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Simon Lester
Florida
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Hi Jesse, I agree with all that! And yet for some reason, some Members want to use Article 11 to raise legal claims. I'm really not sure why. Perhaps they are just not sure about the chances of success under the legal provision itself, and they want to cover all the bases by making an Article 11 claim as well.
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Here's an example of where a participant seemed to think Article 11 should/could apply beyond factual issues: "5.65 ... The European Union claims that, in making these findings, the Panel acted inconsistently with Article 11 of the DSU. This is because, to the European Union, the Panel's reasoning at issue is inconsistent and incoherent with its earlier finding that the DIMD acted inconsistently with Articles 3.1 and 3.2 of the Anti-Dumping Agreement by failing to take into account the impact of the financial crisis when using the 2009 rate of return for constructing the target domestic price." Russia - Commercial Vehicles, Appellate Body report Could that point of appeal have been based on a provision other than Article 11? Arguably, yes, but Members seem to find Article 11 useful for this type of appeal on occasion.
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Just off the top of my head, the old US federal nutrition guidelines were appalling in terms of the science (eat lots of white bread and pasta!), but not protectionist as far as I can tell. https://healthland.time.com/2011/06/02/the-usda-ditches-the-food-pyramid-and-offers-a-plate/ They are better now, although science is still not playing enough of a role.
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I could see the MPIA arbitrators following the same principle, though, which is derived from DSU Article 3.10.
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Hi Henry, Doesn't this mostly just replicate the Working Procedures for Appellate Review: 30. (1) At any time during an appeal, the appellant may withdraw its appeal by notifying the Appellate Body, which shall forthwith notify the DSB. http://worldtradelaw.net/misc/abwp6.pdf.download#page=1 I would not have thought someone could appeal after the report/award is out.
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Let me also just add something that law prof Harlan Cohen tweeted in relation to this issue: "Something I've written about and am writing about now - the problem is that the formal terms are red herrings. How much weight precedent has in any system is really cultural. In that sense, what everyone is really fighting about is how constrained to *feel* about prior opinion." https://twitter.com/harlangcohen/status/1263584130492583938 He also said this: "Arguing against terms like precedent and cogent reasons can have the effect of freeing others from a prior decision's burden, but perhaps paradoxically, changing the terms to something looser might change nothing at all." I think he's right about this. To me, this is as much about culture as it is about a specific legal standard. In my view, DS534 tells us something about the culture: https://ielp.worldtradelaw.net/2019/04/the-evolving-role-of-precedent-in-wto-dispute-settlement.html Of course, with the Appellate Body no longer functioning, the culture is likely to change.
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Thank you for posting this quote, which helps illustrate my statement above about the practical impact of the AB's reasoning in this case: "If panels want to diverge from past Appellate Body reasoning, they can do so, but they will almost certainly be reversed. As a result, it's bad for the system if they diverge because it doesn't accomplish anything except slow things down."
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I love your spin here! Very well done! Off the top of my head, I would say that there has been criticism from multiple US administrations; various other US politicians; multiple US interest groups; a decent number of trade lawyers and academics; and a bunch of people on twitter. To me, that constitutes "a great deal." Not a majority of the trade law community, but it's not just one or two isolated people. But I encourage you to conduct some scientific polling of the issue and report back with reliable numbers. ;-)
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What I see them doing is struggling to balance out the competing views of various WTO Member governments. I see why they thought they came up with a reasonable balance. Obviously, not everyone agrees. If they had taken a different approach, they would still have made some governments mad, but those particular governments would not have reacted in the same way. All of this may have been hard to anticipate back in 2008.
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Just to be clear on one point, and I'm not using any creativity to reach this conclusion, but I don't think the AB thought it was legally inappropriate for a panel to disagree with the AB. Bad for the system, yes, but legally inappropriate, no.
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Let me also note what Giorgio Sacerdoti thinks the AB did here: "Thank you. I wanted to add a comment on “cogent reasons”. I chaired that Appellate Body division which used that expression in its report. I think we have to recall that how the issue arose, Mexico was appellant and complained under Article 11 DSU that the Panel, by not having followed the case law on zeroing of the Appellate Body, had breached Article 11. And in that context, the Appellate Body said that Panels are expected for reasons of stability and predictability and respect of the expectations of the membership, to follow, previous case law, except for cogent reasons (without defining or listing them). The AB distinguished the authority of previously adopted AB report which is guidance for panels from General Council’s interpretations under Article IX (2) of the WTO Agreement which represent authentic interpretation. Accordingly while indicating that as a rule panels are expected to respect previous holdings of the AB, the AB rejected the claim of Mexico that article 11 DSU had been breached by the panel because of it not having followed the interpretation previously laid down by the AB. So, the AB did not elevate the principle to a legal obligation that in case of breach would represent a breach of the requirement to make an objective examination of the matter. This is very important because it underlines that the AB has not laid down “precedent” as a principle of WTO law in the sense of US common law, on the contrary. For instance, I read what the US said recently in a DSB meeting on this point. The US picked up this point but misunderstood the statement of the AB. The US considered that the AB had contradicted itself by stating that panels must follow the precedents of the AB while at the same time not finding a breach of Art. 11. What the AB did is just the contrary. Not having found a breach of Art. 11 by the panel because the panel had not followed the AB previous case law, and by restating that only interpretations by the membership under Art. IX.2 of the WTO Agreement are binding “erga omnes”, the AB has rejected any doctrine of precedent, while restating the importance of the principles of predictability and stability which underpins the conclusion that panels are expected to follow the previous interpretations of the AB, absent cogent reasons not to do so. Where do the words ‘cogent reason’ come from? They were used by the appeal Chamber of the International Criminal Tribunal for the former Yugoslavia (ICTFY), which referred to the fact that the tribunal had not followed in the instance under consideration the case law of the Appeal Chamber. Referring to the approach of the ICTFY was appropriate because that is the only international tribunal which has an appellate mechanism. Thank to you all for a lively a productive session." See p. 36 here: https://www.wti.org/media/filer_public/58/3b/583bcf87-075e-4698-9a8b-66600ffe8091/24_may_appellate_review_workshop_final_document.pdf
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Again, I don't think DSU Article 11 is particularly relevant here, because we would have had the exact same debate even if that provision did not exist. But let me ask you this. If you were the Appellate Body in Stainless Steel, and were faced with the arguments noted above from various governments, what would you have said on the issue?
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Jesse, It's impossible to get in the head of the Appellate Body folks who were writing this, and perhaps they had different views about what they were doing here. But the way I look at the practical impact of the ruling is as follows. If panels want to diverge from past Appellate Body reasoning, they can do so, but they will almost certainly be reversed. As a result, it's bad for the system if they diverge because it doesn't accomplish anything except slow things down. If the Appellate Body hadn't said what it said, everything would have operated in pretty much the exact same way. There might have been less controversy though. The Appellate Body may have recognized this, but in the face of the arguments from the parties, perhaps it felt like it had to say something. And as I said above, perhaps it thought it found a way to thread the needle and make everyone, including the U.S., happy. (I don't want to get into Article 11, because that's an area where I think the Appellate Body has completely botched things and I think it would distract from the issues here. Even if there were no Article 11, we would be debating the exact same issue regarding whether panels had to follow past AB decisions.)
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FWIW, here was my initial reaction to all this in the Dispute Settlement Commentary for the AB report in the case: "In this appeal, the Appellate Body made some strong statements criticizing the Panel's decision to depart from prior rulings. In this regard, the Appellate Body said that it was "deeply concerned about the Panel's decision to depart from well-established Appellate Body jurisprudence clarifying the interpretation of the same legal issues," as its approach has "serious implications for the proper functioning of the WTO dispute settlement system." (See para. 162) At the same time, though, some new language it used in explaining the role of precedent in WTO dispute settlement may actually encourage panels to go their own way. In particular, the Appellate Body stated: "'[e]nsuring 'security and predictability' in the dispute settlement system, as contemplated in Article 3.2 of the DSU, implies that, absent cogent reasons, an adjudicatory body will resolve the same legal question in the same way in a subsequent case." (See para. 160) Based on this language, panels looking to ignore prior rulings now know what they need in order to do so: "cogent reasons." It is not clear what impact this standard will have. Will future panels treat this as effectively prohibiting them from going against the Appellate Body? Or will they see it as an invitation to come up with "cogent reasons" for going against the Appellate Body? It is likely that this Panel thought it did have "cogent reasons" for taking the approach it did. As the Panel stated: "We would like to underline, however, that our analysis is not simply an unthinking repetition of these past panel decisions. Rather, it reflects our own appreciation of the facts and the legal arguments presented by the parties in these proceedings, as is required by our obligation under Article 11 of the DSU to carry out an objective examination of the matter before us." ----------------- So when you say, "the AB must abord [is that the word you meant?] the issue of possible past mistakes and how to correct them," it could be argued that's what the AB thought it was doing.
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What I'm getting at is this: Do you think the AB took the wrong approach, or do you think its approach is inherent in a two-tier system?
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Given the situation with the Appellate Body, I don't think we are likely to hear the Appellate Body's views on the issue. But presumably if the Appellate Body had ruled, it would have reversed the panel, with or without a slap. But my point was that this panel did not seem persuaded that it had to follow the Appellate Body's reasoning.
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Hi Marc, So what do you make of a case where a panel felt free to depart from prior AB reasoning? https://ielp.worldtradelaw.net/2019/04/the-evolving-role-of-precedent-in-wto-dispute-settlement.html Simon
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I'm not completely sure I understand the question, and it has been a while since I read law and development scholarship. With those caveats in mind, my view is that the rhetoric on these issues is sometimes overblown, and for the most part we only move slightly back and forth along the continuum of the role of the state in the economy. Both "developed" and "developing" countries continue to think about policies that will help them develop further, and the policy debates about what will accomplish that don't change very much over time.
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No way! I'm an anti-tariff populist in the mold of William Jennings Bryan.
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Thanks for this great post, Ulli! And I'm not going to put up much of a fight if people keep calling these the "Lester principles." 😉 I just wanted to say a few words about this part: the reality that US hegemonic nationalism is driven by domestic business interests and ‘neo-liberal values’ (like ‘market fundamentalism’, utility-maximization by the homo economicus, Chicago school economics neglecting social inequalities inconsistent with economic and social human rights) that are fundamentally different from those of European, ordo-liberal constitutionalism (proceeding from more comprehensive protection of fundamental rights and public goods, viewing markets as legal constructs that cannot protect general consumer welfare without legal limitations of ‘market failures’, ‘governance failures’ and ‘constitutional failures’). I have doubts about the notion that the United States and Europe differ so greatly on the role of the state. There are some people in the United States who strongly favor free markets (I am one of them!), but if you look at actual U.S. policy, there is lots of regulation, rights protections, high levels of spending, and large budget deficits. Europe varies a bit, but I think you will find lots of regulation and high levels of spending there as well. As to budget deficits, some places in Europe (Germany being the most famous) tend to be more fiscally conservative. Interestingly, those places get a lot of criticism by American economists on the left, who would like Germany to take a more interventionist approach to economic policy. In a sense, the Germans are the free market folks on this issue. With regard to regulation, it's very hard to measure this, but I would say U.S. regulation has at least as much impact as European regulation. We just focus on different areas and do things in different ways. (The U.S. does a lot more through tort law, for example). And as for rights, I would have thought the U.S. pushes further than almost anyone. Any differences probably reflect different views on which rights should be protected. Summing up, to me, the U.S. and Europe are generally in the same ballpark on most of these issues. We can quibble about the details, and it's fun to argue about it all, but the similarities are much greater than the differences. The differences within each place are greater than the differences between the two.
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Or, the U.S. could file a new complaint against the Canadian measures, and a panel would hear the case.
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Yes, the U.S. can, and presumably will, make this argument. I am skeptical that others will agree with it though. If Canada requests retaliation, the U.S. would then refer the matter to arbitration, and the arbitrator would be the one deciding the question.
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Also, see Henry Gao's comment here: https://ielp.worldtradelaw.net/2020/03/the-trump-administrations-shameful-attack-on-appellator-zhao.html#comment-6a00d8341c90a753ef025d9b398e8b200c
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Given that she was vetted and approved by the WTO membership and has been on 8 previous AB divisions, and also that the AB is no longer functioning for other reasons, I would let this report be adopted and then separately look into the issue of a possible government affiliation here.
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anon, I appreciate you making the "Lester Principles" suggestion, and please let me know where I should send the payment. ;-)
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