By Steve Charnovitz, George Washington University Law School
The Obama Administration has not yet apologized for its unilateral action in May 2016 to unseat Appellate Body Member Seung Wha Chang, a distinguished jurist from South Korea. Although this hostile act by the United States has been roundly criticized by other governments within the World Trade Organization (WTO) and by many outside commentators, the Obama Administration refused to back down from its action to threaten WTO judges with non-reappointment if their judicial opinions rankle the U.S. Trade Representative (USTR). Ironically, although President Obama has rightly criticized the U.S. Senate for refusing, for political reasons, even to consider the President's mid-March Supreme Court nomination of Judge Merrick Garland even though that inaction leaves one Justice seat vacant, the Obama Administration engages in analogous politicization at the WTO that leaves one Appellator seat vacant.
Although the Obama Administration had refused in 2011 to go along with the widely-supported reappointment of Appellate Body Member Jennifer Hillman from the United States, reportedly on the grounds that she had not upheld U.S. protectionist measures being challenged in WTO dispute settlement, this most recent Obama Administration action to blackball another country's judge is a more serious assault on judicial independence in the WTO. Starting next week (26 September 2016), the WTO Dispute Settlement Body (DSB) is scheduled begin a focused discussion on improving the appointment process for Appellate Body Members. Below I offer a proposal to clarify the Dispute Settlement Understanding (DSU) regarding reappointment.
The Obama Administration announced its decision to block the reappointment of Judge Chang at the May 23 DSB meeting. The reason offered was that the Obama Administration disagreed with the jurisprudence articulated in four recent Appellate Body decisions on which Judge Chang was one of the three appellators on the division deciding the case. Two of those cases involved successful challenges by China against countervailing duties imposed by the Obama Administration. At the DSB Meeting, the Administration stated clearly that Appellate Body jurists needed to be "held responsible" and "accountable for the views they have endorsed" (Statement by the United States at the Meeting of the WTO Dispute Settlement Body, 23 May 2016).
The Obama Administration's announcement elicited an outcry of opposition in the world trade community. According to an account of the DSB Meeting published by the WTO, numerous governments, led by South Korea, either objected to the U.S. position or expressed concerns about the damage that could be done to the WTO. The other complaining governments included Brazil, China, Colombia, Egypt, the European Union, Honduras, Iceland, India, Indonesia, Mexico, Nigeria, Oman, Paraguay, Russia, Switzerland, Taiwan, Thailand, Turkey, Uruguay, and Viet Nam. Based on press accounts (as the official WTO minutes remain classified as of 22 September 2016), no government sided with the United States. (See "U.S. Slammed at DSB For Blocking Korean Appellate Body Reappointment", World Trade Online, 23 May 2016).
By conditioning its support for a judicial reappointment on whether or not a WTO judge sides with the United States on the substance or process of WTO law, the Obama Administration strikes at the heart of the concept of judicial independence. In 1994, when the US Executive Branch sought Congressional approval for US membership in the WTO, the US "Statement of Administrative Action" characterized the new Appellate Body as being composed of "seven independent experts" (SAA, p. 345). That Statement of Administrative Action was approved by the US Congress in the Uruguay Round Agreements Act (19 USC §3511). But the WTO appellators can hardly be "independent" when they know that the United States (or any other WTO Member) will veto a reappointment as a way of making WTO judges "accountable for the reviews they have endorsed."
I could not find any position paper on the USTR or White House websites explaining how the Obama Administration decided to target Judge Chang. The Administration did not seek any public comment on its plan to fire Judge Chang, and has not explained why the benefits to the United States from intimidating WTO judges will be greater than the costs to the United States of embarrassing South Korea and undermining the WTO.
The US ouster of Judge Chang was an affront to South Korea. Chang was the first and so far only Korean judge to serve on the Appellate Body. In an article about this sordid episode in the Korea Times (see Choi Sung-jin, "US set to oust Korean judge from WTO appellate body," 1 June 2016), an unnamed Korean government official is quoted as saying "We are explaining the iniquity of the U.S. moves to other member countries." That the Obama Administration singled out South Korea for the harsh judicial treatment should be put in context of the unfair way in which the Obama Administration has treated South Korea in bilateral trade relations. The most egregious conduct involved the Korea-US Free Trade Agreement (KORUS) that had been signed by both countries in 2007. After he took office, however, President Obama refused to send the KORUS to the Congress until Korea agreed to renegotiate the KORUS and accept more US protectionism. In particular, the Obama Administration pressured Korea to allow the 25% US tariff on imported trucks to remain in place for seven additional years rather than to begin to be phased out in the first year of the trade agreement. One wonders why in view of the increasing militarism in North Korea, the Obama Administration sees geopolitical reasons to embarrass the government and people of South Korea.
The US ouster of Judge Chang was also an affront to the WTO. Already suffering a legitimacy crisis for its inability to complete ongoing Doha Round trade negotiations (owing in large part to weak USTR leadership), the WTO has been enjoying a legitimacy boost from its effective dispute settlement system. But when the Obama Administration forces a vacancy in the Appellate Body and politicizes the process of re-appointment, the future effectiveness of WTO dispute settlement is put at risk.
The danger to the WTO dispute system was immediately grasped by the WTO community. The other six appellators sent a joint letter to the DSB Chair on 18 May 2016 observing that "The dispute settlement system depends on WTO Members trusting the independence and impartiality of Appellate Body Members. Linking the reappointment of a Member to specific case could affect that trust." In addition, the corps of retired WTO appellate judges voiced sharp criticism. In a letter dated 31 May 2016, all 13 former Appellate Body members wrote to the DSB chair to criticize the blocked reappointment. The letter observes that "all of the accomplishments of the past generation in establishing the credibility of the WTO dispute system can be put in jeopardy" by "inappropriate pressures by participants in the WTO system." In addition, many WTO scholars have also been critical of the Obama Administration. For example, Professor Gregory Shaffer wrote: "USTR's hubris could be explained if this were Putin's Russia. Or perhaps Trump's America. But the Obama administration? Has this fallen outside the President's radar?" ("Will the US Undermine the World Trade Organization?, 23 May 2016, The World Post).
The Obama Administration's disrespect for the WTO comes at a precarious time in US trade politics when leading candidates in the upcoming elections are calling into question the benefits to the United States from international trade and from WTO Membership. It is not enough for a US President merely to say the right things as President Obama did at the United Nations on 20 September when he declared that "I believe that as imperfect as they are, the principles of open markets and accountable governance, of democracy and human rights and international law that we have forged remain the firmest foundation for human progress in this century." A President must also do the right things. And President Obama failed to do the right thing when he allowed (or ordered) his Administration to undermine judicial independence in international trade law and to unaccountably veto the reappointment of a distinguished Korean jurist supported by most (if not all) other WTO member governments.
The continuing fallout from the US judicial veto calls for a decisive response at the WTO. At the DSB meeting next week, I propose that the Members promulgate new normative guidance on Appellate Body appointments. Happily, a made-to-order statement is available in the excellent letter from the 13 former appellators which states in one pertinent paragraph:
"A decision on the reappointment of a Member of the Appellate Body should not be made on the basis of the decisions in which that Member has participated as a part of the divisions in particular appeals, lest the impartiality, the independence, and the integrity of that one Member, and, by implication, of the entire Appellate Body, be called into question. Nor should either appointment or reappointment to the Appellate Body be determined on the basis of doctrinal preference, lest the Appellate Body become a creature of political favor, and be reduced to a mere political instrument. Rather, as provided in Article 17.3 of the WTO Dispute Settlement Understanding, the standard for both appointment and reappointment should be whether the person in question is 'of recognized authority, with demonstrated expertise in law, international trade and the subject matter of the covered agreements generally'."
A decision adopting this policy statement can be taken in the DSB by consensus pursuant to DSB Article 1.4.
Another reform I recommend is that the Appellate Body should adopt an amendment to its Working Procedures for Appellate Body Review (see WT/AB/WP/6, 2010, para. 2 (Duties and Responsibilities)) to make clear that Appellate Body members should not accept invitations to be interviewed by a WTO member regarding a reappointment. It has come to my attention that USTR's Geneva office has on recent occasion called in a sitting Appellate Body member to discuss her reappointment. Since the US government apparently cannot resist the temptation to engage in WTO-illegal ex parte communication with Appellate Body members, the Appellate Body, by its own rules, should forbid such reappointment interviews.
In summary, the Obama Administration should apologize to the WTO for the damage USTR has caused and the Administration should support the enactment of a DSB normative statement to depoliticize reappointments of WTO judges.