WTO Appellate Body Places Government Policy Statements at Risk

Eliza Patterson
January 14, 2005
In a little noticed recent ruling, a World Trade Organization (WTO) Appellate Body made two significant determinations that effectively expand the jurisdiction of dispute settlement panels and the coverage of WTO rules.
The Appellate Body (AB) in United States - Sunset Reviews of Anti-Dumping Measures on Oil Country Tubular Goods from Argentina[1] found, among other things, that the US government's Sunset Policy Bulletin (SPB)[2] was a government "measure" susceptible to challenge in the WTO and that the challenge could be addressed to the bulletin "as such." An "as such" challenge in WTO dispute settlement parlance is one made without regard to how, or even whether, a "measure" is applied; it alleges that the measure itself violates a WTO rule.[3]
These findings open the door to future challenges to a wide range of government documents previously not considered within the reach of the WTO.
The United States argued that non-binding government documents, such as the SPB, simply express agency thinking and provide guidance for the public and private sector.  Since these documents do not oblige the government to do anything and are not considered to be binding instruments under domestic law, the US argued that they are not the type of government instrument that could be subject to an "as such" challenge in the WTO.  In the US view, the rules of the WTO do not cover mere statements of policy.[4]
The AB did not dispute the US characterization of the SPB, but rejected its conclusion. The AB ruled that the legal status of the document under US domestic law was irrelevant[5] and that any government document that provides for administrative guidance and creates expectations among public and private actors is a "measure" that can give rise to a finding of inconsistency, as such, with the WTO regime.[6]  In other words, policy guidance of this sort must be consistent with WTO rules.
The potential impact of this ruling should not be underestimated. Although the AB did not find the SPB to be in violation of the particular WTO rules cited in the case,[7] its determination that policy statements are subject to "as such" challenges opens the door to future challenges not only to the SPB but to a wide, ill-defined, range of government instruments. Although the case involved a dispute under the Anti-Dumping Agreement, the AB did not limit its interpretation of the scope of WTO dispute settlement to any particular type of dispute.[8]
Governments have been put on notice that the issuance of policy statements designed to provide "guidance" to government agencies, irrespective of their status under domestic law, and regardless of their actual application, must comply with the vast array of WTO rules or risk subjecting the government to a WTO challenge. It is possible that this case will dampen the already waning enthusiasm of member governments to undertake additional obligations as contemplated by the Doha Round of trade negotiations in 2001.
About the author:
Eliza Patterson is a Harvard Law School graduate who specializes in international trade. She is an adjunct professor at Washington and Lee University School of Law.
[1] WT/DS268/AB/R.
[2]  Policies regarding the conduct of five-year ("sunset") reviews of Antidumping and Countervailing Duty Orders: Policy Bulletin, United States Federal Register, vol. 63, No.73 (16 April 1998) at p.18871.
[3] WT/DS268/AB/R footnote 22.
[4] US appellant's submission, paras. 11, 13.
[5] Para. 187.
[6] Para. 188. Article 3.3 of the DSU refers to "situations in which a Member considers that any benefits accruing to it directly or indirectly under the covered agreements are being impaired by measures taken by another Member." (Emphasis added.)
[7] Article 11.3 of the Anti-Dumping Agreement.
[8] In the course of its analysis the AB cited a prior case, US-Corrosion-Resistant Steel Sunset Review (WT/DS244/AB/R), in support of its position that the SPB was a measure subject to WTO dispute settlement. The AB in that case addressed the specific situation of dispute settlement involving alleged violations of the Anti-Dumping Agreement. However, the AB in the case at hand did not rely on that precedent. Rather, it undertook its own analysis and reached the much broader determination discussed above.