Jan 22, 1998
NO CERTAINTY FOR FUTURE FROM HORMONE RULING
Geneva, 20 Jan (Chakravarthi Raghavan) -- The WTO's dispute settlement system is "a central element in providing security and predictability" in the multilateral trading system, Art.3 of the Dispute Settlement Understanding of the WTO affirms.
The same article goes on to say that the dispute settlement system "serves to preserve rights and obligations of Members under the covered agreements, and to clarify the existing provisions of agreements in accordance with customary rules of interpretation of public international law."
But with panels, and the appellate body, carrying out these stipulations, and handing down rulings - following principles of judicial economy (used in domestic courts) in not deciding all the issues raised before them, but create some doubts and leave issues open for decision another day and "await another case" -- the system may need many more years, well into the next century, before Members get a sense of "security" and "predictability", and clarification of existing provisions. This is more so since though the WTO system is rule-based, rule-making in the WTO is power-based.
This concern about uncertainty is evident among some trade diplomats and observers, after the latest panel and appellate body ruling -- that on the dispute between Canada and the United States on the one hand, and the European Community on the other -- over the ban on imports of beef and products from cattle raised on growth inducing hormones. This concern is over the feeling that the trading relationships, generally based on mutual understandings and good faith, is likely to become more and more litigatory (and in adverserial proceedings as in Anglo-Saxon domestic courts, not merely between private parties, but individuals and state) that may not always achieve the purpose of peace and security in the trading system.
No one familiar with some recent US civil and criminal judicial proceedings, and parallel trials in media, would want to extend it to the WTO system. But the contrary situation demands that at least in the beginning, panels and appellate bodies need to fully deal with all arguments and pleadings and make them public to foster the view that all views are being taken into account, and not merely power equations.
And in the final analysis, any system (trading, monetary or financial) needs to get public (as different from governments and trade officials) confidence and acceptability, and the DSU method (even if the rulings are posted on the web sites of the WTO) is going to strain this, at a time of increasing distrust of the globalization and trading systems intrusionary element in domestic policies.
While making public the appellate body report, the WTO secretariat (which in fact guides panels in making rulings, and the appellate body, with its own secretariat which guides the work of that body), fought shy of providing any briefing or explanations to the media the ruling and its implications.
One official privately said, on a non-attributable basis, that the ruling favoured both sides, on different points, but left room for them to come back.
Very promptly, both the United States and the European Communities claimed victory -- the appellate body having declared illegal the present decade old ban (thus pleasing the US and Canada), but having left the door wide open for the EC to set higher standards than that of the Codex Alimantaire at the FAO in Rome (a body dominated by TNC corporate interests), carry out "risk assessment", with some further studies, and institute restrictions if it so chose, and then be subject to challenge. In the meanwhile the present restrictions or new ones can continue.
But the ordinary traders (and investors) and trading nations, most of whom are ill-equipped for a litigatory process of trading, and others seeking to make some "sense" of these, whether on sanitary and phytosanitary rules as well as other agreements (where same or similar language might have been used), would probably have to wait for the next millennium.
In strict legal terms and practice, there is nothing objectionable, but much to be said in favour of the approach of the panels and appellate body in not deciding all the issues - a practice of domestic courts, particularly under Anglo-Saxon law where the principles of rex judicata apply (to the litigants in the case), and courts are loath to decide cases against others without an opportunity for them to present their views.
But whether this is what trade negotiators had in mind in December of 1993, in drafting and concluding the DSU is doubtful.
In relation to one of the provisions of the SPS agreement, Art. 3.3, the appellate body says it is "evidently not a model of clarity in drafting and communication".
Given the way WTO negotiations and decision-making take place, in the most non-transparent way and within a small closed circle of negotiators (and one of the Appellate body members in fact chaired the one of the key negotiations in the final stages), often informally, with few of them having any legal drafting expertise, and agreements adopted, without the checks and balances usually used in international treaty making, and in a hurry by "consensus" of the membership --"model of clarity in drafting" is going to prove too much.
The atmosphere in which the Uruguay Round accords were concluded in November-December 1993, and which is often cited as an explanation for the problems in texts, is unfortunately proving to be not an exception but the rule.
If anything, negotiations since the WTO came into being, have become even more non-transparent than before. Even the latest agreement (that on financial services) adopted in December, with the language used by the US in its MFN exemption clause, shows that the Uruguay Round "way" of drafting of accords is going to be the rule, and not an exception.
Since the WTO came into being, 117 disputes on 82 distinct matters have been brought up, of which 17 were withdrawn, 63 are still in the stage of consultations, and about 40 went to the panel stage. Of these 24 are being examined by panels, two panel rulings are now under appealed. In all about 13 appellate body rulings involving strictly the WTO rules and interpretations have been handed down.
And the appellate body says now in the hormone case, that its rulings on the "burden of proof" dealt with in atleast two earlier rulings have been misunderstood by the panels (read WTO's legal division).
But even after the latest ruling, it is problematical whether outsiders, even trade lawyers, can understand, when a complainant has to make a prima facie case, when the burden shifts to the defending member, when issues not specifically raised by the litigants can be pursued, and when panels can use arguments of its own (not raised by the parties).
For, unlike in domestic courts, details of all the issues and arguments are not even publicly available as of right.
The appellate body has found fault with the panel for its "general, unqualified, interpretative ruling" shifting the evidentiary burden on to the Member imposing an SPS measure, and cites its own ruling on the imports of shirts and blouses under the Textile accord - where the appellate body in fact subtly shifted the burden on to complainants from the United States.
The appellate body has ruled out, importing into the DSU system, the standard of review of the anti-dumping agreement (which has been specifically affirmed as an exception) where WTO panels have been asked to defer to domestic judgements on facts and evidence.
It then goes on to invoke the DSU requirement that a panel make an "objective assessment" of the matter before it, disagrees with some of the panel conclusions on them, but nevertheless finally concludes it is still "objective". This is so in respect of the views of experts cited before it, and its ignoring (according to the EC complaint in appeal), the views of two experts cited by it (Dr. Andr and Dr. Lucier) about one of the hormones, MGA, and its being an extraordinarily potent progestant. The panels could have made a reference to and evaluated their views, the appellate body concedes, but says the panel not having done so is not distortion or disregard of evidence.
When would a panel's ignoring of evidence be distortionary or disregard? The appellate ruling is unclear.
The appellate body again concedes that the panel has wrongly interpreted Dr. Lucier's views, but says it is "not a deliberate disregard of evidence or gross negligence amounting to bad faith," nor can any panel realistically refer to all points before it.
The appellate body also agrees that the panel did not in fact represent the opinions of experts accurately in relation to the issue of control of harmful material (in restricting or banning imports), but that this again does not amount to egregious disregarding or distorting of evidence (which alone would warrant the appellate body to overrule the panel on facts). There are similar remarks about the level protection set by the EC in respect of five hormones and that for carbadox and olaquinodox.
The panel's views have been upheld on the procedures adopted in its not having set up an expert review group, but selecting a group of experts and hearing their views and reaching its own decisions. But this ruling, and arguments used, provides no clear guidance for the future on use of review bodies or of experts, and has not taken into account that in these matters it is not the views of governments that matter, but the extent to which public confidence will be strengthened.
Again, the appellate body, perhaps rightly, makes a distinction between "claims" of parties and "arguments" in support or rebuttal and goes on to uphold the right of panels to use arguments not advanced by parties. But given the non-transparency of panels (and the advice of the secretariat), it raises the question who provided the panel with the arguments not raised by the parties.
The appellate body has made a useful distinction between the many loosely worded expressions in the various agreements -- about "shall", "based on", "conformity with" etc insisting that treaty interpreters are not entitled to assume that such differences in usage is merely inadvertent or "accidental" (as Canada contended).
But given the profusion of such usages through the various texts, and none of which were checked in the final stages for consistency, this raises the question whether the WTO, its secretariat, and members, should not spend a little time in looking at these questions -- openly and with adequate notice, rather than go on adding new issues and writing new power-based rules - as the present leadership seems to be intent on.
Even the review and assessment exercise (originally intended for the first Ministerial Conference) was ignored by the WTO head, while pushing the new issues of the US and EC.
The appellate body agrees that the panel's interpretation of Art. 3 of the SPS, making the objective of achieving harmonised norms into binding norms is wrong, and based on its erroneous premise that the usage "based on" and "conform to" mean the same.
"...we are compelled to reject this premise as an error in law. The correctness of the rest of the Panel's intricate interpretation and examination of the consequences of the Panel's litmus test, however, have to be left for another day and another case."
Such an approach in a domestic court is understandable, and could almost be interpreted as an invitation to legislators to clarify things better. But use of the argument of 'judicial economy' in not clarifying things in the multilateral system, or inviting rule-makers specifically to clarify, and in effect inviting new disputes, may keep panellists, the legal division and the appellate body in business.
But again it is hardly likely to be reassuring to the public or enhance confidence of the trading community or of the public about the WTO's intrusive presence in domestic law making and policy for the promotion of profit of outside traders.
The appellate body has upheld the right of countries to have domestic standards higher than those of generally agreed international standards, but leaves some doubts on the issues of 'scientific justification' or 'appropriate level of protection' - saying that though the use of 'or' in Art. 3.3. is 'disjunctive', the lack of clarity in drafting makes it less so.
The appellate body has rejected the panel view that 'risk assessment' is a complete scientific exercise, while 'risk management' that countries might indulge in, is a political exercise involving social value judgements. The SPS, it notes, does not use any notion of 'risk management' and hence importing this to restrict the meaning of 'risk assessment', or to specific minimum magnitude of risk, is not warranted.
Risk to be evaluated in risk assessment, the appellate body insists, is not only that which can be ascertained in a science laboratory, but also risk in human societies as they actually exist - "the actual potential for adverse effects on human health in the real world where people live and work and die."
But in giving leeway to Members in this "risk assessment", the appellate body has left open some possibilities for disputants to challenge "risk assessments" in future.
"We do not believe that a risk assessment has to come to a monolithic conclusion that coincides with the scientific conclusion or view mplicit in the SPS measure. The risk assessment could set out both the prevailing view representing the 'mainstream' of scientific opinion, as well as opinions of scientists taking a divergent view. Art 5.1 does not that the risk assessment must necessarily embody only the view of a majority of the relevant scientific community.... In most cases, responsible and representative governments tend to base their legislative and administrative measures on 'mainstream' scientific opinion. In other cases, equally responsible and representative governments may act in good faith on the basis of what, at a given time, may be a divergent opinion coming from qualified and respected sources. By itself, this does not necessarily signal the absence of a reasonable relationship between SPS measures and risk assessment, especially where the risk involved is life-threatening in character and is perceived to constitute a clear and imminent threat to public health and safety.
"Determination of the presence or absence of that relationship can only be made on a case-to-case basis, after account is taken of all considerations rationally bearing upon the issue of potential adverse health effects."
This is in accord with judicial practices, but not very reassuring to public and consumers who are faced with problems of corporations trying to sell their wares and make profits without any full disclosures of risks (as is now evident over the issues of tobacco and smoking risks) and there is an increasingly mounting lack of confidence in governments and international systems, pushing profit interest, over concerns for consumers.