Into The Weeds
One of my favorite TV shows a few years ago was Weeds, which featured the more or less dysfunctional Botwin family whose widowed mother of two teenage boys had taken to selling marijuana in her suburban neighborhood as a way to make ends meet after the sudden death of her husband. Eight seasons and many episodes later, most of which cannot be described in a PG-rated column like this one, the show ended with the family still more or less dysfunctional but intact and largely at peace with itself, although none of its members could reasonably be held up as an example of behavior worth emulating.
This week’s column also visits the weeds, though in Geneva rather than suburban California, and looks at the growing dispute between the United States and virtually everyone else over the WTO’s Appellate Body and the rules governing its operation.
First, a bit of background and some context. One of the WTO’s core functions is its dispute settlement process, which got a shot in the arm in the Uruguay Round when members agreed that decisions could no longer be blocked by a single member, an unprecedented development in international diplomacy that has contributed significantly to the WTO’s importance. The process consists of two stages — a panel to review the dispute and render a decision, and an Appellate Body (AB) of seven members selected by the WTO for a maximum of two four-year terms. The latter reviews panel decisions upon appeal by one or more of the parties, and it has the last word. Appellate Body decisions are final.
The immediate issue concerns appointments to the Appellate Body. There is one vacancy, another whose term expired in June but who is continuing to serve through the conclusion of appeals he has been working on, and a third vacancy arriving this week when another member’s term expires. Efforts to fill all three vacancies, which require consensus by WTO members, have been underway since last spring, but the U.S. has blocked any progress pending resolution of its concerns about the AB exceeding its authority. The instant case is the AB’s decision to allow a member whose term has expired to continue serving in order to conclude work on appeals they had been participating in. While not necessarily objecting to such a practice, the U.S. maintains it can only be permitted by a decision of the Dispute Settlement Body, which consists of the WTO’s members, rather than by the AB on its own. In other words, the issue is less the decision itself, than the way it was made and who made it.
Of course, things are never as simple as they seem, which is why some context is necessary. The U.S. has, for several administrations, complained about the Appellate Body exceeding its authority; specifically, making decisions that go beyond the text of the agreements negotiated in the Uruguay Round. This is similar to the debate in the U.S. about whether judges should be “strict constructionists,” adhering strictly to the text of the law and Constitution, or whether they should attempt to determine what the authors’ intent was, particularly in applying the law to situations that clearly did not exist when it was first written. It was ironic to see the Obama administration arguing that AB members should approach their mandate as the late Justice Scalia did while it was arguing the opposite here at home. In the current administration, the irony is gone, but the position remains the same.
That context should tell you a lot. Having made little headway substantively, the U.S. has decided to throw sand in the WTO’s gears in order to get its attention. The AB is already overworked, and if there are only four members to do it, the process could well grind to a halt or take so long to render decisions that they would lose much of their value. The gambit seems to have worked — countries are paying attention, but the U.S. has yet to put forward any specific solutions it is seeking.
I think the U.S. is right about AB overreach — that’s been a concern in the U.S. legal community for years — but it may find its tactics counterproductive. The U.S. has been one of the largest participants in the dispute settlement process since the Uruguay Round, both as plaintiff and defendant, and has frequently taken cases to the AB when dissatisfied with panel outcomes. Crippling the Appellate Body may well come back to bite us when we find ourselves appealing a case we lose and finding no one there to conduct the review. Obvious cases looming are our insistence on treating China as a nonmarket economy and our countervailing duties on Canadian softwood lumber.
More important is the larger issue: what this says about our commitment to a trading system based on rules. For 70 years we have been the world’s leader in writing and defending those rules, and by and large we have benefited from them greatly. Just as Nancy Botwin discovered in Weeds, undermining the rules might provide some short-term satisfaction, but if it leads to the law of the jungle in Geneva, we will be the biggest loser.