8:05 AM Nov 1, 1995

DSB MEET ADJOURNED OVER APPELLATE BODY DEADLOCK

Geneva 1 Nov (Chakravarthi Raghavan) -- The meeting of the Dispute Settlement Body (DSB) of the World Trade Organization was adjourned Wednesday at the suggestion of its Chairman, Amb. Don Kenyon of Australia to give time for further reflexion and consultations on the composition of the Standing Appellate Body.

While adjourning the meeting and putting off a decision on this question as well discussion on the other items on its agenda, Kenyon said the DSB would remain on call.

Kenyon, who heads a selection committee for picking seven names, at an informal heads of delegations meeting last week had mentioned seven names, but did not get a consensus. The European Union, Switzerland, Brazil and India were among those who had expressed reservations then.

On Monday, the EU Council of Ministers refused to clear the names and, according to the comments made by France and some others, the Council found the list to be 'imbalanced' with membership dominated by members from countries allied to the US, including the Asia-Pacific Economic Forum and the EU Commission was asked to seek a rebalancing of the list, and that the Council would meet again on 10 November.

The EU position became known in media reports on Tuesday, and presumably had also been conveyed by the EC Commission here both to Kenyon and the WTO head Renato Ruggiero.

Trade diplomats said that while there might have been some informal consultations between Kenyon and the EU, and informally within the selection committee, as far as they knew, there had been no general consultations.

None of the DSB members spoke after Kenyon. The DSB meeting had been originally set for 10 in the morning and had then been put off for two hours, though no explanation was officially available.

Some Third World diplomats, from countries who had no candidates, said that the Australian and New Zealand missions had been busy Wednesday morning ringing up several other missions and encouraging them to speak at the DSB meeting and criticise the EU for holding up consensus.

Some of these delegations got the impression that the EU position was being blamed on France, relating the French position to one of opposition to the New Zealand candidate because of New Zealand opposition to the French nuclear test in the Pacific.

However one Third World diplomat said the French nuclear test and the New Zealand and Australian objections had little to do with the problem, and that the EU's view that the outcome was skewed and the appellate body had been packed with members from pro-US countries was more widely shared than was being made out.

Through the selection process and the way it had been handled by Kenyon and the selection committee, there has been a geographical regional carveout in choosing the seven members, and in such a way that countries and personalities who could stand up to the US have been eliminated in favour generally of US supporters, the trade diplomat complained. Those with candidates feel embarrassed to say 'no' to the consensus, others keep quiet.

However, other countries may not have the weight or strength to hold up the consensus and the process had been handled in such a way to take advantage of their weakness.

But the net result was a further blow to the credibility of the WTO and its consultation processes to establish a consensus, and the even greater marginalization of developing countries, the diplomat complained.

Talking to newsmen, WTO Director-General Renato Ruggiero was hopeful that the difficulties could be resolved and that through a further process of consultations, the large consensus in favour of the informal proposals of the selection committee could be translated into full consensus. Ruggiero said that some informal proposals have been made but thought it would be difficult now to rearrange the geographical equilibrium.

It was not clear whether Ruggiero's reference to 'informal proposals' was to the list of seven names that Kenyon had announced at an informal Heads of Delegations meet, or hints in the WTO lobbies that there was an effort to cook a deal.

Some diplomats said that there were efforts to get a consensus, through deals ala the one that preceded Ruggiero's election (the promise that the next DG would come from some other region), namely, that when after two years two of the DSB members have to retire, their places could be filled by candidates from other countries and regions. The diplomats said this would completely destroy any public confidence in the WTO's dispute settlement mechanism.

US Ambassador Booth Gardner said that the US had accepted the "slate" put forward by the Chairman of the DSB but hoped that this issue could be put behind as soon as possible -- hopefully in the next two or three days. Gardner did not think it was necessary to rearrange the 'geographical distribution' to get a consensus, but said the EU seemed to need more time to reflect on the makeup of candidates.

The EU Commission's Amb. Jean-Pierre Leng however said that the selection committee or its chairman, through consultations, have to find "a geometry or combination" on the composition which could command consensus which was not there at the moment.

Leng said he did not want to argue with his American colleague on whether it was only the EU that was holding up the consensus. But he underlined there was no statement at the DSB -- it was not clear whether or not he was referring to the reported efforts of the Australian and New Zealand missions this morning to get delegations to blame the EU at the DSB.

Leng noted that the DSB Chairman in his wisdom had said there was no consensus and wanted to hold further consultations in the coming days and whenever he felt there could be a decision he would convene the meeting and that he thought this could be a matter of days.

"But you know no consensus means there are many possibilities if you play with the names and the groups and the qualities and qualifications and so on, and in many cases one or the other (WTO members) has a problem, not the Community necessarily," Leng said.

Leng went on to add: "If you take various geometry that one can think of you find difficulties in one or the other areas. So what I think the Chairman has to do, and he will do, and the selection committee will help, is to find a geometry or combination which can have a consensus. At the moment it's not the case and that is it... we need more time."

Asked whether it was only one or two of the EU members wanting a redistribution because of their feeling that it was lopsided towards the Asia-Pacific region and whether a solution could be found by a geographical redistribution, Leng said: "Firstly, I would not distinguish between the member-states. We have a Community and we make common decisions. So it is not a question of one or two member states. But I would say that there is a feeling that the slate as though of or decided by the selection committee or any other combination that has been presented informally can fly and therefore there is a need for more consultations."

Reminded that Kenyon had presented seven names to the informal heads of delegations meeting and whether that would have to be changed, Leng said "for the moment there has been no proposal by the selection committee which has to be made to the DSB. Mr. Kenyon said it was not time yet to make a proposal. He has not yet made a proposal. He can float ideas, but the proposal has to be made here and the DSB is the only authority to decide."