Bridges to Nowhere? WTO Adjudication and the Academic World

May 2015

I have often wondered about consistency in jurisprudence. As such, consistency is of course not a value, because one could be consistently wrong. How can we ensure consistently correct responses? A necessary ingredient to this effect is expertise. Expertise nonetheless is (thank God) evolving. Philosopher Karl Popper famously exaggerated this simple fact of life when he stated that today’s science laughs when facing yesterday’s orthodoxy. Expertise, consequently, is no friend of consistency.

Personally, I would not mind inconsistent judgments by courts across time to the extent that they are consistently logical, taking into account that logic itself develops over time. That would place me within the camp of people who do not adhere to a blind adherence to prior case law. Should WTO panels as well as the Appellate Body (AB) be entrusted with the discretion to make the changes when warranted?

I understand of course, that it is quite important for an institution like panels and the AB to claim “consistency.” After all, there is a fine line between inconsistency and arbitrariness, and no adjudicator would like to be accused of similar sins. It would be irresponsible if not illogical, if, in the name of consistency we were to accept repeatedly the same mistake.

Case law of the WTO though, is not characterised by the kind of inconsistencies I described above. I have not seen (except once) an admission by the AB “we got it wrong.” The one time (Dominican Republic-Import and Sale of Cigarettes) concerned a paramount obligation, non-discrimination. In EC-Seal Products, without much ado, this one time was set aside with a swift return to prior case law. No apologies were offered.

Case law of the WTO is occasionally characterised by inexplicable inconsistencies, where it is difficult for outsiders to identify the distinguishing factor from one case to the next. Why, for example, was market price paid enough to “exhaust” pass through of subsidies in US—Lead and Bismuth II, but not in US—Countervailing Measures on Certain EC Products? Why were (adverse) trade effects equated to less favourable treatment in the case law before and after Dominican Republic-Import and Sale of Cigarettes, but not in that particular dispute? There are many more examples in addition to these.

There’s more. Since case law on some issues now represents all the colours of the rainbow, it is quite easy for the AB to “cherry pick” from prior decisions and claim “consistency.” Why do I care about consistency tied to logic? Well, because if this condition is not met, errors are unavoidable; both type I as well as type II errors. How could, for example, Korea’s “dual pricing system” ever be judged discriminatory, when no adverse trade effects could be shown, and the AB accepted that the objective pursued was legitimate? How can the Canadian textbook local content subsidy in favour of domestic producers only avoid punishment? Or, more nuanced, how can the EU “seals regime” that in the name of animal welfare allows imports of products from seals brutally be judged as necessary to protect public morals in the EU?

Lack of detailed scrutiny and the cost of forum diversion have so far reduced the amount of criticism that some of the AB acrobatic judgments should have provoked. It is not sure that this will be the case for long. One thing though, is for sure: irrespective whether the Doha round will be crowned with success, WTO dispute settlement procedures will continue to be the only genuine “WTO voice.” It is the only area where Members should and yet do not have any influence.

It is, in my view, in times when faith to multilateralism seems to be fading, that brave actions need to be taken to restore it. The WTO bureaucracy cannot decide on the fate of the ongoing negotiations. It can do a lot though, to improve the quality of the output by its adjudicating bodies. There are dozens of imaginative proposals concerning the corporate governance of WTO adjudication floating around in the literature, and some of them have been proposed during the DSU Review by trading nations that have endorsed them. Many ideas have never been discussed in the WTO. Is there merit, for example, in changing the current identity or institutional mandate of panellists and AB members? Is there merit in bringing different expertise in the support divisions for Panels and the AB? Or allowing judges to pick their clerks?

In the GATT years, a few contracting parties in a world where “sovereignty” was the buzzword were not afraid to ask Gottfried Haberler, a Harvard economist, to evaluate claims regarding the limits of the most-favoured-nation (MFN) clause. Jan Tumlir would keep the door open to Harry Johnson and Herbert Grubel, and Arthur Dunkel had even appointed Jagdish Bhagwati to act as his advisor. The WTO, at a time of crisis, would be sending the correct message everywhere by demonstrating its will to strengthen even more its successful institution, its “courts,” while opening the door wide to voices around and away from its premises that have been thinking about the same issues. May the E15 Initiative be a serious contribution to this perspective.

Petros C. Mavroidis is the Theme Leader of the E15 Task Force on Regulatory Systems Coherence and a member of the Expert Group on Competition Policy. He is the Edwin B. Parker Professor of Law at Columbia Law School and Professor of Law at the University of Neuchâtel. He is currently on leave at the Robert Schuman Centre at European University Institute (EUI) Florence until 2016.

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