1.Please tell us more about the new system? How will it work? Do we see any improvement over the existing procedures?
This new thing, i.e. the Multi-party Appeal Arbitration Arrangement (MPIA), is a mechanism agreed upon by 16 WTO members, including most of the users of the WTO dispute settlement system, such as the EU, China, Brazil and Canada, as an interim stop-gap for the paralyzed WTO Appellate Body (AB) mechanism, which took place at the end of last year because of the constant block by the US on the nomination of AB members.
If you look at the text of the MPIA, it mostly follows existing procedures of the WTO AB. However, there are also some improvements, such as para. 9-10: An appeal shall be limited to issues of law covered by the panel report and legal interpretations developed, and arbitrators should only address issues that are necessary for the resolution of the dispute. This is meant to resolve the so-called “overreach” by former WTO AB members who have adjudicated unnecessarily issues not covered by the panel report or beyond the resolution of the dispute.
There are some other improvements, such as para. 12-14, on the respect of the 90-day rule, including giving the arbitrators the discretion on procedures, such as decisions on page limits, time limits and the length and number of hearings required, and the rights to propose substantial measures such as an exclusion of claims based on the alleged lack of an objective assessment of the facts.
So we do see some improvements there.
2.Will the new system replace the old WTO’s two-step dispute system eventually?
Yes and No.
Yes, because MPIA offers the participants a chance to appeal panel reports for disputes among themselves if they decide to do so. This surely helps to preserve the two-stage dispute settlement system of the WTO, at least among the participants.
No, because it only applies to the 16 WTO members or some other members who may decide to join later on, but not to the other members who are not participating, including the major users of the WTO dispute settlement mechanism, such as the US, Japan, Korea, Turkey or Russia. So you have a big chunk left outside of the picture.
That’s why even participants of MPIA themselves have emphasized that in their ministerial statement that this is interim and they will continue their efforts to engage on the total resolution of the AB impasse and the full operation of the AB mechanism.
3.What signal does this send to the United States?
I would call this a “good-faith” signal, in the sense that, on one hand, when you, I mean the US, create a problem in the system, we will find an alternative to keep the system run while, on the other hand, that this is only interim and we will continue to engage you and others for the resolution of this problem, including legitimate concerns that you may have, and for the full operation of the system with you back inside as a major player.
4.An international trading system without the US, Will it work? Can the US be left out from the international trading mechanism?
This is a hard question and we can’t discuss this conceptually because it won’t make much sense without looking at the bigger political or geopolitical context.
The first question is whether the US chooses to leave the system, the answer is no, because we do see that the US is still engaging in quite some fronts of the WTO.
The second question is even when the US chooses to stay away partially, such as on the AB, whether other members are willing to leave out the US. The answer could be different for different members, with some say yes and others, including the major ones, say no.
And the last question is, if something is created without the US, who accounts over 20% of both global GDP and trade, how meaningful this would be for such a creation? This is a serious question not only regarding the US, but also regarding other major players such as China and the EU who may choose to stay away from some aspects of the system in the future.
5.An EU source said the Trump administration was engaging with the WTO to discuss a deep reform of the WTO. What kind of reform is the US looking for? Will it get support from other member states?
This is a too complicated issue because the so-called “WTO reform” is very comprehensive, covering almost each and every aspect of the system based on the proposals by members already on the table. One needs to look at exactly what aspects and which proposal we are talking about to tell whether and how the US are engaging, what they want, and whether they get support from other members.
To make a long story short, on issues like fisheries, e-commerce and transparency, some other members view the role of the US generally engaging and even positive. On some other issues such as the AB, maybe not. And on some sensitive issues such as developing country status, special and different treatment and the non-market economy policies and practices, the feelings are quite different for different members.
6.What’s China’s position?
China from the very beginning is an active player on this issue. If you read carefully the official documents of China on WTO reform, you would find that the resolution of the AB issue is a top priority for China.
That’s why China, jointly with others including the EU and India, has tabled a number of proposals for the resolution of the AB problem. China was also active all through the process for the establishment of MPIA, including at Davos on January 24th when a similar group of members decided to work for a MPIA, and on March 27th when this agreement was finally achieved. So generally speaking, China is an active player on this issue.