The MPIA decision on French fries from Colombia
Spring 2023
The Appellate Body of the World Trade Organization (WTO) became inoperative in 2019 due to a blockage in the appointment of the new Appellate Judges. The blockage in the appointment resulted in the WTO lacking the number of judges necessary to hear an appeal. The interruption reflects the U.S. criticism that the Appellate Body overreached its jurisdiction, and took away rights and imposed new obligations through erroneous interpretations of WTO agreements. With the Appellate Body inoperative, the panel judgment will not be enforced if the losing party appeals. The trade community often refers to the appeals as being directed “to the void”, as no adjudicatory body can hear the case. The current crisis in the Appellate Body reflects the need to reform the WTO dispute settlement system.
On April 30, 2020, forty-seven WTO members notified the organization of the creation of a new Multi-Party Interim Appeal Arbitration Arrangement (MPIA), and their intention to, rather than appeal to the Appellate Body, resort to using this mechanism to arbitrate their disputes as long as the Appellate Body is not able to hear appeals of panel reports in disputes among them. The MPIA does not abrogate the first two phases of the WTO dispute settlement system (consultations and panel) and is “limited to issues of law covered by the panel report and legal interpretations developed by the panel.” The panel, in turn, is the competent forum to assess the facts of the case and the applicability of and conformity with the relevant covered agreements.
Last semester, the MPIA finalized the first two disputes. In July 2022, the appellate arbitration panel issued its first award. The parties notified the WTO of the award with a recommendation to bring measures into conformity concerning the dispute “DS583: Turkey — Certain Measures concerning the Production, Importation and Marketing of Pharmaceutical Products” the award was notified with a recommendation to bring measures into conformity. In December 2022, the parties notified the WTO of the award with a recommendation to bring measures into conformity concerning the dispute “DS591: Colombia — Antidumping Duties on Frozen Fries.”
At the Dispute Settlement Body meeting on January 27, 2023, the United States praised how the arbitrators handled, in Colombia — Antidumping Duties on Frozen Fries, the issue of the Antidumping Agreement Article 17.6(ii) legal standard of review. The positive comments will not change the United States’ position towards the Appellate Body but may indicate what may become a starting point for future negotiations. Some critics have already been contemplated at the MPIA, such as the alleged procedural defects of the Appellate Body. The substantive flaws the United States identified will be less likely to be overcome in the near future. However, the MPIA might serve as a laboratory for what might be a reformed Appellate Body.