US Critiques WTO Arbitral Proceeding for Carrying Same Issues as AB
The U.S. critiqued the Multiparty Interim Appeal Arbitration Arrangement (MPIA), which has been adopted by various nations as an alternative to the defunct World Trade Organization Appellate Body, during a December meeting of the Dispute Settlement Body.
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A statement from the U.S. noted how one MPIA member called out an MPIA arbitrator in a recent spat involving the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) for replacing the dispute panel's interpretation of the agreement's plain language with a "corollary theory" not based on the text of the agreement. The MPIA member said the arbitrator was "making up new rights and obligations" and threatening "confusion and uncertainty" for members.
The U.S. said these concerns "correspond to concerns with WTO dispute settlement that we have raised in the past." Specifically, the U.S. said it identified various instances where the "dispute settlement system has adopted interpretations that depart from the plain text as agreed to by Members, contrary to Article 3.2 of the Dispute Settlement Understanding."
In addition, the "corollary theory" adopted by the MPIA arbitrator seems to rely on precedent, "at least in part," which is the "same systemic error that the United States has criticized in past reports."
The U.S. statement is referring to an award issued in the EU's dispute on China's enforcement of intellectual property rights (see 2507210060). The arbitrators said that the EU showed that China has an anti-suit injunction policy for its courts and that parts of the TRIPS Agreement aren't confined to ensuring a patent owner's exclusive rights in each member's domestic legal system. However, the arbitrators ultimately held that China's anti-suit injunction policy doesn't violate the TRIPS Agreement.
The concerns raised by the U.S. come amid additional public criticism from the nation concerning the WTO's structure and mission (see 2512160045). In December, the U.S. ambassador to the WTO issued a response to reform discussions, arguing that the era of the "most favored nation" rate has passed.
In response to the government's statements, Simon Lester, head of WorldTradeLaw.net, said in a blog post that appellate review would be a valuable tool to use to address the U.S. government's concerns, though he acknowledged that one party will almost always be scorned following an adjudication. He said, in light of the value of two-tiered review and the U.S. aversion to WTO dispute settlement, he would be "interested to hear from the U.S. or other governments on how exactly they would like to see interpretation carried out in WTO dispute settlement, in terms of the weight placed on text/context/object and purpose, or on some other interpretive issues."