Overview
There exists a deep-seated practice and tradition of resorting to consensus as the favoured means of decision-making at the World Trade Organization (WTO). This practice was carried over from the time of its predecessor, the General Agreement on Tariffs and Trade (GATT). This marked preference for decision-making by consensus over voting has been enshrined in Article IX:1 of the Marrakesh Agreement Establishing the WTO (Marrakesh Agreement) which provides that: "[t]he WTO shall continue the practice of decision-making by consensus followed under GATT 1947".
However, Article IX:1 of the Marrakesh Agreement also states that: "[e]xcept as otherwise provided, where a decision cannot be arrived at by consensus, the matter at issue shall be decided by voting".
Thus, while the Marrakesh Agreement formally recognizes consensus as the preferred means of decision-making, it also clearly recognizes the validity of taking decisions by voting as a subsidiary means when consensus is unattainable on any given matter.
As an added twist to decision-making at the WTO, Article IX:1 of the Marrakesh Agreement also establishes that: "[d]ecisions of the Ministerial Conference and the General Council shall be taken by a majority of the votes cast". In other words, majority voting was intended to be the default means of decision-making for the Ministerial Conference (MC) and the General Council (GC).
Nevertheless, in practice, voting at the WTO never takes place. Instead, WTO Members have strictly adhered to consensus since the WTO’s inception.
In this three-part series, we intend to explore how the WTO Membership’s traditional aversion to voting as a means of decision-making is coming under fire and putting a strain on the proper functioning of the WTO.
Each part will in turn discuss the following three instances where significant pressure is currently building up on consensus as the exclusive means of decision-making at the WTO: (i) the appointment of Appellate Body (AB) members; (ii) the proposed decision to waive certain provisions of the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement) with regard to combatting COVID-19; and (iii) the outcomes of negotiations on e-commerce, investment facilitation, micro, small and medium-sized enterprises (MSMEs) and the domestic regulation of services conducted as "joint statement initiatives" (JSIs).
This first instalment of our three-part series will focus on the appointment of AB members.
I. The appointment of Appellate Body members
A. Rules applicable to the appointment of Appellate Body members under the DSU
Article 17.2 of the Dispute Settlement Understanding (DSU) provides that:
"The [Dispute Settlement Body] DSB shall appoint persons to serve on the Appellate Body for a four-year term, and each person may be reappointed once […] Vacancies shall be filled as they arise."
Article 2.4 of the DSU states that: "[w]here the rules and procedures of this Understanding provide for the DSB to take a decision, it shall do so by consensus". [Footnote omitted.] Therefore, the general preference for consensus as a means of decision-making is also specifically mandated as the default decision-making rule for decisions taken by the Dispute Settlement Body (DSB) pursuant to Article 2.4 of the DSU.
B. The Appellate Body crisis
The prevailing view, espoused by the United States among other WTO Members, is that a decision of the DSB taken by consensus is necessary to appoint AB members. Nevertheless, to paint a complete picture, there is a minority view suggesting that filling a vacancy at the AB requires an "appointment" as opposed to a "decision", and that an appointment would not be subject to the consensus requirement for decisions taken by the DSB. However, that view has not gained any traction beyond academic circles.
In the summer of 2017, the United States formally began linking the appointment of AB members with its long-standing systemic concerns regarding the AB (the discussion of which is beyond the scope of this instalment). The United States has since consistently maintained that the DSB must first consider a number of systemic AB issues before taking any further decision aimed at filling AB vacancies. As a result, no member has been either appointed or re-appointed to the AB ever since. In December 2019, the AB was reduced to less than the three members that are required to serve on any given appeal, thus preventing the AB from hearing any new appeals.
In spite of heavily criticising the United States for its stance that has led to the AB’s paralysis, no WTO Member has openly invoked majority voting to appoint AB members and fill the AB’s vacancies – despite there being a clear legal basis to do so.
C. The appointment of AB members does not require a decision of the DSB taken by consensus
1. The Ministerial Conference has the authority to appoint AB members by majority vote
There is no question that the MC has the authority to appoint AB members. The conclusion that the MC can appoint AB members by majority vote requires a careful reading of the text of the Marrakesh Agreement.
Article IV:1 describes the MC as follows:
There shall be a Ministerial Conference composed of representatives of all the Members, which shall meet at least once every two years. The Ministerial Conference shall carry out the functions of the WTO and take actions necessary to this effect. The Ministerial Conference shall have the authority to take decisions on all matters under any of the Multilateral Trade Agreements, if so requested by a Member, in accordance with the specific requirements for decision-making in this Agreement and in the relevant Multilateral Trade Agreement [MTA].
The MC is the highest authority within the WTO’s governance structure. The MC has to meet at least once every two years. While regular MCs normally take place every two years, special MCs can also take place in the interval between regular MCs. Otherwise, Article IV:2 of the Marrakesh Agreement specifies that it is the General Council that carries out the functions of the MC in the interval between regular MCs.
It is from Article IV:1 of the Marrakesh Agreement that we know that the MC has the authority to appoint AB members ("to take decisions on all matters under any of the [MTAs]"). The appointment of AB members is a matter governed by the DSU which is an MTA pursuant to Article II:2 of the Marrakesh Agreement and Annex 2 thereof. Accordingly, the MC can take decisions on the appointment of AB members.
The last sentence of Article IV:1 clearly states that these decisions must be taken "in accordance with the specific requirements for decision-making in this Agreement and in the relevant Multilateral Trade Agreement".
Article IV:1 does not set out the "requirements for decision-making" applicable to decisions taken by the MC. The phrasing is also conjunctive: "in this Agreement and in the relevant [MTA]".
Article IX of the Marrakesh Agreement, entitled "Decision-Making", spells out the actual "requirements for decision-making" for MC decisions and provides the relevant context to fully understand the meaning and intent of Article IV:1 of the Marrakesh Agreement.
The last sentence of Article IX:1 provides that: "[d]ecisions of the Ministerial Conference and the General Council shall be taken by a majority of the votes cast, unless otherwise provided in this Agreement [i.e., the Marrakesh Agreement] or in the relevant [MTA]". Therefore, the default rule for decision-making by the MC is one of majority voting unless "otherwise provided".
Nothing in the Marrakesh Agreement "otherwise provides" for something other than majority voting in the case of AB appointments. That leaves the DSU, i.e. "the relevant [MTA]" for AB appointments. The DSU does "otherwise provide" for decision-making other than by majority voting.
However, footnote 3 attached to the last sentence of Article IX of the Marrakesh Agreement crucially clarifies the scope of application of the DSU’s decision-making rule. Footnote 3 reads as follows:
Decisions by the General Council when convened as the Dispute Settlement Body shall be taken only in accordance with the provisions of paragraph 4 of Article 2 of the [DSU] [i.e., the DSU consensus rule].
The last sentence of Article IX:1 of the Marrakesh Agreement sets out a rule of majority voting by the MC and the GC, "unless otherwise provided in this Agreement or in the relevant Multilateral Trade Agreement". Footnote 3 to Article IX of the Marrakesh Agreement makes clear that the consensus requirement of Article 2.4 of the DSU (i.e., the "relevant MTA") applies only to the GC when convened as the Dispute Settlement Body (DSB).
The necessary implication of footnote 3 is that the DSU’s consensus requirement does not apply to the MC. Had the drafters intended the consensus rule of the DSU to apply to the MC as well, they would have said so. The explicit reference in footnote 3 only to the GC when convened as the DSB necessarily excludes the MC from its scope. As a result of its clear wording, footnote 3 does not extend the consensus rule to the MC. Therefore, the DSU’s consensus rule does not apply to the MC when it exercises its authority under Article IV:1 of the Marrakesh Agreement to appoint AB members.
Article IV:1 provides that the MC "shall have the authority to take decisions on all matters under any of the [MTAs] … in accordance with the specific requirements for decision-making in this Agreement and in the relevant [MTA]." [Emphasis added.]
Articles IV:1 and IX:1 of the Marrakesh Agreement, as well as footnote 3 to Article IX:1, may be read "holistically" alongside Articles 2.4 and 17.2 of the DSU (i.e., the "relevant MTA") so as to avoid any unnecessary interpretive conflict between these provisions. On the basis of such a holistic reading, the consensus rule of Article 2.4 of the DSU does not apply to the MC when exercising the function of appointing AB members.
While no perceived conflict seems to arise between the Marrakesh Agreement and the DSU in this scenario, it may be worth mentioning that Article XVI:3 of the Marrakesh Agreement specifies that: "[i]n the event of a conflict between a provision of this Agreement and a provision of any of the Multilateral Trade Agreements, the provision of this Agreement shall prevail to the extent of the conflict".
Accordingly, any conflict regarding decisions taken by the MC would be resolved in favour of the rule of decision-making by majority vote under Article IX:1. There is no basis for giving priority to the decision-making rule contained in the DSU over the decision-making rule contained in Article IX of the Marrakesh Agreement. If anything, the conflict clause provided for in Article XVI:3 of the Marrakesh Agreement clearly gives priority of application to Article IX of the Marrakesh Agreement.
In sum, Article IV:1 does not indicate that the MC is subject to the consensus decision-making rule of Article 2.4 of the DSU. Article IX:1 of the Marrakesh Agreement, combined with its footnote 3, make clear that the MC is not subject to the DSU’s consensus decision-making rule in respect of appointing AB members.
2. The General Council also has the authority to appoint Appellate Body members when discharging the functions of the Ministerial Conference
With regard to the GC’s power to appoint AB members, Articles IV:2, IV:3 and IV:4 of the Marrakesh Agreement contemplate three functions for the GC: (i) discharging the functions of the MC in the intervals between meetings of the MC; (ii) convening as appropriate to discharge the responsibilities of the DSB; and (iii) convening as appropriate to discharge the responsibilities of the TPRB.
Footnote 3 to Article IX of the Marrakesh Agreement refers only to the second function of the GC (i.e., when the GC convenes as the DSB). It cannot be a mere coincidence that the text of footnote 3 refers expressly to this function of the GC. The drafters were aware of the different capacities in which the GC would serve and provided in footnote 3 that the DSU’s consensus rule would apply to the GC only when it convenes as the DSB.
On this basis one can argue that the GC may convene as the MC (its first function) and in this capacity the GC would not be subject to the decision-making constraint imposed by footnote 3 to Article IX of the Marrakesh Agreement. However, this argument might be overly technical and legalistic to some. In order to minimize any doubt about the legality of appointing AB members by majority vote, a more cautious course of action may be to convene a special MC exclusively for the purpose of appointing AB members. It would seem politically important for such a far-reaching decision to be taken by the MC as the WTO’s highest authority.
II. Conclusion
The main takeaway is that while opposite conclusions may be argued as to whether majority voting for the appointment of AB members is permitted or not, the question is at least a debatable one. We respectfully submit that the better interpretation of the relevant treaty provisions is that the MC has the authority to take a decision on appointing AB members matter by majority vote.
It is impossible to ascertain whether this is the outcome that the drafters intended. However, it is at a minimum a plausible interpretation of the WTO Agreements that provides a sufficiently sound legal basis for the Membership to do what is necessary to preserve the existence of the WTO dispute settlement system.
Should a majority of WTO Members implement this approach, either at a regularly scheduled MC or at a MC specially convened for the purpose of appointing AB members, it would be far from obvious that such a decision would not be taken in conformity with the WTO Agreements.
The paralysis of the Appellate Body is an existential crisis that is spreading beyond the dispute settlement system to the WTO as a whole. The true question that arises is: why would the WTO Membership give the United States the benefit of the doubt on this interpretive issue when the US position effectively blocks the functioning of the WTO’s dispute settlement system?
The soundness of the legal arguments previously put forward strongly suggests that this is ultimately a political issue and not a legal one. On that front, not a single WTO Member has formally proposed that the decision to appoint AB members be made by voting, even though some of the AB vacancies have remained unfilled for more than four years.
WTO Members are clearly reluctant to even call for decision-making by majority voting. This reluctance is likely the result of a complex set of political considerations, none of which can serve as a satisfactory explanation on its own. The following factors may shed partial light on the current state of decision-making at the WTO.
First, WTO Members seem to view consensus as a dike: should a crack in consensus as the exclusive means of decision-making let even the slightest amount of voting through, this decision-making leak would ultimately lead to opening the floodgates. Reaching this point of no return would cause Members to trigger voting on an ever-growing number of issues. Some Members may feel that decision-making by voting would gradually erode the proper functioning of the WTO due to increasing frictions, disruptions and generalized unpredictability.
Second, while a large number of WTO Members may oppose the US stance on appointing AB members, many among these same Members may be reluctant to give up the clout that consensus affords them on other matters.
We will further explore these reasons in our upcoming parts II and III on decision-making at the WTO that will take closer looks at the proposed decision to waive certain provisions of the TRIPS Agreement with regard to combatting COVID-19 and the outcomes of JSI negotiations on e-commerce, investment facilitation, MSMEs and the domestic regulation of services.
