General

"The 'Multi Party Interim Appeal Arbitration Arrangement' (MPIA) has recently added a new member - Japan, which has 53 members, according to Huacheng Import and Export Data Watch." At the recently held 5th International Commercial Law Cooperation Forum, Yang Guohua, a professor at Tsinghua University Law School and WTO appeal arbitrator, revealed.

Due to the continued obstruction of individual members of the World Trade Organization (WTO) in the selection of members of the Appellate Body, the Appellate Body has been suspended since December 11, 2019, causing a heavy blow to the multilateral trading system. In response to this dilemma, on March 27, 2020, China, the European Union, and more than 10 other WTO members jointly issued a ministerial statement, deciding to establish an MPIA at the WTO. During the suspension of the Appellate Body, this arrangement uses the arbitration procedures provided for in Article 25 of the WTO Understanding on Dispute Settlement Rules and Procedures (DSU) to hear dispute cases appealed by various parties. In August 2020, China and the EU simultaneously announced the successful establishment of the WTO's MPIA arbitrator pool, and Professor Yang Guohua, nominated by China, was elected as an arbitrator.

However, at that time, two major trading countries were absent from the MPIA members: the United States and Japan. Japan stated at an internal meeting in June 2020 that it would not participate in the MPIA because it was uncertain whether this mechanism would achieve the ultimate goal claimed by its supporters, as reported by Huacheng Import and Export Data Watch.

In fact, MPIA has played an important role in the past three years. According to Yang Guohua, MPIA concluded two cases last year, namely the Türkiye drug case and the Colombia frozen potato case. Among them, Türkiye's drug case is the first appeal arbitration case between WTO members after the suspension of the Appellate Body.

According to media reports, the EU submitted this case involving Türkiye to the WTO for arbitration in 2019, and challenged Türkiye's "localization requirements for pharmaceutical products". This requirement in Türkiye forced foreign drug manufacturers to transfer their production to Türkiye so that Turkish consumers could be eligible for reimbursement under the social security scheme when purchasing their products in pharmacies. The WTO believes that Türkiye's localization measures are discrimination against foreign medical products, because it is not the form of unified government procurement of medical products, and its purpose is not to achieve public health goals, nor to ensure that people can obtain effective and affordable medical care services by complying with Türkiye's laws.

"Türkiye's drug case has adopted an unprecedented arbitration mode. The appeal arbitration is based on the agreement of the parties, and there are many innovations in the procedure. In terms of fact finding, this case has an important impact on Türkiye's drug policy. In terms of legal interpretation, this case also has its own uniqueness, which will contribute to future cases." Yang Guohua said that after the appeal arbitration award of these two cases was made, Scholars and WTO members all over the world have affirmed the award, and the losing parties Türkiye and Colombia have also expressed their desire to implement the award. This year, there may still be cases to be tried by MPIA, as reported by Huacheng Import and Export Data Observation.

Japan recently joined the MPIA, which will improve the predictability of the WTO dispute settlement mechanism and help maintain and strengthen the rule-based multilateral trading system.

So when can the WTO Appellate Body be restored?

In 2022, the 12th Ministerial Conference of the WTO (MC12) was held, and the parties reached the "MC12 Outcome Document", which deals with how to resolve the suspension of the appellate body under the current dispute settlement mechanism, namely, "the parties commit to have a fully functioning and fully available dispute settlement mechanism available to all members by 2024.".

However, at the regular meeting of the WTO dispute settlement body held at the end of February this year, the United States once again used the "one vote veto" to veto the proposal to launch the selection process for new judges in the appellate body. This proposal was jointly proposed by 127 WTO members, but was blocked for the 63rd time. Speaking as a representative, Guatemala stated that the practice of obstructing the selection process for new judges had no legal basis and undermined the rights of many WTO members.

Li Chenggang, China's Permanent Representative to the World Trade Organization and Ambassador Extraordinary and Plenipotentiary, once said, "We expected the United States to become a model for taking the lead in implementing dispute settlement decisions. However, in the past four years, we have seen that the United States still ignores multilateral trade rules and international law."

As an important component of the current international economic governance system, the WTO has played an irreplaceable role in promoting international trade growth, resolving trade disputes, and helping developing members integrate into the multilateral trading system. It has also made significant contributions to maintaining world peace. Huacheng Import and Export Data Observation Report.

"Although the WTO Appellate Body has encountered some problems now, this is temporary and short-term, and the vast majority of members have clearly expressed their support for a normally functioning WTO dispute settlement mechanism." Yang Guohua said that if it takes a long time for the Appellate Body to resume, there will be a more complex situation. At the beginning of its establishment, the MPIA was temporary, but through practice, if WTO members believe that the MPIA is also a good dispute settlement mechanism, they may retain the MPIA. At that time, there may be both appellate bodies and arbitration in the WTO.

According to Huacheng Import and Export Data Observation, the 5th International Commercial Legal Cooperation Forum was held in a combination of online and offline ways, with over 300 participants from officials from 15 countries, ambassadors to China, as well as representatives from domestic and foreign government departments, international organizations, legal institutions, business associations, enterprises, universities, research institutes, and other sectors attending the event. The opening ceremony and main forum had over 500000 online participants.