First Ruling From WTO Appellate Body Alternative Hailed as Judicious

The first decision of the World Trade Organization's multiparty interim appeal arbitration arrangement, or MPIA, was judiciously economical, and also gave more deference to countries' antidumping authorities, trade experts said.

The MPIA said Colombia's antidumping duties against imported frozen fries from several EU countries were not allowed, but it did overturn some of the WTO panel conclusions. The MPIA was formed after the U.S. blocked nominations to the WTO Appellate Body for so long that the body no longer had a quorum, and then no members at all. The U.S. had complained for years that the Appellate Body was creating obligations the members never agreed to in negotiations, and that its rulings took too long and addressed issues the parties didn't raise and weren't needed to resolve the cases. Countries that are part of it have agreed to abide by arbitrators' decisions, and the EU, China, Australia, Canada, Mexico, Brazil, Colombia and others have joined.

Nicholas Lamp, a law professor at Queen's University who formerly worked at the WTO's Appellate Secretariat, tweeted about the Dec. 21 decision. "This sentence on treaty interpretation marks a sea-change in WTO jurisprudence," he said, highlighting this line: "Treaty interpretation is not an exact science, and applying the Vienna Convention's method does not magically and inevitably lead to a single result."

He added, "Had the Appellate Body adopted this approach 22 years ago, it would still exist today.

"The admission that a Vienna Convention interpretation can lead to more than one result is so important because it allows the arbitrators to give effect to Article 17.6(ii) which instructs panels to accept an investigating authority's interpretation as long as it is 'permissible.'"

The arbitrators still found that Colombia's interpretation was not permissible.

Sungjoon Cho, a law professor at Chicago-Kent School of Law, who has represented the Korean government in negotiations under the WTO, commented on a blog hosted by Simon Lester, saying, "All in all, the MPIA tribunal appears to sympathize with those WTO members, including the United States, which advocate broad deference in administering antidumping measures. However, it is not entirely clear whether the MPIA’s new integrative approach regarding Article 17.6 (ii) would actually entail [the] kind of deference that some domestic authorities desire. To me, the MPIA made it clear that Article 17.6 (ii) is not a self-judging provision and that it is still the final arbiter to determine, according to the Vienna Convention on the Law of Treaties, whether a particular antidumping measure violates the Antidumping Agreement, despite the alleged 'special deference.'"

Lester, who once served as a legal affairs officer at the WTO Appellate Body Secretariat, blogged at WorldTradeLaw.net that he thought the arbitrators' articulation of how to determine whether governments' trade remedy methodologies are permissible under WTO rules was "clear and reasonable." Yet, he said, it will take a few more decisions "to get a better sense of how it will work in practice though."

"Of course, what I think is not as important here as what governments think. In this regard, I wonder if this approach is one that the U.S. would support in the context of its objections to Appellate Body overreach," he wrote.

The U.S. had criticized the MPIA as being vulnerable to some of the same missteps it feels the Appellate Body and its Secretariat were prey to. But observers noted that if MPIA continued to issue quick and restrained rulings, it could be a substitute for the Appellate Body acceptable to the U.S.

Lamp tweeted: "On procedure, the arbitrators try hard to avoid doing the things that the U.S. has accused the Appellate Body of doing:

• address issues that are not necessary to resolve the dispute;
• address issues that are uncontested or outside their mandate.
• exceed 90 days."

The report, he said, "looks like a necessary course correction. Which begs the question: why was the Appellate Body unable to change course in this way?"

One way the arbitrators managed to have a narrower ruling was by encouraging Colombia to drop arguments under the Dispute Settlement Understanding Article 11 that the original panel did not have an objective assessment of the facts, so that the ruling could be issued within the 90-day deadline. Colombia did so.

The U.S. had frequently complained that appeals at the WTO were making assertions about facts, which was the first panel's job.

Lester said a successful strategy may be for MPIA arbitrators to pressure parties to not include DSU Article 11 in their appeals. "Is there a developing norm against DSU Article 11 appeals? Will they be seen more negatively by Members? It might be better to codify all this, but perhaps a norm is the best that can be done at the moment," he wrote.

In a statement issued after its victory, the EU called the case "also clear proof that WTO disputes can be resolved quickly and efficiently, with the final award issued well within the 90-day deadline."

The EU said Colombia imposed antidumping duties against EU frozen fries in November 2018, targeting 85% of those exports to the country; before the antidumping duties, EU member states sold about 23 million euros' worth of fries there.