10:37 AM Oct 30, 1996

DSB, LACKING QUORUM, POSTPONES ADOPTION OF RULING

Geneva 29 Oct (TWN) -- The World Trade Organizations' Dispute Settlement Body (DSB) was unable to adopt a ruling of the Appelate Body on the dispute over liquor taxes in Japan on Tuesday, and is to meet again Friday for this purpose.

The panel ruling, upheld by the Appellate body, held that Japan's varying domestic taxes as between sochu and other Japanese country liquors and imported liquors like whisky (taxes at a rate several times higher than on sochu) were discriminatory and violated the GATT obligations, and Japan should rectify this situation.

The DSB, meeting convened by the EU (which brought up the case against Japan) for adopting the report, did not manage to get a quorum of a simple majority of the WTO members or 63, and at Japan's insistence the meeting was suspended.

With so many formal and informal meetings taking place currently, as a part of the preparations for Singapore, the DSB could not even meet in the WTO building, and a meeting was scheduled at a conference building outside the WTO. But with most country delegations having no more than one or two bodies to field at WTO meetings, and many formal and informal meetings (where real decisions are taken) held simultaneously, few are able to be present at all WTO meetings and of its subsidiary bodies. Thus few of them have a quorum, not to mention a full house, but have got by with no one raising the quorum issue.

Rulings of the WTO disputes panels, or that of its Appellate Body in cases where an appeal has been lodged, is virtually automatic -- unless the membership by consensus decides otherwise.

But with just 37 delegations present at the meeting, even before the adoption of the agenda, Japan's Amb. Nobutoshi Akao, sought "some clarification about rules and procedures" over the quorum. The chairman, Amb. Celso Lafer of Brazil, clarified that the rules provided for a quorum of simple majority (or 63 out of the 125 members), but that the meeting could go ahead and take decisions on the basis of consensus.

But Japan did not agree and said that such an important matter with legal implications should be decided without a quorum. Akao was quoted by a WTO spokesman as saying that the level of attendance was "insufficient to adopt such an important report... everyone should respect the rules of procedure."

A brief suspension for 15 minutes, during which the secretariat officials scrambled around to get additional delegations to come and attend the meeting (and provide a quorum), did not succeed in mustering the additional delegations needed.

Another meeting, that of the trade and environment committee in the same building, had only one additional delegation present.

The DSB meeting was finally 'suspended' till Friday morning. Japan said that in view of the legal implications of the adoption of a ruling, the DSB should act only with a quorum.

WTO officials said under old GATT rules and practices that have carried over into the WTO, decisions could be taken by consensus, and if no one present raised the issue of quorum, the presence or absence could be ignored.

Denying a quorum and raising the issue of lack of quorum to prevent decisions is a legitimate parliamentary instrument in national parliamentary decision-making processes.

The old GATT was a provisional agreement among governments, and thus had free-wheeling rules and procedures based on consensus. But the WTO is an international treaty, even if old GATT practices have been allowed to be carried over by the WTO agreement.

Even if the WTO could continue the old practice and take decisions by consensus (which under the WTO agreement means no one present at a meeting formally objects), this raised the interesting question (for the public) of what could be a "cut-off point" where the secretariat or the chair of the meetings would be forced to note the lack of a quorum and themselves put off the meeting.

No WTO official would hazard a guess, though one noted that for the DSB to adopt a panel ruling, whoever seeks the adoption (one of the parties involved in the dispute) has to formally inscribe it on the agenda, has to be present to ask for the adoption, and presumably the other parties to the dispute and panel ruling too would be there.

That would call for the minimum presence of two, and perhaps the four Quad members (Canada, EU, Japan and the USA) who are parties to most of the disputes, and have a pie in everyone else's affairs!