fellow in academics, government and private sector
the Centre for Trade and Economic Integration legal experts, as well as students from Canada
at the Graduate Institute of Geneva. and abroad, with the opportunity to contribute
to advancements in international law.
Robert spent 15 years as an international trade
lawyer at Global Affairs Canada (formerly Foreign The ILRP strives to be the world’s leading
Affairs and International Trade Canada), during international law research program, with
which time he provided trade law advice and recognized impact on how international law
litigated disputes before the WTO. As permanent is brought to bear on significant global issues.
delegate to the WTO for five years, he was Canada’s The program’s mission is to connect knowledge,
representative to the Dispute Settlement Body, to policy and practice to build the international law
negotiations to improve the dispute settlement framework — the globalized rule of law — to
system and in many disputes involving Canada. support international governance of the future.
Its founding belief is that better international
Previously, as Canada’s permanent delegate to governance, including a strengthened international
the Organisation for Economic Co-operation law framework, can improve the lives of people
and Development in Paris, he represented everywhere, increase prosperity, ensure global
Canada in activities relating to trade, sustainability, address inequality, safeguard
agriculture, science, technology and industry, human rights and promote a more secure world.
including major initiatives on innovation,
the digital economy and green growth. The ILRP focuses on the areas of international
law that are most important to global innovation,
prosperity and sustainability: international
economic law, international intellectual property
law and international environmental law. In its
research, the ILRP is attentive to the emerging
interactions among international and transnational
law, Indigenous law and constitutional law.
vi CIGI Papers No. 194 — October 2018 • Robert McDougall

and China’s status as a “market economy” will
Executive Summary only risk further destabilizing the trading system.

Meanwhile, concerns about the WTO’s incapacity
to defuse growing trade tensions have largely
The impasse in the World Trade Organization
overshadowed efforts to launch a new negotiating
(WTO) over the appointment of new members
agenda based on even the modest outcomes at
of the Appellate Body is just one symptom
the 2017 Ministerial Conference in Buenos Aires.
of crisis in cooperation on trade. Driven by
skepticism about multilateralism and binding The stalemate in the Dispute Settlement Body
dispute settlement, and by a growing strategic (DSB) over the appointment of new members of the
and economic rivalry with China, the current Appellate Body is just one more symptom of crisis
US administration has elevated longstanding US at the WTO. If a solution is not found, the already
concerns about WTO dispute settlement to new severely compromised dispute settlement system
heights. The inability of WTO members to exercise will be rendered dysfunctional by late 2019, if not
their collective authority to interpret the meaning earlier. The immediate cause is the US refusal to
of their WTO commitments has meant that the join consensus to launch the appointment process.
Appellate Body is effectively not subject to any While the United States initially cited concerns
checks and balances. As other WTO members about the practice of Appellate Body members
blocked US efforts to negotiate more member being extended beyond the end of their terms, it is
control, the United States increasingly turned to understood to be using the process as leverage to
unpopular unilateral mechanisms, culminating bring about more systemic reform of the system, in
in the current block on new appointments particular of the functioning of the Appellate Body.
as part of its more disruptive trade policy.
While concerns of one sort or another about
Assuming the United States will eventually dispute settlement in the WTO have animated
return to rules-based trade, restoring the WTO successive US administrations almost since the
dispute settlement system to full capacity and founding of the organization, the current US
enhancing its legitimacy will likely require administration has elevated them to new heights.
some changes. This might include improving The escalation by this administration reflects
mechanisms for political oversight, diverting its skepticism about multilateralism in general
sensitive issues from adjudication, narrowing the and binding dispute settlement in particular,
scope of adjudication, improving institutional and its deep suspicion that global trade rules
support and providing members more say over are increasingly stacked against US interests. It
certain procedures. Preserving compulsory, is further complicated by the growing strategic
impartial and enforceable dispute settlement competition for economic dominance between the
in the WTO will require an accommodation United States and China that might ultimately be
of different perspectives on how the system too great for even the multilateral trading system
should function. Achieving this, in whatever to contain. The more fundamental causes and
form, will contribute to maintaining and even context of the impasse in the DSB mean that ending
strengthening multilateral cooperation on trade. it, and restoring the WTO dispute settlement
function, will require solutions to much more
than just the procedure used to extend Appellate
Body members beyond the end of their terms.
Introduction
Other WTO members countered past US reform
efforts with an often equally dogmatic insistence
on their own vision of dispute settlement. Their
The rules-based multilateral trading system is frustration with the current US administration’s
facing unprecedented strain. The unpredictable erratic trade policy and suspicion of its ultimate
and often belligerent trade policy actions of the intentions make cooperation more difficult than
current US administration, inflicted on adversaries ever. For now, however, time is on the side of the
and allies alike, have been met with retaliation United States. The more incapacitated the system
and legal challenge at the WTO. Regardless of becomes, the more significant the reforms will
their outcome, new and ongoing adjudication over likely need to be in order to reach agreement to
“national security” justifications for trade measures restore it. In any event, despite uncertainty about
Crisis in the WTO: Restoring the WTO Dispute Settlement Function 1

the United States’ true end-game, addressing some more recently become almost existential in nature
of its longstanding systemic concerns — if this can can be attributed to at least three related factors.
be done while preserving the compulsory, impartial
and enforceable nature of dispute settlement — First, more than any national administration
would actually improve the system’s legitimacy in recent memory, the current administration
and effectiveness in the long run. Indeed, reaching is openly skeptical of, and sometimes outright
agreement to restore the dispute settlement hostile toward, the rules-based international order,
function might demonstrate that cooperation including the multilateral trading system. President
on international trade is still possible, even in Donald Trump has frequently criticized the WTO
the current contentious trade environment. and the dispute settlement system, alleging that
both treat the United States unfairly.2 United States
This paper contributes to the discussion of possible Trade Representative (USTR) Robert Lighthizer has
options to resolve both the immediate procedural openly reminisced about the veto that contracting
impasse and the broader systemic concerns. To parties enjoyed over dispute settlement under the
that end, the next section sets out the complex WTO’s predecessor, the General Agreement on
challenges facing the rules-based trading system Tariffs and Trade (GATT).3 And National Security
that will complicate efforts to restore the dispute Adviser John Bolton has not disguised his disdain
settlement function in the short term. Stepping for the WTO.4 Moreover, the equation of national
back, the paper then surveys the evolution of trade security with economic security in the recent
dispute settlement, highlighting in particular the annual national security review,5 and the invocation
emergence of an institutional imbalance in the of national security to justify a number of tariffs,6
WTO legal framework that, in part at least, has suggest a new direction in US trade policy that does
always threatened the legitimacy of the system. not consider the United States to be bound by the
Next, the paper tracks how WTO members, starting constraints of its international trade obligations. On
with the United States, have responded to this these facts alone, it is reasonable to conclude that
institutional imbalance. A number of possible the motivation of the United States is to dismantle
reforms are evaluated that might pave the way for the dispute settlement mechanism entirely, and
the restoration of the dispute settlement function, perhaps even the rules-based trading system itself.
and then options are outlined for instruments
that can be used to implement these reforms. Despite these various pronouncements, however, it
The paper concludes with thoughts on both the is not clear that the US administration intends, or
importance and the complexity of the task at hand. would even have the domestic legal and political
2 See e.g. White House, “Remarks by President Trump at 2018 White
The Context for Crisis in

House Business Session with Governors” (26 February 2018) [White
House, “2018 White House Business Session”], online: <www.whitehouse.
gov/briefings-statements/remarks-president-trump-2018-white-house-
WTO Dispute Settlement business-session-governors/>; “Trump Threatens to Pull U.S. Out of WTO
If It Doesn’t ‘Shape Up’” (29 August 2018), online: Bloomberg <www.
bloomberg.com/news/articles/2018-08-30/trump-says-he-will-pull-u-s-out-
of-wto-if-they-don-t-shape-up>.
Almost since its inception,1 the WTO dispute
settlement system has faced controversy of one 3 See e.g. Interview of USTR Robert Lighthizer by John Hamre,
“U.S. Trade Policy Priorities” (18 September 2017 at the Center for
sort or another. Given the unprecedented and Strategic and International Studies) [Lighthizer interview], online:
unparalleled consequences that the outcomes <www.csis.org/analysis/us-trade- policy-priorities-robert-lighthizer-united-
can have for sovereign states, this is hardly states-trade-representative>.
surprising. For most of this period, however, these 4 John Bolton, “Trump, Trade and American Sovereignty”, The Wall Street
controversies never posed any serious threat to the Journal (7 March 2017).
viability of the system. That the challenges have 5 See “Economic security is national security”, in White House,
“National Security Strategy of the United States of America” (December
2017) [“National Security Strategy”], online: <www.whitehouse.gov/
wp-content/uploads/2017/12/NSS-Final-12-18-2017-0905.pdf>.
6 US Department of Commerce, “The Effect of Steel Imports on the

1 Marrakesh Agreement Establishing the World Trade Organization, 15 National Security” (11 January 2018), online: <www.commerce.gov/
April 1994 (entered into force 1 January 1995), 1867 UNTS 154, 33 ILM sites/commerce.gov/files/the_effect_of_imports_of_steel_on_the_
1144 [Marrakesh Agreement]. national_security_-_with_redactions_-_20180111.pdf>.
2 CIGI Papers No. 194 — October 2018 • Robert McDougall

authority,7 to pursue such an extreme course. The China a “high-tech powerhouse” over the coming
fact remains that the WTO, with its compulsory and decades.12 This ambitious plan has exacerbated
binding dispute settlement system, is too important growing concern about how China’s membership
to the United States to be completely dismantled, in the WTO has turned out. The United States has
even as the United States seeks both substantive catalogued a number of concerns about China’s
and institutional reforms. Indeed, the current US policies that it considers unfairly undermine US
administration has itself expressed support for interests,13 concerns that are shared by at least
the WTO,8 continues to engage in at least some some others.14 These include forced technology
ongoing activities and negotiations,9 and has even transfer, discriminatory licensing requirements,
launched several new disputes,10 with plans for investment restrictions, theft of intellectual
possibly more.11 In the absence of a clear statement property, support of industry through state-owned
of intent to dismantle the dispute settlement enterprises (SOEs), subsidization of excess capacity
system, the United States’ anti-WTO rhetoric and lack of transparency in its administration.15
may be seen as principally for domestic political While some of China’s practices may be covered by
consumption or to generate leverage over other existing trade rules, and therefore enforceable in
WTO members to achieve its reform objectives. WTO dispute settlement, others arguably are not.16
As unpalatable as it may be for other members to
engage constructively with the United States on Since the United States considers, rightly or
WTO reform questions in such an environment, wrongly, that the current trade rules are stacked
refusing to do so only out of suspicion of its against it in its competition with China, it may
ultimate motives risks missing an opportunity to also consider that any further interpretation
de-escalate some of the tensions while improving and enforcement will only entrench China’s
the trading system for the benefit of all. advantage. Indeed, one criticism of the dispute
settlement system is that it has reduced the scope
Second, one of the causes of escalating US rhetoric to use trade defence measures while at the same
and action against the multilateral trading system time making it harder to challenge subsidies
is the growing strategic competition among the provided through SOEs,17 both developments that
major powers, especially between China and the are more beneficial to China than to others. The
United States, and to a lesser extent the European ongoing adjudication over whether China should
Union. China has adopted “Made in China 2025,”
a state-backed industrial plan designed to make
12 See e.g. Jost Wübbeke et al, “Made in China 2025: The making of
a high-tech superpower and consequences for industrial countries”
(December 2016), Mercator Institute for China Studies, online:
7 Joel Trachtman, “Power to Terminate U.S. Trade Agreements: <www.merics.org/sites/default/files/2017-09/MPOC_No.2_
The Presidential Dormant Commerce Clause versus an Historical MadeinChina2025.pdf>; Lorand Laskai, “Why Does Everyone Hate
Glass Half Empty” (15 October 2017), online: <https://ssrn.com/ Made in China 2025?”, Council on Foreign Relations (28 March 2018),
abstract=3015981>. online: <www.cfr.org/blog/why-does-everyone-hate-made-china-2025>.
8 At the 2017 WTO Ministerial Conference, USTR Lighthizer referred to the 13 White House, “National Security Strategy”, supra note 5. See also USTR,
WTO as “obviously an important institution.” USTR, “Opening Plenary “Findings of the Investigation into China’s Acts, Policies, and Practices
Statement of USTR Robert Lighthizer at the WTO Ministerial Conference,” Related to Technology Transfer, Intellectual Property, and Innovation
December 2017, online: <https://ustr.gov/about-us/policy-offices/press- Under Section 301 of the Trade Act of 1974” (22 March 2018) [USTR,
office/press-releases/2017/december/opening-plenary-statement-ustr>. “Investigation into China’s Acts”]; USTR, “2017 Report to Congress on
China’s WTO Compliance” (January 2018) [USTR, “Report on China’s
9 In October 2017, the United States submitted a new proposal. WTO,
WTO Compliance”].
General Council, “Procedures to Enhance Transparency and Strengthen
Notification Requirements under WTO Agreements: Communication from 14 “Joint readout”, supra note 11.
the United States” (30 October 2017), WTO Doc JOB/GC/148.
15 USTR, “Investigation into China’s Acts”, supra note 13.
10 Over the summer of 2018, the United States launched disputes against
six WTO members (Canada, China, the European Union, Mexico, Russia 16 Mark Wu, “China Inc.” (2016) 57:2 Harv Intl LJ; Jennifer Hillman,
and Turkey) related to measures those members took in response to US “Testimony before the US-China Economic and Review Security
tariffs on steel and aluminum. See also India—Export Related Measures Commission” (8 June 2018), online: <www.uscc.gov/sites/default/
(DS 541), consultations requested on 14 March 2018; and China—Certain files/Hillman%20Testimony%20US%20China%20Comm%20w%20
Measures Concerning the Protection of Intellectual Property Rights (DS Appendix%20A.pdf>.
542), consultations requested on 23 March 2018.
17 USTR, “The President’s 2018 Trade Policy Agenda” (March 2018) at
11 See e.g. “Joint readout of discussion: Meeting between EU Commissioner 22–24 [USTR, “President’s 2018 Trade Policy Agenda”], online:
for Trade Cecilia Malmström, Minister of Economy, Trade and Industry of <https://ustr.gov/sites/default/files/files/Press/Reports/2018/
Japan Hiroshige Seko and US Trade Representative Robert Lighthizer” AR/2018%20Annual%20Report%20FINAL.PDF>. See also William
(on non-market-oriented policies and practices) (10 March 2018) Davey, “Comment on Shaffer/Gao” (2018) U Ill L Rev 36; Michel
[“Joint readout”], online: <http://trade.ec.europa.eu/doclib/docs/2018/ Cartland, Gerard Depayre & Jan Woznowski, “Is Something Going
march/tradoc_156632.pdf>. Wrong in the WTO Dispute Settlement?” (2012) 46:5 J World Trade 979.

be considered a market economy only adds to checks to preserve even the original balance
this tension,18 with USTR Lighthizer warning between WTO members and adjudicators.24
that results unfavourable to the United States
would be “cataclysmic” for the WTO.19 Against These longstanding systemic concerns are now
this backdrop, it is reasonable to suspect the simultaneously exacerbated by the two newer
United States of trying to “suspend” the operation developments and provide the pretext for the US
of the dispute settlement system to prevent administration to advance those agendas. Restoring
any further consolidation of China’s perceived the dispute settlement function is therefore likely
advantage under the current rules until there is no longer a matter of merely reaching agreement
a rebalancing of rights and obligations, whether on the proper conception of adjudicator autonomy,
this is negotiated bilaterally or multilaterally. but may instead depend on adequate resolution
of the US administration’s concerns about
Third, long before the arrival of the Trump multilateralism in general and the terms of its trade
administration and even before the emergence of with China in particular. The present paper does
open rivalry between the United States and China, not address those two issues. Eventually, however,
successive US administrations have expressed the United States will likely return to the view that
concerns about the design and operation of the a compulsory, impartial and enforceable dispute
WTO dispute settlement system, in particular the settlement mechanism is in its long-term interest.
Appellate Body. While the United States was the Even then, it may still insist on a degree of member
original proponent of a strong dispute settlement control that reflects the intergovernmental nature
mechanism in the WTO, concerns that were raised of multilateral trade cooperation, especially that
by some almost immediately after the founding of which increasingly takes place in a multipolar
the WTO20 eventually found official expression in world. The starting point in the search for a new
proposals21 in the negotiations to revise the Dispute equilibrium is a better understanding of the
Settlement Understanding (DSU).22 The essence of concerns about the features of the existing system.
the US proposals is to strike a different balance
between the autonomy of WTO adjudicators and
the control by sovereign governments over the
meaning of their WTO commitments, especially
Innovation in Dispute
those that were intentionally left imprecise.23
US concerns have reflected a combination
Settlement under the

of buyer’s remorse and a realization that the
WTO legal framework contained insufficient
WTO
The evolution of mechanisms for the settlement
of international trade disputes has involved
18 European Union—Measures Related to Price Comparison Methodologies, an incremental process of legalization and
WT/DS516; United States—Measures Related to Price Comparison
Methodologies, WT/DS515.
judicialization.25 While dispute settlement
under the GATT originally involved only
19 Shawn Donnan, “Trump trade tsar warns against ‘market economy’
status”, Financial Times (21 June 2017), online: <www.ft.com/
political and diplomatic approaches, through
content/4d6ba03e-56b0-11e7-9fed-c19e2700005f>. a succession of agreements and procedural
20 Alan Wolff, “Testimony before Senate Finance Committee on proposed
understandings it had already become, by the
WTO Dispute Settlement Review Commission Act” (10 May 1995), end of the Uruguay Round, almost a completely
online: <www.finance.senate.gov/imo/media/doc/Hrg104-124.pdf>.
Note, however, that the proposed act in support of which this testimony
was provided was not adopted by the US Congress.
24 Wolff, supra note 20.

21 USTR, “Further Contribution of the United States on Improving Flexibility
and Member Control in WTO Dispute Settlement: Communication from 25 The term “legalization” refers to the “increase in the use of formal legal
the United States” (24 October 2005) TN/DS/W/82 [USTR, “Improving rules to regulate a particular domain,” whereas the term “judicialization”
Member Control”]; (25 October 2005) TN/DS/W/82/Add.1. refers to the “increase in enforceability through adjudication and the
possible authorization of sanctions by an independent third party.” See
22 WTO, “Understanding on rules and procedures governing the settlement
Dirk De Bièvre and Arlo Poletti, “Judicial Politics in International Trade
of disputes”, Annex 2 of the Marrakesh Agreement [DSU], online:
Relations: Introduction to the Special Edition” (2015) 14:(S1) World Trade
<www.wto.org/english/tratop_e/dispu_e/dsu_e.htm>.
Rev at S3. See also Kenneth Abbot et al, “The Concept of Legalisation”
23 USTR, “Improving Member Control”, supra note 21. (2000) 54:3 Intl Organization 401.

rules-based system that included delegation automatic adoption of bad panel reports and to
of authority to independent panels.26 ensure consistency and coherence across disputes.29
Despite the progressive legalization of GATT The dispute settlement system embodied in the DSU
dispute settlement, one significant feature is therefore a hybrid. The ad hoc panels of experts
remained unchanged: the ability of a contracting that emerged under the GATT were retained with
party, usually the responding party, to use the only minor changes. Layered on top of this is the
practice of consensus decision making to block more institutionalized and judicialized Appellate
the adoption of the final panel report, which was Body, tasked with reviewing issues of law and legal
required to give it legal effect. The possibility interpretation developed by panels,30 in accordance
of a veto meant that GATT panels had to be with customary rules of interpretation of public
constrained in their legal reasoning and findings international law.31 Despite the conscious move
to increase the chances that their reports would toward legalization and judicialization, however,
be accepted by responding parties. Once a the negotiating history, architecture and text of the
responding party agreed to the adoption of a DSU indicate that the intention was never to create
report, however, it was quite likely to comply with an independent judicial system.32 For instance, the
the outcome.27 As a result, while adopted GATT DSU does not grant panels or the Appellate Body
panel reports enjoyed a high degree of political any inherent or ongoing jurisdiction. Instead, they
legitimacy and high compliance rates, the most are subordinate to the DSB, the governing body.
contentious trade issues could not be resolved This is confirmed by the fact that their mandate is
through formal dispute settlement procedures. to make “findings as will assist the DSB” in making
recommendations and rulings,33 their “reports”
The Uruguay Round negotiations resulted in acquire binding legal status only once adopted by
a significant expansion of substantive trade the DSB, and they are subject to strict timelines
commitments for members of the new WTO. To for circulating their reports, the Appellate Body
make these new commitments more credible, GATT more so than panels.34 Finally, the text of various
dispute settlement practices were consolidated provisions of the DSU reinforces the subordinate
and strengthened in the new DSU. The most status and role of WTO adjudicators to the DSB.35
important innovation was to make several key
stages of the dispute settlement process, including
the adoption of final reports, subject to negative
(or reverse) consensus decision making,28 which
removed the ability of individual members 29 Debra Steger, “The Founding of the Appellate Body”, in Gabrielle
to block the progress of a dispute. A second Marceau, ed, A History of Lawyers in the GATT/WTO: The Development
of the Rule of Law in the Multilateral Trading System (Cambridge,
significant innovation was a mechanism for UK: Cambridge University Press, 2015); Peter Van den Bossche,
appellate review. This was introduced only late “From Afterthought to Centrepiece: The Appellate Body and Its Rise to
in the negotiations to overcome concerns about Prominence in the World Trading System”, in Giorgio Sacerdoti, Alan
Yanovich & Jan Bohanes, eds, The WTO at Ten: The Contribution of the
Dispute Settlement System (Cambridge, UK: Cambridge University Press,
2006) at 201.
30 DSU, supra note 22, art 17.6.
31 Ibid, art 3.2.

26 Robert Hudec, “Comment on: Free trade, sovereignty, democracy:
The future of the World Trade Organization” (2002) 1:2 World Trade 32 Steger, supra note 29; Richard Steinberg, “Judicial Lawmaking at the
Rev 211 at 220 [Hudec, “Comment”]. WTO: Discursive, Constitutional, and Political Constraints” (2004) 98 AJIL
247 at 250.
27 Robert Hudec, Enforcing International Trade Law: The Evolution of the
Modern GATT Legal System (Salem, NH: Butterworth Legal Publishers, 33 DSU, supra note 22, arts 7, 11.
1993) at 362.
34 For panels, DSU (supra note 22) article 12.9 provides that in “no case
28 In general terms, except in those circumstances where voting is should the period from the establishment of a panel to the circulation of
authorized, article IX:1 of the Marrakesh Agreement provides that the report to the Members exceed nine months.” For the Appellate Body,
the WTO “shall continue the practice of decision-making by consensus DSU article 17.5 provides that in “no case shall the proceedings exceed
followed under GATT 1947,” with “consensus” defined in the footnote 90 days.” Overall, according to DSU article 20, the entire process “shall
as when “no Member…formally objects” to a decision. Negative (or as a general rule not exceed nine months where the panel report is not
reverse) consensus therefore means that a particular step in the dispute appealed or 12 months where the report is appealed.”
settlement process shall proceed unless there is a consensus (i.e., no
formal objection) that it not proceed. The DSU (supra note 22) provides 35 For example, the DSU provides that appellate review is conducted by
for negative consensus in the establishment of panels (article 6.1), the a “body” and not a court, composed of “members” instead of judges,
adoption of panel and Appellate Body reports (articles 16.4 and 17.14) and that issues “reports” instead of decisions, containing “findings” and
and the authorization of retaliation (articles 22.6 and 22.7). “conclusions,” not rulings.

The division of labour between the WTO’s political the mandates of WTO adjudicators. According to
and adjudicative bodies was further codified various sub-provisions of article 3, the system is
in several provisions intended to preserve expected to provide “security and predictability”
political control over the interpretation of the to the multilateral trading system, “clarify the
substantive commitments that WTO members existing provisions” of the WTO Agreement,
were in the process of making. First, the DSU deliver “prompt,” “satisfactory” and “positive”
provides, in two separate provisions, that WTO settlement of disputes, and maintain “a proper
adjudicative bodies cannot “add to or diminish balance of rights and obligations.” The Appellate
the rights and obligations” of WTO members.36 Body in particular “shall address each of the issues
Second, the Marrakesh Agreement reserves to raised,” but in “no case shall the proceedings
WTO members the “exclusive authority to adopt exceed 90 days.”40 All of these objectives are to be
interpretations” of the obligations contained achieved while not “adding to or diminishing the
in the WTO agreements.37 While in practice rights and obligations” of members and deferring
it may be difficult to distinguish between the to the members’ exclusive authority, under the
“clarifications” that are meant to result from the Marrakesh Agreement, to adopt interpretations
dispute settlement system38 and the “authoritative of their WTO obligations.41 Depending on the
interpretations” reserved for members alone,39 circumstances, these objectives and limitations
the clear intention was nonetheless that there be can be arranged in various configurations to justify
constraints on the ability of WTO adjudicators either an expansive law-making mandate for
to take on an expansive law-making role. adjudication or a more limited, deferential one.
Unanticipated Deficiencies in Second, like many international agreements, the

Marrakesh Agreement and the GATT contain text
the WTO Legal Framework that is imprecise and indeterminate, including
The significance of the removal of the veto over gaps, overlaps and even conflicts.42 There may be
report adoption and the creation of a judicialized several reasons for this, including, for example,
institution for appeals cannot be, and generally intentionally negotiated constructive ambiguity,
is not, underestimated. These changes can be insufficient legal review and parallel negotiations
credited for the unprecedented success of the over similar types of obligations.43 Many provisions
adjudication of international trade disputes in may also constitute “incomplete contracts” in
the WTO. However, they also fundamentally that they use general language that later needs
changed the character of the system in ways to be interpreted and applied in transaction-
that were likely not fully appreciated, or specific circumstances.44 Clarifying treaty
appreciable, at the time. Four characteristics of obligations that may be imprecise, indeterminate,
the legal framework created by the WTO, when ambiguous or incomplete, whether intentional
taken in combination, have turned out to have or not, is one of the objectives of dispute
unintended consequences for the functioning and settlement. However, in these circumstances
legitimacy of the dispute settlement system. an effective mechanism for political course
correction would be required to manage the
First, the multiple objectives set out in the DSU offer risks and consequences of interpretations
potentially competing visions of the priorities of
the dispute settlement system and, by implication,
40 See DSU, supra note 22, arts 17.12, 17.5.
36 DSU, supra note 22, arts 3.2, 19.2. 41 Marrakesh Agreement, supra note 1.
37 Marrakesh Agreement, supra note 1, art IX:2. DSU (supra note 22) article 42 Hudec, “Comment”, supra note 26 (“many of the WTO’s existing legal
3.9 further acknowledges the hierarchy of “authoritative interpretations” texts suffered from gaps, papered-over differences and other forms of
over the results of dispute settlement. legal incoherence” at 212). See also Lorand Bartels, “The Separation of
Powers in the WTO: How to Avoid Judicial Activism” (2004) 53 ICLQ 861
38 DSU (supra note 22) article 3.2 provides that the dispute settlement at 871.
system “serves to preserve the rights and obligations of Members under
the covered agreements, and to clarify the existing provisions of those 43 Bartels, supra note 42. See also USTR, “Improving Member Control”,
agreements.” supra note 21.
39 Claus-Dieter Ehlermann & Lothar Ehring, “The Authoritative Interpretation 44 Judith Goldstein & Richard Steinberg, “Regulatory Shift: The Rise of
Under Article XI:2 of the Agreement Establishing the World Trade Judicial Liberalization at the WTO” in The Politics of Global Regulation,
Organization: Current Law, Practice and Possible Improvements” (2005) Walter Mattli & Ngaire Woods, eds (Princeton, NJ: Princeton University
8:803 J Intl Econ Law. Press, 2009) at 211.

that were not intended or anticipated by, considerable degree of autonomy49 to affect the
and are not acceptable to, WTO members. rights and obligations of WTO members in ways
that were not only not intended, but in fact were
Third, as it turns out, compared to the high degree explicitly prohibited. Indeed, WTO adjudicative
of political control exercised over disputes by bodies benefit from more immunity from political
GATT contracting parties, the opportunities for override than domestic judicial bodies, even those
WTO members, either individually or collectively, explicitly granted judicial independence in a
to assert political oversight over adjudicator system of separation of powers between co-equal
interpretations have turned out to be limited. All branches of government. Even in the European
legal systems have some mechanisms of political Union, due to the more limited EU membership,
control, and in many domestic legal systems, its comparatively like-minded nature and qualified
co-equal branches of government provide checks majority voting on many issues, EU member states
and balances on each other.45 While in principle have more effective opportunities to overturn
the WTO’s adjudicative bodies are subordinate erroneous or politically unpalatable judgments of
to its political bodies, and can be overridden by the Court of Justice of the European Union (CJEU).
interpretations adopted by these bodies, consensus
decision making among the increasingly diverse While these four characteristics of the WTO
and fractious membership effectively precludes legal framework do not make an expansive
any collective action.46 A large majority of members role for adjudication inevitable,50 it is generally
could disapprove of a result of adjudication, but acknowledged they have allowed WTO adjudicators
it could still be adopted as final and binding as to engage in a degree of unintended law making.51
long as even one member approves, with little Over the years, different configurations of
prospect of “legislative” reversal of the outcome adjudicators, supported by different configurations
in the future. Although this imbalance has been of Secretariat legal support, have balanced the
widely acknowledged,47 the legitimacy risks have objectives and limitations of the dispute settlement
been downplayed on the grounds that political system in different ways. Some results have
control can still be exercised effectively through the reflected the “extraordinary circumspection and
expression of individual member views in the DSB, care” demanded of adjudicators by the weaknesses
the control over appointment and reappointment of of the political bodies.52 Other results amount
adjudicators, and ultimately the refusal to comply.48 to a “declaration of independence” in pursuit of
greater authority, autonomy and a more expansive
Finally, the combination of the multiple objectives law-making mandate for the institution.53
of dispute settlement, the need for determinations
on imprecise obligations, and ineffective political A certain amount of law making through
oversight has meant that WTO adjudicative bodies, adjudication is to be expected in any legal system,
and the Appellate Body in particular, enjoy a if only because resolving textual ambiguities will
inevitably result in clarifications of obligations
in a way that one party may not have originally
expected. Where there may be some disagreement,
however, is over how significant this law making
45 Bartels, supra note 42 at 866–68.
is in the WTO and whether it has positive or
46 Hudec, “Comment”, supra note 26 (“the WTO’s inability to legislate

on controversial issues would deprive WTO law of a safety valve that
49 See Ehlermann, supra note 46 (“In view of the weakness of the political
most other legal systems possess — the power to reverse errant rulings
decision-making process, the responsibility of the AB is enormous. It must
by legislation” at 212). See also Claus-Dieter Ehlermann, “Six Years on
proceed with extraordinary circumspection and care”, at 606).
the Bench of the ‘World Trade Court’: Some Personal Experiences as
Member of the Appellate Body of the World Trade Organization” (2002) 50 Steinberg, supra note 32 at 250.
36:4 J World Trade 605.
51 Ibid. See also Andrew Lang, “The Judicial Sensibility of the WTO
47 See Claude Barfield, “Free Trade, Sovereignty, Democracy: The Future Appellate Body” (2017) 27:4 Eur J Intl L 1096; Robert Howse,
of the World Trade Organization” (2001) 2:2 at 403–15. See also the “The World Trade Organization 20 Years On: Global Governance by
response by Hudec, “Comment”, supra note 26. See also Ehlermann & Judiciary” (2016) 27:1 Eur J Intl L 9.
Ehring, supra note 39 (warning that “if the legislative response...is not
available or not working, the independent (quasi-) judiciary becomes an 52 Ehlermann, supra note 46 at 606.
uncontrolled decision-maker and is weakened in its legitimacy” at 813).
53 Howse, supra note 51 at 28. See also Hélène Ruiz Fabri, “The WTO
48 Steinberg, supra note 32 at 249; Laurence Helfer & Anne-Marie Appellate Body or Judicial Power Unleashed: Sketches from the
Slaughter, “Why States Create International Tribunals: A Response to Procedural Side of the Story” (2017) 27:4 Eur J Intl L (celebrating the
Professors Posner and Yoo” (2005) 93 Cal L Rev 899. “rise of a fully-fledged judicial power” at 1080).

negative consequences, including whether it the European Union55 and Brazil.56 Shortly after
preserves or upsets the carefully negotiated the founding of the WTO, however, the United
balance of concessions and whether it enhances or States seems to have had second thoughts about
complicates efforts to address problems in trade the risks created by combining negative consensus
cooperation. On these points, there is a considerable adoption of reports with positive consensus
divergence of views among WTO members. member override.57 Early in the formal negotiations
to revise the DSU, the United States sought
amendments that would provide more checks and
balances in WTO dispute settlement, specifically
by providing for more “flexibility and member
Objections, Actions and

control,” as well as guidance on the “interpretative
approach” to be followed by adjudicators.58 These
Reactions proposals have been discussed extensively and

continuously since their formal introduction,
although progress has not been possible.59
It is tempting to consider that the crisis in the WTO
dispute settlement system, and the rules-based Over the intervening years, the United States
trading system more generally, started with the appears to have grown more concerned about what
election of the current US administration. Instead, it considered the risk and the reality of adjudicative
almost from the very founding of the WTO, the overreach, especially given its ongoing failure to
United States has only awkwardly accepted the convince other members of the need for more
encumbrances on its freedom of action that the effective checks and balances. It has expressed
move to the WTO represented. As soon as it became these concerns in a variety of circumstances
clear that there were few checks and balances on over the years, but they are now most succinctly
this new institutionalized and judicialized system, summarized in the US president’s 2018 Trade
the United States began a slow escalation of efforts Policy Agenda.60 They fall into three categories
to restore a balance more acceptable to it. Other of concern: certain substantive interpretations
members, and in many ways the institution itself, of WTO adjudicative bodies; certain systemic
have seen no real reason to engage with these approaches adopted by these bodies, especially
US efforts, focusing instead on consolidating the the Appellate Body; and certain procedural
independence and authority of the institution, actions of the Appellate Body that the United
while exploiting the various decision-making States considers to be beyond its authority.
rules to contain and limit US desire for reform. The
arrival of the most recent US administration has Under the category of substantive concerns, the
only brought these longstanding differences into United States considers that WTO adjudicators
clearer view, but in a manner that now may even have on a number of occasions “added to or
pose an existential threat to the system as a whole. diminished” the rights and obligations of WTO
The United States as

Persistent Objector 55 EC, “Communication from the European Economic Community”
(24 September 1987), MTN.GNG/NG13/W/12, online: <www.
worldtradelaw.net/document.php?id=history/urdsu/W12.pdf>.
It was the United States that originally sought to
strengthen the dispute settlement system in the 56 Brazil, “Communication from Brazil” (7 March 1988) MTN,GNG/
Uruguay Round,54 the judicialization of which was NG13/W/24, online: <www.worldtradelaw.net/document.
php?id=history/urdsu/W24.pdf>.
initially resisted by other major powers such as
57 Wolff, supra note 20; Stoler, supra note 54 (“United States negotiators
got what they wanted, but they don’t want it any longer” at 155).
58 USTR, “Improving Member Control”, supra note 21.
59 Ronald Saborio, “Report by the Chairman Dispute Settlement Body in

Special Session to the Trade Negotiations Committee” (12 December
2015) TN/DS/28.
60 USTR, “President’s 2018 Trade Policy Agenda”, supra note 17. See also
“Statements of the United States at the August 2018 Meeting of the
54 Hudec, “Comment”, supra note 26. See also Andrew Stoler, “The Dispute Settlement Body”, items 4 and 15 [USTR, “US Statements, August
WTO Dispute Settlement Process: Did the Negotiators Get What They 2018”], online: <https://geneva.usmission.gov/wp-content/uploads/
Wanted?” (2004) 3:1 World Trade Rev 99. sites/290/Aug27.DSB_.Stmt_.as-delivered.fin_.public.pdf>.

members, contrary to the express prohibition in the by treating their own past analysis almost as an
DSU.61 It cites specific instances of interpretations authoritative, even binding, source of interpretation
related to subsidies, technical barriers to trade, of WTO obligations. These concerns reveal a
safeguards, anti-dumping duties and countervailing disagreement about the nature of the dispute
duties, which the United States considers do settlement system. Whereas the United States
not reflect what was negotiated by members.62 considers the system to be more akin to contract
Some of these examples may simply be the sour arbitration, it considers that some important
grapes of a losing party, others may involve members and perhaps the Appellate Body itself
interpretations based on ambiguous obligations see it as “evolving kinds of governance” (sic).65
that reflect incomplete negotiation, and still others
may reflect legitimate concern that adjudication Under the category of procedural concerns, the
simply provided the wrong answer. Regardless of examples cited by the United States are simply
the underlying reason for the concern, they involve procedural manifestations of its concerns about
interpretations that might, in a well-functioning the mandate of the Appellate Body. First, it objects
system, be subject to review in the political to the approach taken by the Appellate Body since
bodies to confirm whether the results maintain 2011 when it cannot meet the strict deadline in
or modify the “proper balance between the rights the DSU for circulating its reports to members.66
and obligations” of members.63 Such a discussion Second, it now objects to the Appellate Body
is unlikely in the current legal framework, and deciding on its own to extend Appellate Body
even if it were to occur, any member that has members beyond the end of the terms fixed in the
benefited from the contested interpretation DSU, which it is authorized to do under rule 15 of
would simply pocket the advantage and block any the Working Procedures for Appellate Review.67 In
attempt to exercise collective political override. the case of compliance with the 90-day deadline,
the United States objects to a change in Appellate
Under the category of systemic concerns, the Body practice, whereas in the case of extensions of
United States has expressed a number of grievances Appellate Body members, the United States now
about how WTO adjudicators, in particular the objects to a rule that it had previously accepted for
Appellate Body, have defined the scope of their almost 20 years. Both issues involve provisions of
mandates. It refers in particular to a number of the DSU that impose conditions on the Appellate
instances that it considers involve obiter dicta Body, adherence with which the United States
or advisory opinions in reports, unauthorized considers to be essential to the legitimacy of the
review on appeal of the factual findings of panels, system. But more importantly for the United
in particular those related to domestic law, and States is that the subordination of the Appellate
the inappropriate legal status given to past Body to the DSB means that only the DSB can
adjudicator reports.64 The concern is not so much decide to waive compliance with either of them.
that adjudicators have modified the rights and In other words, the United States objects to the
obligations of members, although this may also be
the result in certain circumstances. Instead, it is
about adjudicators exceeding their mandates by 65 Lighthizer interview, supra note 3. See also Anthea Roberts, Is
providing legal reasoning and findings on issues International Law International? (Oxford, UK: Oxford University
beyond those necessary to resolve disputes, or Press, 2017). See also Ricardo Ramírez-Hernández, “Farewell
Speech of Appellate Body Member”, WTO Appellate Body (28
May 2018), online: <www.wto.org/english/tratop_e/dispu_e/
ricardoramirezfarwellspeech_e.htm> (“is the WTO a contract or a
constitution?”).
61 USTR, “President’s 2018 Trade Policy Agenda”, supra note 17.
66 USTR, “President’s 2018 Trade Policy Agenda”, supra note 17 at 24–25.

62 Ibid at 23–24.
See also USTR, “Statements of the United States at the June 2018
63 DSU, supra note 22, art 3.3. Meeting of the Dispute Settlement Body” (22 June 2018) (item on DSU,
article 17.5) [USTR, “US Statements, June 2018”], online: <https://
64 USTR, “President’s 2018 Trade Policy Agenda”, supra note 17 at geneva.usmission.gov/wp-content/uploads/2018/06/Jun22.DSB_.Stmt_.
26–28. See also USTR, “Statements of the United States at the May as-delivered.fin_.public.pdf>.
2016 Meeting of the Dispute Settlement Body” (16 May 2016) (item on
reappointment of an Appellate Body member) [USTR, “US Statements, 67 WTO, Working Procedures for Appellate Review (adopted 16 August
May 2016”], online: <www.wto.org/english/news_e/news16_e/ 2010), WTO Doc WT/AB/WP/6; USTR, “2018 Trade Policy Agenda”,
us_statment_dsbmay16_e.pdf>; USTR, “Statements of the United States supra note 17 at 25–26. See also USTR, “Statements of the United
at the November 2017 Meeting of the Dispute Settlement Body” (22 States at the March 2018 Meeting of the Dispute Settlement Body” (27
November 2017) (item on adoption of reports in Indonesia—Horticultural March 2018) (item on Appellate Body matters) [USTR, “US Statements,
Products) [USTR, “US Statements, November 2017”], online: <https:// March 2018”], online: <https://geneva.usmission.gov/wp-content/
geneva.usmission.gov/wp-content/uploads/2017/11/Nov22.DSB_.pdf>. uploads/2018/03/Mar27.DSB_.Stmt_.as-delivered.fin_.rev_.pdf>.

Appellate Body’s claim of independent authority to persistently across successive US administrations.72
determine its own schedule and roster of members. The current impasse is just the latest instalment
in a longstanding, but progressively escalating,
As a result of its substantive concerns about the effort to bring about, either through collective or
law-making character of certain interpretations, individual action, a different balance between the
its systemic concerns about certain approaches political and adjudicative functions of the WTO.
taken by the Appellate Body, and its procedural However, what started out as an effort to restore
concerns about the Appellate Body unilaterally a degree of member control and provide guidance
disregarding the treaty limits placed upon it, on appropriate interpretative approaches now
the United States has sought to exercise more may be about much more, given the current US
political control over the operation of the dispute administration’s concerns about multilateralism and
settlement system. It initially attempted to engage the terms of its trade with other major economies.
in negotiations to strengthen the legal framework
for political oversight.68 It has been persistent
in its objections, in the DSB and elsewhere, to
Reactions of Other Members
what it considers were instances of adjudicator There is, of course, room for legitimate
overreach.69 With consensus decision making disagreement about whether political checks and
preventing any collective action, the United balances on adjudicative outcomes are necessary
States began resorting to techniques to exercise or sufficient, about whether WTO adjudicators
unilateral influence over the adjudicative process. have in fact exceeded their mandate and, if so,
It started by refusing to support the reappointment whether either of these present a problem for
of two US nationals on the Appellate Body, first the dispute settlement system specifically or
in 2007 and again in 2011. This tactic eventually for trade cooperation generally. For starters,
expanded to include requests to “interview” any US proposals to introduce more “flexibility and
Appellate Body member seeking reappointment, member control” into the DSU have received very
culminating in its refusal in 2016 to support the little support from other members, in part out
reappointment of Seung Wha Chang, the Appellate of concern that the real objective was to restore
Body member from Korea.70 Starting in 2011, along power-based features to the dispute settlement
with some other members, the United States began system in which the United States could use
confronting the Appellate Body about the latter’s its leverage to achieve more favourable results.
claim of independent authority to deliver reports There is no doubt some truth to this, and past
after the deadline without seeking the agreement and recent statements from USTR Lighthizer
of the parties or the permission of the DSB.71 have only served to heighten such concerns.73
This sequence of events highlights the long history Regarding US concerns about certain substantive
of US concerns about, and responses to, what it interpretations, many of these concerns have been
considers to be adjudicative overreach under the shared by one or more other members on different
judicialized system that was established in the occasions.74 Statements of disagreement in the
WTO. Whether or not one agrees with US concerns, DSB are not in themselves confirmation of WTO
its motivations or its tactics, it is hard to say that adjudicator error or overreach, as losing parties
the United States has not acted consistently and will invariably criticize, and winning parties will
72 There have nonetheless been occasions where the United States has
supported what could be seen as adjudicative law making, including
controversial rulings related to the submission of amicus curiae briefs
69 USTR, “President’s 2018 Trade Policy Agenda”, supra note 17; USTR, and open hearings, and the Appellate Body’s self-assigned authority to
“US Statements, August 2018”, supra note 60; USTR, “US Statements, “complete the analysis.” On the first, see WTO, Minutes of the General
May 2016”, supra note 64; USTR, “US Statements, November 2017”, Council Meeting (held November 2000), WTO Doc WT/GC/M/60. On
supra note 64; USTR, “US Statements, June 2018”, supra note 66; USTR, the second, see WTO, Minutes of the Dispute Settlement Body Meeting
“US Statements, March 2018”, supra note 67. (held July 1997), WTO Doc WT/DSB/M/36.
70 “US Statements, May 2016”, supra note 64. 73 Lighthizer interview, supra note 3.
71 USTR, “US Statements, August 2018”, supra note 60; USTR; “US 74 Terrence Stewart, “The Broken Multilateral Trade Dispute System”
Statements, June 2018”, supra note 66. See also WTO, Minutes of the (Washington, DC: Asia Society Policy Institute, 2018), online: <www.
meeting of the Dispute Settlement Body (held on 10 July 2012) WTO Doc stewartlaw.com/Content/Documents/Terence%20P.%20Stewart%20-%20
WT/DSB/M/319. The%20Broken%20Multilateral%20Trade%20Dispute%20System.pdf>.

invariably praise, the outcome.75 However, it is independent tribunal to control its timetable. That
also not necessarily the case that just because a the negotiating history, architecture and text of
party lost, its criticism is biased and unfounded, the DSU may not support these more ambitious
and that adjudication delivered an appropriate expectations is either only a matter of semantics79
and legitimate outcome. Since very few members or just evidence that the system has evolved
comment in the DSB on the results of disputes in beyond the original intention reflected in the DSU.
which they were not the main parties, evaluating
the legitimacy of certain interpretations on the Reflecting this broader conception of the role of
basis of DSB discussion of specific disputes is adjudication, many members accuse the United
fraught with difficulty.76 More than anything, States of attempting to undermine the “judicial
the unrepresentativeness of DSB discussions, independence” of the Appellate Body and the
combined with the ability of a successful “international rule of law.”80 While these claims
disputing party to block any effort to collectively seem to be justified in light of the more recent
override a given interpretation, only confirms pronouncements of senior members of the US
that in the end there are no effective checks and administration, including the president himself,81
balances on the WTO adjudicative function.77 they do not address the longer standing concerns
of the United States that institutional imbalance
There is even less agreement with the United undermines the legitimacy of the WTO (and may
States on its systemic and procedural concerns even be partly responsible for provoking the
about certain approaches of the Appellate Body. worrying rhetoric of the current US administration).
For a variety of reasons, many other members These members seem to consider judicial
have more ambitious expectations for the dispute independence only in binary terms; anything that
settlement system than the United States. They interferes with the absolute right of a tribunal to
see the Appellate Body, as the institution often be wrong will, by definition, revert the dispute
sees itself, as an independent world court charged settlement system to a power-based system. But
with providing clarification, and even promoting even if the WTO legal framework envisaged an
evolution, of the trade rules for the benefit of all independent judiciary — although the United
members.78 The European Union (i.e., the European States disputes this82 — judicial independence
Commission) may be more comfortable with does not exist in a vacuum. A true system of
activist adjudicators, given the contribution the separation of powers depends upon the dynamic
CJEU has made to constructing the internal EU interaction between equally effective rule making
legal order; other powerful members may tolerate and adjudicative bodies. There can be said to be a
unchecked adjudicator law making as long as it “politically optimal level of judicial independence.”83
affects the rights and obligations of the United In the case of the WTO, the relatively weaker
States proportionately more than it does them; and ineffective rule-making function magnifies
and smaller WTO members may support a strong the power of the adjudicators, along with the
tribunal as their last defence against potential implications of their legal findings and conclusions.
pressure from more powerful states. For many,
therefore, adherence to precedent provides
predictability, obiter provides needed clarity over
79 See e.g. Joseph Weiler, “The Rule of Lawyers and the Ethos of Diplomats:
imprecise obligations, and it is natural for an Reflections on the Internal and External Legitimacy of WTO Dispute
Settlement” (2001) 35:2 J World Trade 191 (“the Appellate Body is a
court in all but name” at 201).
75 Cosette Creamer & Zuzanna Godzimirska, “(De)Legitimation at the WTO 80 WTO, Minutes of the Meeting of the Dispute Settlement Body (held on
Dispute Settlement Mechanism” (2016) 49 Vand J Transnat’l L 275. 28 May 2016) WTO Doc WT/DSB/M/379. See also James Bacchus,
“Might Unmakes Right: The American Assault on the Rule of Law in World
76 Ibid. See also Steinberg, supra note 32. Trade”, CIGI, CIGI Papers No 173, 18 May 2018.
77 Alec Stone Sweet & Thomas L Brunell, “Trustee Courts and the 81 White House, “2018 White House Business Session”, supra note 2;
Judicialization of International Regimes: The Politics of Majoritarian Lighthizer interview, supra note 3; Bolton, supra note 5.
Activism in the European Convention on Human Rights, the European
Union, and the World Trade Organization” (2013) 1:1 JL & Courts 61 82 USTR, “President’s 2018 Trade Policy Agenda”, supra note 17; USTR, “US
(“To the extent that override is, in practice, off the table, indirect controls Statements, November 2017”, supra note 64. See also Steger, supra note
will be ineffective” at 66). 29.
78 Van den Bossche, supra note 29; Howse, supra note 51; Fabri, supra 83 Erik Voeten, “International Judicial Independence”, in Jeffrey L Dunoff
note 53; Isabelle Van Damme, “Treaty Interpretation by the WTO & Mark A Pollack, eds, Interdisciplinary Perspectives on International
Appellate Body” (2010) 21:3 EJIL 605 (“From the outset, the Appellate Law and International Relations: The State of the Art (Cambridge, UK:
Body made the conscious choice to function as if it were a court” at 606). Cambridge University Press, 2012) 421 at 424.

Other members, and in more recent years As the current turmoil in international trade
the institution itself, have never adequately relations attests, such a bargain may be difficult
acknowledged this concern or engaged with the to achieve. But at a minimum, this may require
United States in a genuine discussion of how to updating the rules to ensure a level playing
accommodate diverging expectations about the field between market-oriented economies,
appropriate institutional balance. They had no for which the trading system was originally
reason. The negative consensus rule that allows designed, and economies that retain significant
any dispute settlement report to be adopted non-market features, to which the current rules
virtually automatically, combined with the may not adequately apply.86 Such a revision
positive consensus rules that effectively prevent might include new interpretations of existing
any collective censure of adjudicators or efforts rules (for example, dealing with subsidies, anti-
to modify the DSU, have allowed the Appellate dumping duties and safeguard measures, etc.),
Body to pursue its “declaration of independence”84 in some cases by modifying interpretations that
unchecked by any political oversight that emerged in previous WTO disputes. It might also
might have helped ensure the legitimacy of the include the introduction of new or strengthened
outcomes, and of the system more generally. It disciplines (for example, dealing with SOEs,
should perhaps now not come as a surprise that competition, transparency, and so forth). The
the same consensus rules that have been used content of these new substantive rules is not
so effectively to sideline US concerns for many the focus of this analysis, but if and when the
years are now being used by the United States to major economies recommit to the rules-based
ensure that its concerns can no longer be sidelined. trading system, it will presumably retain a
Since all members share the responsibility for binding dispute settlement system. Based on the
allowing it to come to this point, all members evaluation offered in the previous sections, this
bear the responsibility to find a way forward. section focuses on possible features of a restored
and updated dispute settlement function.
In the initial stages of the impasse in the DSB

over Appellate Body appointments, there was
some discussion of excluding the United States
Options for Restoring from decision making or recreating a separate
mechanism for appellate review to operate without
the Dispute Settlement US involvement.87 The idea was to deprive the
United States of its leverage over the regular system
Function while allowing other members continued access
to appellate review. Fortunately, it does not appear
It is likely that the fate of the WTO dispute that any WTO member government officially
settlement system no longer depends only endorsed these proposals. In addition to many legal
on the ability of WTO members to reach an and practical challenges with attempting to work
accommodation on the essential features and around the US stranglehold on the Appellate Body,
operation of that system. It may now be linked, doing so would be counterproductive. For instance,
directly or indirectly, to the outcomes of changing overriding the United States through voting
perceptions of the value of institutionalized would only further undermine the legitimacy of
multilateral cooperation and the shifting global the system and make its unravelling even more
balance of economic power.85 Restoration of the likely. The United States would be unlikely to
dispute settlement function may only be possible submit to, or abide by the results of, an appeal
as part of a new bargain that updates the balance heard by an Appellate Body division composed
of rights and obligations, as was the case for the
new features of the DSU that only came into force
as part of the conclusion of the Uruguay Round. 86 Wu, supra note 16.
87 Robert McDougall, “The Search for Solutions to Save the WTO Appellate
Body”, European Centre for International Political Economy (December
2017), online: <http://ecipe.org/publications/the-search-for-solutions-
84 Howse, supra note 51.
to-save-the-wto-appellate-body>; Tetyana Payosova, Gary Hufbauer
85 Zaki Laidi, “Is Multilateralism Finished?”, Project Syndicate (18 May & Jeffrey Schott, “The Dispute Settlement Crisis in the World Trade
2018), online: <www.project-syndicate.org/onpoint/is-multilateralism- Organization: Causes and Cures”, Peterson Institute for International
finished-by-zaki-laidi-2018-05>. Economics, PIIE Policy Brief 18-5 (March 2018).

of any members appointed over its objections. “extraordinary circumspection and care”88
Likewise, creating a parallel system would not in interpreting WTO obligations.
deprive the United States of leverage, but would
in fact give it exactly what it appears to want: →→ The purpose of appellate review is to
either a much weaker ad-hoc appeal mechanism protect against erroneous panel results
or an exemption from binding dispute settlement and incoherence between panel reports,
outright. The United States would likely eventually and is not meant to be an opportunity for
sign up to a parallel ad-hoc appeal mechanism re-evaluation of the facts or for expansive
and push to dismantle the original one. In any advisory analysis of legal provisions.
event, for most members, for whom the United
→→ To retain the legitimacy of the system and the
States is their largest trading partner, a dispute
overall balance of rights and concessions, an
settlement mechanism that does not apply to the
effective mechanism of political counterbalance
United States holds vastly diminished appeal.
is both necessary and appropriate.
Guiding Principles for the →→ Not every trade dispute can be or should
Dispute Settlement System be resolved through adjudication, so
there should be effective opportunities,
The future of rules-based multilateral trade
and the will to use them, for alternative
cooperation depends instead on achieving an
and conciliatory dispute settlement.
accommodation of the various interests in the
operation of a dispute settlement system. Arriving With these principles in mind, a number of possible
at such an accommodation might be facilitated by changes could be made to restore and update
consideration of a number of guiding principles the dispute settlement function and enhance
by which dispute settlement should operate. its legitimacy. Changes could be made in five
areas, including to: improve institutional balance;
→→ A compulsory and binding dispute settlement
redirect some issues away from adjudication;
system, including automatic initiation of
clarify the mandate and approach of adjudication;
disputes and adoption of results, is an essential
improve the institutional support for adjudication;
feature of the rules-based trading system.
and address a number of procedural issues.
→→ WTO members have the responsibility to
administer, collectively, the dispute settlement Improve Institutional Balance
system, including the right to modify the As already indicated, all legal systems have some
mandate of adjudication and to override any mechanism for political control. Legitimacy is
interpretation advanced by adjudicators. difficult to sustain in its absence. It is a question
of achieving the right balance. Under the GATT,
→→ The primary objective of the dispute
individual countries could block the dispute
settlement mechanism is to resolve disputes
settlement process, which improved its legitimacy
between members in a prompt and positive
but undermined its effectiveness. By removing this
manner, and all other objectives are
right completely, which addressed the effectiveness
incidental and subordinate to this task.
problem, the WTO has perhaps gone too far the
→→ Retaining trust in the system requires that other way, which has undermined its legitimacy.
adjudicators remain independent and impartial, This institutional imbalance was recognized early in
and that members refrain from any action the life of the WTO,89 and over the years there have
that might undermine this impartiality. been proposals to strike a different balance between
→→ To preserve the delicate political balancing

88 Ehlermann, supra note 46. See also John Jackson, “Governmental
act that multilateral trade agreements Disputes in International Trade Relations: A Proposal in the Context
represent, adjudicators should exercise of GATT” (1987) 13:1 J World Trade 1 (“Internationally, a case can
be made that in order to encourage nations to be willing to submit
themselves to an adjudicatory system, it will be necessary for that system
to be cautious in interjecting the judges’ choices of policy goals into
previously agreed rules. Therefore, the rules should be cautiously and
restrictively interpreted or applied” at 10).
89 Hudec, “Comment”, supra note 26; Ehlermann, supra note 46; Barfield,
supra note 47; Stoler, supra note 54.

political control and adjudicator independence. But to issues of specific concern.97 It will be extremely
nothing has been done to correct the situation. difficult to move away from consensus (positive
or negative) in the area of dispute settlement, but
On one end of the spectrum are the ideas of it is becoming obvious that the current approach
reverting to individual member veto90 or allowing does not sufficiently safeguard the delicate
disputing parties to remove certain parts of balance between political and legal considerations
reports prior to adoption.91 These proposals would in the interpretations of the trade rules.
reintroduce power-based features into the system
and therefore would unlikely be unacceptable to
most members (and have indeed been rejected
Redirect Some Issues Away
for that reason in the negotiations to revise the from Adjudication
DSU). On the other end of the spectrum are The de facto automaticity and lack of political
proposals that Appellate Body members serve one filters in the dispute settlement system have
term of longer duration than the current single created an environment in which any issue can
terms and that they be made permanent.92 These be subject to adjudication, despite its potential
changes would deprive WTO members of the ramifications for the integrity of the trading
opportunity to interfere with the functioning of the system. Some trade disputes just should not be
Appellate Body, but in themselves do not address resolved through adjudication, including where
the underlying legitimacy concerns and would WTO obligations are imprecise as a result of
probably just divert the pressure elsewhere. They incomplete negotiations or where an issue is so
would therefore likely be unacceptable to some, politically sensitive that an adjudicated outcome
at least not without the introduction of another risks undermining the system (national security,
effective means to exercise political oversight. for example). These disputes may be better resolved
outside the adjudicative process. The current
The answer to restoring balance and enhancing system relies on self-restraint in avoiding such
legitimacy lies instead in strengthening collective sensitive disputes, but as the membership of
political oversight of disputes. This might include the WTO grows and trade disputes reach further
increasing political control over the launch and and further into domestic regulation, that self-
finalization of certain disputes, or certain stages restraint may be starting to break down. Some
of disputes, or increasing the chances of political additional filters could be introduced in its place.
override of the results of adjudication. Some ideas
include greater recourse to voting,93 minority First, the more contentious trade rules could be
blocking of report adoption,94 adoption of parts of made non-justiciable, removing them from the
reports,95 or some form of review of the results of jurisdiction of adjudication, either ex ante or on
adjudication by expert groups.96 The introduction of a dispute-specific basis. A mechanism could be
“interim review” of appeal reports might provide an developed to allow a member to petition the
opportunity for the Appellate Body to be sensitized governing bodies (or an expert group) to exempt
a matter from adjudication, perhaps on condition
that an alternative political or conciliation process
be initiated to resolve the issue. Second, WTO
90 Lighthizer interview, supra note 3; Barfield, supra note 47.
adjudicators could be authorized to decline to hear,
91 USTR, “Improving Member Control”, supra note 21. or to make findings on, controversial matters, either
92 Bacchus, supra note 80. The European Union has also proposed such on their own initiative or in response to a petition
an amendment: see EC, “European Commission presents comprehensive from a party. This could also be done either as part
approach for the modernisation of the World Trade Organisation”
(18 September 2018), online: <http://europa.eu/rapid/press-release_
of a request for leave to appeal (certiorari) or by
IP-18-5786_en.htm>. abstaining from making findings in the course of a
93 Jennifer Hillman, “Moving Towards an International Rule of Law”,
dispute (non liquet). It could also be connected to
in Gabrielle Marceau, ed, A History of Lawyers in the GATT/WTO: a process that refers the matter to the governing
The Development of the Rule of Law in the Multilateral Trading System bodies for political resolution (a form of “legislative
(Cambridge, UK: Cambridge University Press, 2015) 60 at 75.
remand”).98 Third, to facilitate resolution of sensitive
94 Hudec, “Comment”, supra note 26; Barfield, supra note 47. issues, the Appellate Body could be allowed to
96 Peter Sutherland, The Future of the WTO: Addressing Institutional 97 USTR, “Improving Member Control”, supra note 21.
Challenges in the New Millennium: Report by the Consultative Board to
the Director-General (Geneva, Switzerland: WTO, 2004) at 56. 98 Payosova, Hufbauer & Schott, supra note 87.

suspend its proceedings in certain circumstances, Anti-Dumping Agreement, broadly interpreted,
similar to what panels can already do, either on its is “capable of general application.”102
own initiative if it considers the issue too sensitive
or in response to an individual or joint request Third, the mandate of the Appellate Body could be
from the parties.99 Panels might be encouraged, clarified to introduce a higher standard of deference
even instructed, to make more use of their toward panel findings. At a minimum, this might
prerogative to “consult regularly with the parties include a higher standard of review of panel factual
to the dispute to give them adequate opportunity findings than that employed under article 11, as well
to develop a mutually satisfactory solution.”100 as explicit exclusion from appellate review of panel
findings related to the operation of national laws.103
Clarify the Mandate and To minimize the risk of advisory opinions and
obiter dicta, the Appellate Body could be instructed
Approach of Adjudication to “address each of the issues” only in a manner
As detailed as it is, the DSU is still imprecise and necessary to resolve the dispute before it. More
incomplete on a number of matters, including the ambitiously, the Appellate Body could be given the
objectives of the system, the standards of review, authority to decide which appeals, or which parts
and the scope of adjudication and of appellate of appeals, to hear (certiorari), based on broadly
review. Further guidance could be provided in these defined circumstances such as when panel reports
areas to streamline the adjudicative function. risk creating inconsistency, demonstrate evidence
of manifest legal error, involve matters of significant
First, it could be clarified that the primary public interest or of systemic interest to the trading
objectives of the dispute settlement system system, or disputes over imprecise obligations.
are the “prompt, satisfactory and positive
settlement of disputes” and the “maintenance Fourth, further guidance could be provided
of the balance of concessions,” that adjudicators on the appropriate approach to be taken to
need only “clarify existing provisions” when interpretation.104 Based on the reference in
necessary to achieve these primary objectives, DSU article 3.2 to “customary rules of public
that the function of adjudicators is to “assist the international law,” the rules of interpretation of
DSB in making recommendations,” and that it the Vienna Convention on the Law of Treaties are
is the achievement of these primary objectives employed to interpret WTO obligations, which
that provides “security and predictability” places initial emphasis on the ordinary meaning
to the trading system. A prioritization of the of the text over other techniques to determine
objectives in this way would provide guidance to the meaning and results in frequent recourse
adjudicators about when and how to elaborate to dictionary definitions. Additional guidance
findings related to certain provisions. could be provided that reiterates the importance
of giving clear effect to the intention of WTO
Second, the standard of review to be employed by members as fully and fairly as possible.105
adjudicators when reviewing national measures
could be further elaborated. A more prescriptive Finally, the role and status of past adjudicator
and deferential standard of review could be reports could be further clarified. While the
adopted to supplement the current requirement current practice of de facto precedent contributes
to make an “objective assessment of the facts,”101 to the predictability of the trading system, a more
especially in cases where obligations are vibrant and transparent “dialogue” between
ambiguous or cases involving national measures
that result from quasi-judicial proceedings. This
might include reviving the issue of whether the 102 WTO, Decision on Review of Article 17.6 of the Agreement on
standard of review set out in article 17.6 of the Implementation of Article VI of the General Agreement on Tariffs and
Trade 1994 (1995), online: <www.wto.org/english/docs_e/legal_e/40-
dadp2.pdf>.
103 USTR, “Report on China’s WTO Compliance”, supra note 13 at 27–28.

See also the Comprehensive and Economic Trade Agreement between
99 USTR, “Improving Member Control”, supra note 21. Canada, of the one part, and the European Union [and its Member
States...], 30 October 2016 (provisionally entered into force 21
100 DSU, supra note 22, art 11. September 2017) [CETA], art 8.31(2).
101 Ibid. See also Jan Bohanes & Nicolas Lockhart, “Standard of Review in 104 USTR, “Improving Member Control”, supra note 21.
WTO Law”, in Daniel Bethlehem et al, eds, The Oxford Handbook of
International Trade Law (Oxford, UK: Oxford Handbooks Online, 2009). 105 Steinberg, supra note 32; Cartland, Depayre & Woznowski, supra note 17.

adjudicators might better serve the integrity and statement of the eligibility requirements for those
legitimacy of the dispute settlement system in the seeking to be appointed to adjudicator roles.
long run.106 This dialogue might be encouraged by
eliminating the requirement for “collegiality”107 Second, more could be done to balance the role
among Appellate Body members (relying instead of adjudicators and their permanent secretariats,
on the maxim of “the one who hears must decide”) perhaps by mandating more frequent turnover
and eliminating the bias against dissents, both in the dispute settlement secretariats. This
horizontal (i.e., on the same panel or Appellate might include caps on the duration of senior
Body division) and vertical (i.e., from panels management positions, for example in the case
of prior Appellate Body reports). There might of the Appellate Body, to a term shorter than
also be a mechanism for the DSB to adopt, on the longest term of an Appellate Body member.
consensus, only parts of a panel or Appellate For legal staff, a system of law clerks might be
Body report,108 or alternatively, to adopt only considered, again with the objective of making
the findings and recommendations, relegating the adjudicators the most experienced and
the entirety of the reasoning to background.109 knowledgeable in the institution and preserving
the support function of the Secretariat.
Improve Institutional
Support for Adjudication Address a Number of
The institutionalization and judicialization
Procedural Issues
of dispute settlement in the WTO have Several procedural controversies over the years
contributed significantly to the effectiveness have interfered with the proper functioning of
of trade adjudication and the “security and the dispute settlement system, some of which
predictability” of the trading system. As part of can largely be seen as reflecting US efforts to
recalibrating the balance between WTO political apply pressure to WTO adjudicators in the
bodies and adjudication, and to protect against face of the country’s failure to achieve more
the politicization of the adjudicative bodies formal mechanisms of political oversight.110
and against the consolidation of institutional While it is unlikely that these procedural issues
biases, additional changes might be made to can be addressed without some resolution of
the institutional structures of adjudication. the broader substantive and systemic issues,
resolution of the broader issues might also
First, the process for selection of adjudicators could reduce the risk of these procedural crises being
be improved. The judicialization of the politics repeated. They might be addressed together.
that are embedded in constructively ambiguous
obligations risks leading to the politicization of First, the deadline for appeals could be clarified. In
the “judiciary.” This may already be seen in the the current dispute settlement environment, the
nomination process. A more neutral, arms-length mandated 90-day deadline for the Appellate Body
mechanism for the appointment of adjudicators appears increasingly unrealistic. If the mandate
could be developed, perhaps as part of a set of for adjudication and the role of the Appellate Body
reforms that also removes some of the more were to be narrowed along the lines described
politically sensitive issues from adjudication. above, the ability to meet this deadline should
At a minimum, this might include a clearer improve. Otherwise, as part of a package of reforms
that improves institutional balance in other
ways, the deadline could be removed, extended
or deemed to be met when certain objective
106 Meredith Kolsky Lewis, “Dissent as Dialectic: Horizontal and Vertical conditions are met or the DSB decides to do so.111
Disagreement in WTO Dispute Settlement” (2012) 48:1 Stan J Intl L 1.
See also Jacob Katz Cogan, “Competition and Control in International Second, the process for reappointing Appellate
Adjudication” (2008) 48:2 Va J Intl L 416 at 449.
Body members could be better regulated. The
107 Claus-Dieter Ehlermann, “Experiences from the WTO Appellate Body” recent US insistence on “interviewing” Appellate
(2003) 38 Tex Intl LJ 469 (“The system of ‘exchange of views’ could have
been criticized by WTO Members as being contrary to the DSU. It is
Body members seeking reappointment has been
remarkable that this has not been the case” at 477).

110 See the section in this paper entitled “Objections, Actions and Reactions.”
109 Henry Gao, “Dictum on Dicta: Obiter Dicta in WTO Disputes” (2018)
17:3 World Trade Rev 509. 111 USTR, “US Statements, June 2018”, supra note 66.

a source of controversy. While it seems to be DSU Amendments
agreed that reappointment is not automatic, there
The most certain way to modify the operation
is disagreement about which justifications can
of the dispute settlement system is through
be used to deny reappointment.112 As currently
amendment of the DSU. Amendment would likely
one of the only mechanisms to exercise political
be required for any structural or institutional
control, it might be difficult to remove the need
changes, and could also be used to make
for reappointment altogether. The improvement
provisions of the DSU more prescriptive about
of other opportunities for collective member
the mandate of adjudication. Unlike most other
oversight as well as the establishment of agreed
WTO agreements, the DSU can be amended
rules of engagement for reappointment might
by consensus in the General Council, and the
mitigate the risk that individual members will
amendments would take effect immediately.114
attempt to influence Appellate Body members
The history of efforts to amend the DSU, however,
this way or make it possible to reach agreement
suggest that this is unlikely to be achievable in
to eliminate the need for reappointment.
a timely manner. As legally simple as it might
Third, the impasse in the DSB over the appointment be, attempting to amend the text of the treaty
of new Appellate Body members is ostensibly risks evolving into discussion of whether other
about the conditions and procedures by which amendments should also be pursued. Engaging in
the final terms of outgoing members can be a more far-reaching reform exercise might delay
extended. Despite the longstanding practice of the process and extend the period of diminished
the Appellate Body alone granting extensions, the capacity of the dispute settlement system.
current length of appeals justifies some concern.113
The solution to this issue is largely technical and Authoritative Interpretations
should be straightforward to implement once the As already discussed, article IX:2 of the
broader political issues have been addressed. It Marrakesh Agreement provides members with
might involve, for example, limits on appeals being the “exclusive authority to adopt interpretations”
assigned to members late in their terms, stipulated of the Multilateral Trade Agreements, including
conditions under which a member assigned to the DSU, as long as they do not “undermine
an ongoing case will not be extended, and limits the amendment provisions in Article X.”115
on the ability of extended members to interact Authoritative interpretations could be used
with appeals in which they are not involved. to address many of the issues raised.
Despite the sophistication of WTO dispute

settlement, the text of the DSU is still imprecise and
incomplete in many important areas, for example,
Choice of Instruments
regarding the mandate and interpretative approach
of adjudicators. Authoritative interpretations
could elaborate on certain provisions of the
The legal framework of the WTO provides DSU or modify any procedural principles and
several instruments to implement revisions to rules of interpretation that have been created
the operation of the dispute settlement system. by WTO adjudicators. There are some limits to
Which one is used would depend upon the level what can be done by authoritative interpretation.
of ambition and complexity, and expectations More significant structural changes such as the
about timing. The most notable are amendments number and status of Appellate Body members,
to the DSU, “authoritative interpretations” of the requirement for reappointment, a system to
provisions of the DSU or other WTO agreements, request leave to appeal, or an improved mechanism
decisions of the General Council or DSB, and for collective oversight, would all be difficult to
amendments to the Working Procedures for implement solely through interpretations. But
Appellate Review. There may be other approaches. other issues, such as prioritizing the objectives of
114 See Marrakesh Agreement, supra note 1, art X:8. Article IV:2 provides
that the General Council conducts the functions of the Ministerial
112 USTR, “US Statements, May 2016”, supra note 64. Conference between its sessions.
113 USTR, “US Statements, March 2018”, supra note 67. 115 Marrakesh Agreement, supra note 1, art IX:2.

dispute settlement (articles 3 and 19.2), establishing lies with the Appellate Body itself.118 However, if
various standards of review (articles 11, 12.7, 17.6 the DSU were amended or interpreted in a manner
and 17.12), limiting the scope of appeal (articles 17.6 that had consequences either for the current
and 17.12), and providing guidance on interpretative working procedures or for the current operation of
approaches (article 3.2), among others, could dispute settlement, the Appellate Body would have
be implemented by adopting interpretations an obligation to amend the working procedures
of the relevant provisions of the DSU. to make them consistent with the revised or
interpreted DSU. For example, if it is agreed that
Authoritative interpretations could also be only those members of the Appellate Body that
adopted to “override” various interpretations hear a case should be involved in developing
in past WTO reports that members might agree the findings in that dispute, or that adjudicator
need to be overturned or further clarified. dissents should not be actively discouraged, these
Obtaining agreement on most of these would principles could be implemented through revisions
likely be difficult and time consuming, but to, or authoritative interpretations of, the relevant
members might want to consider what kinds provisions of the DSU (for example, articles 17.1,
of substantive corrections might be feasible 17.3 or 17.11). In such circumstances, the Appellate
and agreeable if more dramatic changes to the Body would need to amend the paragraphs of the
dispute settlement system are unacceptable. working procedures that deal with “collegiality”
(rule 4) and dissent (rule 3.2) to make them
DSB Decisions consistent with this interpretation of the DSU.
The DSB has the authority and the responsibility
to “administer [the] rules and procedures” set
out in the DSU.116 Except for those decisions that
explicitly require negative consensus, all other
decisions of the DSB are to be taken by positive
consensus.117 Positive consensus decisions of
Conclusion
the DSB are quite rare, with appointments and
These are turbulent times for international trade
reappointments of members of the Appellate Body
cooperation. Ongoing structural transformation
probably constituting the largest number of such
of the global economy and political upheaval in a
decisions over the years (outside of adoption of
number of countries have unsettled multilateral
meeting agendas and annual reports). A number
approaches to cooperation that have largely worked
of possible adjustments could be implemented by
well for the past 70 years. It is not surprising that
consensus DSB decision. These might include, for
binding dispute settlement is caught in the fray,
example, guidance on the interpretative approach
given its essential role in preserving the security
to be employed by adjudicators, supplemental
and predictability of the rules-based trading
criteria for the qualifications of Appellate Body
system. Indeed, while the major innovations
candidates, regularization of the launch of the
codified in the DSU have contributed to the success
appointment process, rules of engagement for
of the system, they also changed its nature in
collective meetings with Appellate Body members
ways that have had unintended consequences
seeking reappointment, and procedures to
that may have contributed to global discontent.
be adopted in cases of reports issued beyond
the prescribed deadlines, among others. Resolving the impasse in the DSB requires renewed
reflection on how well the current dispute
Amendments to the Working settlement system has served the interests of WTO
Procedures for Appellate Review members. While the usual assessment is justifiably
positive, the success of the system cannot be
WTO members cannot, on their own, change
measured only by the number of disputes launched
the working procedures for appellate review, as
and the rate of compliance. It must also be assessed
responsibility for drawing up and maintaining them
by how well it retains legitimacy among states
and their ongoing consent to be bound by its
outcomes. While it may be tempting to blame the
116 DSU, supra note 22, art 2.1.
117 Ibid, art 2.4. 118 Ibid, art 17.9.

impasse solely on the skepticism of the current US
administration toward multilateralism and binding
dispute settlement, such a view ignores the long
and escalating history of concerns, some of which
have been widely shared by other members. The
current situation instead suggests that certain
weaknesses, and certain grievances, should have
been taken more seriously over the years.
While the future of the rules-based trading system

is now uncertain, the optimistic assessment is
that whatever system emerges from the dust
of current trade tensions, it will retain binding
dispute settlement. It will likely not, however, be
retained unchanged from its current form. At a
minimum, given the resurgence of sovereignty
concerns, there will need to be a more sustainable
balance between the political and adjudicative
functions of the WTO. To that end, this paper
has outlined potential changes in a number
of areas, including improving mechanisms for
political oversight, removing sensitive issues from
adjudication, narrowing the scope of adjudication
and improving institutional support. A more
sustainable balance would also help to avoid a
number of procedural controversies that have
plagued the WTO, especially in recent years.
Any negotiated outcome at this point will need

to balance a diversity of legitimate perspectives
on how the dispute settlement system should
function. Not all of the ideas for specific changes
presented in this paper are desirable, feasible or
likely agreeable. In particular, focusing on the
extremes of either reverting to individual state
vetoes or further entrenching the independence
of adjudicative bodies are likely to lead only to
instant deadlock. The restoration of the dispute
settlement function might be based instead
on an eclectic mix of pragmatic changes to the
current system, implemented through a variety
of legal instruments. In uncertain times, reaching
agreement on a dispute settlement system that is
compulsory, impartial and enforceable, however
that is achieved, can help preserve, and even
enhance, multilateral cooperation on trade.

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CIGI Papers No.

194 — October 2018

Crisis in the WTO

Crisis in the WTO:

For publications enquiries, please contact publications@cigionline.org.

Copyright © 2018 by the Centre for International Governance

The opinions expressed in this publication are those of the

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67 Erb Street West

vi About the International Law Research Program

2 The Context for Crisis in WTO Dispute Settlement

4 Innovation in Dispute Settlement under the WTO

8 Objections, Actions and Reactions

12 Options for Restoring the Dispute Settlement Function

vi CIGI Papers No. 194 — October 2018 • Robert McDougall

Executive Summary only risk further destabilizing the trading system.

Crisis in the WTO: Restoring the WTO Dispute Settlement Function 1

2 See e.g. White House, “Remarks by President Trump at 2018 White

The Context for Crisis in

6 US Department of Commerce, “The Effect of Steel Imports on the

2 CIGI Papers No. 194 — October 2018 • Robert McDougall

Crisis in the WTO: Restoring the WTO Dispute Settlement Function 3

Settlement under the

24 Wolff, supra note 20.

4 CIGI Papers No. 194 — October 2018 • Robert McDougall

30 DSU, supra note 22, art 17.6.

31 Ibid, art 3.2.

Crisis in the WTO: Restoring the WTO Dispute Settlement Function 5

Unanticipated Deficiencies in Second, like many international agreements, the

40 See DSU, supra note 22, arts 17.12, 17.5.

6 CIGI Papers No. 194 — October 2018 • Robert McDougall

46 Hudec, “Comment”, supra note 26 (“the WTO’s inability to legislate

Crisis in the WTO: Restoring the WTO Dispute Settlement Function 7

Objections, Actions and

Reactions proposals have been discussed extensively and

The United States as

58 USTR, “Improving Member Control”, supra note 21.

59 Ronald Saborio, “Report by the Chairman Dispute Settlement Body in

8 CIGI Papers No. 194 — October 2018 • Robert McDougall

66 USTR, “President’s 2018 Trade Policy Agenda”, supra note 17 at 24–25.

Crisis in the WTO: Restoring the WTO Dispute Settlement Function 9

10 CIGI Papers No. 194 — October 2018 • Robert McDougall

Crisis in the WTO: Restoring the WTO Dispute Settlement Function 11

In the initial stages of the impasse in the DSB

12 CIGI Papers No. 194 — October 2018 • Robert McDougall

→→ To preserve the delicate political balancing

Crisis in the WTO: Restoring the WTO Dispute Settlement Function 13

14 CIGI Papers No. 194 — October 2018 • Robert McDougall

103 USTR, “Report on China’s WTO Compliance”, supra note 13 at 27–28.

Crisis in the WTO: Restoring the WTO Dispute Settlement Function 15

108 USTR, “Improving Member Control”, supra note 21.

16 CIGI Papers No. 194 — October 2018 • Robert McDougall

Despite the sophistication of WTO dispute

Crisis in the WTO: Restoring the WTO Dispute Settlement Function 17

116 DSU, supra note 22, art 2.1.

117 Ibid, art 2.4. 118 Ibid, art 17.9.

18 CIGI Papers No. 194 — October 2018 • Robert McDougall