7:46 AM Feb 1, 1996

APPELLATE BODY TRAVAILS AND DOUBTS

Geneva 1 Feb (Chakravarthi Raghavan) -- Issues and concerns about the rules of procedure that are being considered for the functioning of the Standing Appellate Body of the World Trade Organization (WTO) appear to have been discussed Thursday at an informal meeting, open to all interested delegations, of the Dispute Settlement Body of the WTO.

The meeting was chaired by the new Chairman of the Dispute Settlement, Amb. Celso Lafer of Brazil and technically was intended to get views of delegations on the planned rules and functioning of the seven-member Appellate Body that was constituted in December.

Views expressed at the meeting included two important issues, namely, whether appellate body personalities coming from any country that is taking a panel ruling in appeal could and should sit and hear the appeal and dispose it off.

The agreement envisages that any such appeal should be heard by a panel of three from the seven, and one of the ideas apparently is to constitute panels by alphabetical order and rotation.

Under the Dispute Settlement Understanding and rules about panels of the WTO, and earlier GATT practice, panellists have to be drawn from countries not involved in a dispute.

However, there appears to be a move to frame the Appellate body rules in such a way that nationals of the country involved in the appeal would not be precluded from participation.

A second move appears to be to create some kind of a collegiate decision-making, in that while three member panels will hear the appeals, all the seven members would associated in the rulings.

The WTO's DSB, in agreeing on a selection process for the Appellate Body and on its functioning, had decided last year that the rules would be framed by the Appellate Body in consultation with the Chairman of the DSB and the WTO Director-General. The use of 'consultation' in GATT/WTO practice involves consultations with the delegations and evolving of a consensus.

At the DSB on Monday, while indicating progress in the rule making, Kenyon would appear to have said that he had already inputs from delegations and would be open to others, and would hold a meeting to hear such views.

Thursday's meeting was in pursuance of this.

However, according to trade diplomats who refuse to be quoted or identified, many key delegations, including some majors, have indicated that they were not consulted nor had they provided inputs, and that perhaps only the US has been involved and their inputs obtained by the DSB chair, Don Kenyon of Australia.

At the meeting, the Indian ambassador, S. Narayanan, appears to have said that the purpose of the meeting and consultations should not merely be to gather views of different delegations and transmitting them to the members of the Appellate Body, but should aim at evolving a consensus view among delegations on key issues and conveying them.

On the issue of participation by nationals of the appellate body in the panel hearing a particular case in which the country of the member is involved, while there was a view that there was no harm in this, other views were also raised, pointing out that such a practice was eschewed from panels since it was not only necessary to give an independent judgement but should appear to be public to be so, and thus a similar convention should apply to the appellate body.

But with United States, Europe and Japan often parties to disputes and appeals, it is argued, that such an exclusion practice would mean that members from these countries would have no work.

The US appears to be pushing for both enabling its national to participate in a case involving itself if he is part of the panel chosen by rotation, and for collegiate function of the appellate body for its views thus to prevail indirectly.

But outside observers suggest that this may make a strong case not to draw appellate body members from the three majors, but not one to ignore the need to avoid any possible interpretations of conflicts.

Norway would appear to have noted Thursday that when a ruling against the United States (in the gasoline case) where the panellists were not drawn from Venezuela or Brazil (the two complainants) had evoked such strong reactions, what would happen in a case between the US and EU, where the US takes up a case in appeal and the appellate body panel hearing it includes a European?

The idea of the collegiate functioning of the appellate body was seen by many as contrary to the actual provisions of the DSU and that there should be no attempt to extend the rules.

When the DSU itself was seen as an experiment and the entire thing was due to be reviewed in three years, it would be better to have a conservative interpretation and proceed on the basis that three members should hear and give their decision, rather than extend the rule to involve all seven, some of the members appear to feel.