US Appeals Compliance Report on India

December 19, 2019 by Mara Lee|World Trade Organization

The World Trade Organization may have its first answer to what happens when a party appeals and there's no appellate body to resolve the dispute. The U.S., which killed the appellate body by not agreeing to appoint any replacements, is appealing a compliance report for a case in which India won the argument that the U.S. antidumping and countervailing case against Indian steel didn't fully follow trade law (see 14081205 and 1706090021).

The U.S. delegation, in its speech at the Dispute Settlement Body meeting Dec. 18, said it will confer with India so the two countries can determine the way forward, whether they can resolve the problem between themselves, or whether they can find alternatives to the appellate process.

Cato Institute trade division Associate Director Simon Lester, blogging about this development, asked: "So what happens to the case now? This U.S.-India conversation presents an opportunity to see if there is some alternative appellate process the Trump administration can accept. We have heard a lot about the U.S. concerns, but we have not seen a specific U.S. proposal for what it would consider an improved process. Maybe India is about to see one. I can imagine the U.S. would propose something along the following lines:

The adjudicators would have trade remedy expertise and would be assisted by independent clerks rather than WTO staff
The scope of appeal would be limited and agreed in advance by the parties [no re-litigating the facts]
There would be a standard of review along the lines of [this] sentence : 'Where the panel finds that a relevant provision of the Agreement admits of more than one permissible interpretation, the panel shall find the authorities' measure to be in conformity with the Agreement if it rests upon one of those permissible interpretations.'
The time-frames would be strictly observed."

Lester said India might agree to that, but it might retaliate immediately, because it sees it as illegitimate to appeal into the void, as the U.S. is doing. He asked: "Is there a mutually agreed solution possible in this case?"

At the same meeting, Mexico, speaking for 119 countries, said it's unfair that one country could prevent the whole WTO from having a functioning dispute settlement system. China said the United States is not constructively engaging on resolving its complaints, and noted that at least 10 pending appeals will be suspended, and, if the paralysis continues, another 33 pending panel disputes are facing a potential legal limbo if disputing parties cannot agree on any interim arrangement.

The U.S. replied that because other countries won't address how the appellate body came to overreach so frequently, they can't fix the problem. "The United States is determined to bring about real WTO reform, including to ensure that the WTO dispute settlement system reinforces the WTO’s critical negotiating and monitoring functions, and does not undermine those functions by overreaching and gap-filling," the U.S. said.