WTO Judicial Appointments: Bad Omen for the Trading System

June 13, 2011 5:00 PM

The office of the US Trade Representative has taken the little noticed but highly unfortunate step of blocking Jennifer Hillman’s second term on the WTO Appellate Body. This is a bad omen, both for the World Trade Organization and the United States.

The Appellate Body (AB) decides appeals from panel decisions in trade disputes. Since its creation in 1995, the AB has decided about 80 cases, and is now widely regarded as the most successful international court in history. The WTO doesn’t call them "judges," but in fact that’s what the AB members are. The seven judges are appointed for four-year terms, by consensus of WTO countries, and each judge can be reappointed once. While any WTO country can nominate a judge to the Appellate Body, by unwritten tradition the United States, the European Union and Japan always have a representative on the AB, while nominees from other countries rotate. Again by unwritten tradition, a judge who serves one term and is willing to serve again is reappointed automatically. Both traditions are now in jeopardy.

The United States has never before blocked its Appellate Body appointee from serving a second term. Since the USTR has offered no explanation for blocking Hillman, suspicions are bound to arise that the United States is displeased with her decisions on the AB and wants to name a judge who is more attentive to US positions in future cases.

These suspicions are bound to erode confidence in the WTO judicial system, and create a chilly reception for Hillman’s successor appointee. "Judicial independence" is a hallowed American concept, now enshrined in the WTO: "The Appellate Body shall comprise persons of recognized authority, with demonstrated expertise in law, international trade and the subject matter of the covered agreements generally. They shall be unaffiliated with any government..."

USTR officials may forcefully disagree with AB decisions, but they should not block the reappointment of a judge without cause or explanation, simply to open an AB slot for someone more akin to USTR views. If the United States arouses suspicions that it seeks to "pack the Appellate Body," other WTO countries are bound to be skeptical of the next US nominee. Some WTO countries might even question the privileged tradition that automatically awards the United States one judge on the Appellate Body.

Hillman is a widely respected trade lawyer with prior service as Chief Textile Negotiator in the USTR, USTR General Counsel, and Commissioner on the US International Trade Commission. She was originally appointed to the Appellate Body in December 2007 and her term expires in December 2011. By all indications, Hillman has served honorably and well. Maybe Hillman has a hidden defect, unrelated to AB decisions, but if so that should be explained. If the USTR is now blocking her reappointment because of cases in which Hillman participated, or cases decided by other AB members, that contradicts the independent foundation of the WTO dispute settlement system.

The next USTR nominee will face the extra challenge of gaining the confidence of other WTO member countries. Hillman’s replacement may be delayed for months by skeptical scrutiny, depriving the Appellate Body of a legal mind at a time when the case load is heavy. Once seated, the new American judge will have to go overboard convincing fellow judges of his or her total independence from USTR’s legal agenda.

The Appellate Body has earned worldwide respect for thoughtful decisions on complex matters rendered by impartial judges. The Doha Round may be dead in the water, but the dispute settlement system remains a well-functioning part of the World Trade Organization. It faces enormous challenges: potential cases on climate change, Intellectual Property Rights (IPR) enforcement, state-owned enterprises, and foreign exchange rates. But if the United States goes down the road of applying a political filter to even one AB appointment, what lesson will the European Union, Japan, and other WTO members learn? If the Appellate Body acquires even the hint of a judicial forum that works as an extension of national trade agendas, how long will the dispute settlement system survive as the "crown jewel" of the WTO, able to render decisions that command both respect and observance?

Barack Obama is a distinguished lawyer. Appointments to the Appellate Body would not normally command time on his crowded agenda. But as a member of the bar, as well as President, Obama should seriously reconsider this damaging precedent.

Update: Fast forward a few years and this “Bad Omen for the Trading System” seemed to come true in May 2016 as the United States seeks to block a second term for South Korean judge Seung Wha Chang on the WTO Appellate Body. Unfortunately the Obama Administration is treating Appellate Body members in the same fashion that Senate Republicans are treating Judge Merrick Garland.