12:20 PM Jul 19, 1995

US BLOCKING WTO CONSENSUS ON APPELLATE BODY?

Geneva 19 July (Chakravarthi Raghavan) -- The attempt of the United States to secure for itself two seats on the World Trade Organization's appellate body for dispute settlement has been holding up a consensus, trade diplomats said Wednesday after a meeting of the WTO Dispute Settlement Body (DSB).

The DSB members expressed their concerns over the delay and the need for early establishment of the panel, so that the appointed members could detach themselves from their service to be available as members and the appellate body has to settle its own rules of procedure before it can get into business.

The DSB Chairman, Amb. Don Kenyon of Australia is to hold further consultations to find a consensus, with a new deadline of 31 July to reach a decision. Kenyon stressed the view that there was not too much time left to decide on the appellate body membership, and one could not wait for a decision to be taken under deadline pressures when cases to be heard are ready.

The Appellate body has to settle its own rules of procedure, and this could take a long time, as the experience of other WTO bodies have shown, trade diplomats note.

The WTO has already missed two or three deadlines on this.

A number of delegations took the floor at the DSB to complain about the delay, without naming the United States, blamed it for seeking to get two seats (for itself and/or with Canada) and thus holding up the consensus.

However US officials told newsmen that the US alone was not to blame and that the EU too was equally responsible. Other WTO participants said that the EU was staking a claim for one member from an EU state, and there was also the demand for another member from Switzerland.

A developing country delegate said that if the US by itself or with Canada garners two seats and the EU with Switzerland another two, there would be only three seats for the rest of the world's trading nations.

The delegate noted that the EU with its 15-members, had a web of association agreements in Europe -- with the participants looking towards EU membership or having strong trade links with EU. The EU's association agreements involve non-members having an "acquis communautaire" or following or acquiescing with the EU trade law and practices.

A six-member team of WTO officers -- WTO Director-General, WTO General Council Chairmen, the Chairman of the DSB, and the Chairmen of the Goods, Services and TRIPs Council -- have been entrusted with the job of selecting seven names (out of a field of over 30 candidates) for the appellate body, which will be the highest body to hear appeals involving interpretations of the WTO rules.

Guidelines for selection too were set in accord with the WTO agreement and the Dispute Settlement Understanding -- under which the members are to be of high calibre with demonstrated expertise in law, international trade and the subject matter of covered agreements, and taking into account the members be broadly representative of the WTO membership as a whole, the different legal systems and other factors including geographical areas and levels of development.

After an extensive process of interviewing the candidates, the six-member team is reported as being in a position to recommend seven names, but has been caught up in the demands of the US and Europe for two seats each.

In his intervention, US Ambassador Booth Gardner noted that it was the US which had taken a lead in defining the guidelines and the US agreed on the need for the body to be set up, but underlined the consensus decision aspect -- implying that if the US was not satisfied it would block any decision. The EU merely said it would constructively help the committee of six to reach a consensus choice.

In other actions, the DSB earlier agreed to establish a panel Wednesday to adjudicate a dispute raised by Canada against the European Union over a French regulation about the nomenclature under which Canadian scallops could be sold on the French market.

The Canadians claim that the scallops exported by them is a like product of that of France, but is being forced to be sold under a different name under regulations issued last year, but whose applicability has been postponed to end of 1995. Canada contends that the French regulation is said to be violative of the GATT's MFN principle and the requirement for national treatment, as also a violation of standards requirements.

Peru, which has sought consultations with EU on this issue, said it reserved its own rights. A number of other countries including Chile, Japan and Iceland said they reserved their third party rights in the dispute.

Japan told the DSB that in the light of its accord with the US, it was no longer pursuing its Art XXIII consultations on the US threatened sanctions over auto- and autoparts trade dispute with the US.

Singapore announced that it too was not pursuing its complaint against Malaysia over the imports of certain petrochemical products, since Malaysia has changed the import licensing requirements.

In other matters, Canada said that it had a dispute with the EU over the import duty on cereals, and that it had already held one round of consultations. The US has also sought consultations with the EU on wheat, corn, barley and rice.

In both cases, the dispute appears to relate to the EU levying the Uruguay Round bound schedule of duties (in its agriculture tariff schedule) on a reference price rather than the actual transaction cost of the imported article, and thus violating the EU's obligations.

Australia said it too had a trade interest as a rice exporter.

The DSB took note of these statements.

Japan and the EU are in the meanwhile due to hold consultations Thursday over the Japanese local taxes and duties on alcoholic beverages which the EU complaints discriminates against imported liquor.