How to Treat the WTO's Problem with Precedent.

• Author: Meyer, Timothy
• Position: Response to by Jeffrey Kucik and Sergio Puig in this issue, p. 539

Table of Contents I. Introduction 588 II. The Appellate Body and Precedent 590 A. How the AB Used Precedent 592 B. The Implications of the AB's Use of Precedenl III. Justifying Adherence to Decisions in Similar Cases 599 A. How to Evaluate Prior Decisions in Contemporary Disputes 600 IV. A Tentative Framework 604 V. Conclusion 609 I. INTRODUCTION

In retrospect, it should hardly be a surprise that the use of "precedent" became such a problem for the World Trade Organization's Appellate Body (WTO AB). As any trade lawyer, commentator, or student knows, the question of "likeness" has bewitched trade law for years. One might think that "likeness" should serve merely as a check to make sure that two products compete with each other before doing the hard work of evaluating whether imports have been treated "less favorably" on account of their national origin. Instead, likeness is, in the view of many people, "the core element" of nondiscrimination jurisprudence under the General Agreement on Tariffs and Trade (GATT). (1) "The obsession with 'likeness' in the GATT/WTO is unheard of in any other legal arena." (2)

And what is the practice of precedent, if not the practice of treating like cases alike? (3) Precedential reasoning requires an account of when two cases are sufficiently similar that they should be subject to the same rule or, on the other hand, why and how they are different and thus can permissibly be treated differently. This comparison also requires a general justification for why like cases should be treated alike. That justification is intuitive to most lawyers. Precedent serves values of predictability, transparency, and coherence. In so doing, it might also promote the legitimacy of the tribunal in the eyes of stakeholders, thereby boosting the tribunal's effectiveness at resolving disputes and compliance with its rulings.

But most tribunals also justify the use of prior decisions in individual cases. At the case-specific level, the practice of justifying reliance on prior decisions--in other words, the practice of precedent--tends to rely on a different set of factors: the correctness of the prior decision, its administrability, reliance by the governed on the rule from the prior decision, and changes to relevant law or facts. Legal systems may often face a tension between the goals of relying on precedent generally and the goals served by relying on precedent in specific--often difficult--cases. And this tension may be particularly acute in legal systems, like the WTO and international law generally, where no express authorization for following precedent exists.

In Extending Trade Law Precedent, Jeffrey Kucik and Sergio Puig conduct a large-scale empirical study that suggests that the WTO AB fell victim to this exact tension--adhering to its own prior decisions in the name of the systemic values of precedent while failing to justify reliance on precedent in difficult cases. (4) Kucik and Puig's article does an admirable job of unpacking how the WTO AB used precedent, despite the formal absence of authorization to do so. (5) While others have discussed how precedent contributed to the AB's decline, (6) Kucik and Puig document with data both the AB's construction of a system of precedent and how that precedential system has operated. They have, in other words, given us a map of how the AB analyzed whether cases were "like" and whether "like" cases should be subject to the same rule. Their main empirical finding is that the AB relied on precedent overwhelmingly to follow or extend the reach of its prior decisions, as a means of "strengthening [of] legal commitments." (7) Because the WTO's negotiation mechanism ceased functioning, political oversight of the AB became difficult and the extension of precedent ultimately alienated the United States. Kucik and Puig thus endorse the greater use of mechanisms, such as sunset clauses, that promote political accountability for international tribunals. They also argue that in the international system, extending precedent can ultimately reduce compliance with the tribunal's decisions, at a cost to the system as a whole. (8)

This Article offers a complementary way to think about the AB's problems with precedent. It argues that the AB's difficulties were similar to the problems with its treatment of "likeness" in nondiscrimination. In short, the AB focused too much on whether two cases (or products in the nondiscrimination context) were "like," while minimizing substantive justifications for treating two cases or products in the same fashion. If two cases were "like," all that remained was to check to make sure no "cogent reasons" counseled departing from the previously established rule. (9) But the "likeness" of two cases, similarly to the "likeness" of two products or services, is best treated as the prelude to evaluating the substantive reasons for treating the specific like things alike--be they cases, products, or services. The failure to inquire into substantive reasons is similar in both the context of precedent and the context of goods and services and creates similar problems.

The Article proceeds in three parts. Part II describes and evaluates Kucik and Puig's descriptive results and their conclusions about the implications of the AB's use of precedent. To preview, their article often equates the use and extension of precedent with decisions that narrow the freedom member states have under the WTO agreements. But tribunals can follow and even extend their prior decisions without necessarily constricting a state's scope of permitted action. Precedent, after all, can narrow the scope of legal commitments just as it can broaden this scope.

Part III argues that international tribunals evaluating whether to treat two cases alike should engage in a full-throated, two-part analysis. The first step asks the threshold question of whether earlier decisions are sufficiently similar to the current case that they might have persuasive value. If the answer to that first question is yes, the second step requires tribunals to grapple with the justification for relying on the reasoning in prior cases. This Article suggests that inquiry should be grounded in the tribunal's key task--treaty interpretation--and should therefore focus explicitly on whether states collectively have embraced prior decisions and the limits of their endorsement.

2. THE APPELATE BODY AND PRECEDENT

   In the 2000s and early 2010s, the United States became disenchanted with the WTO AB--the centerpiece in the WTO's "crown jewel" of a dispute settlement system. (10) While originally conceived of as a standing body to correct legal errors in panel decisions in WTO disputes, the AB quickly became the chief component of the most functional element of the WTO. In part, that stemmed from divisions among an expanding membership that limited the possibility for successful negotiations. In part, it also stemmed from a difference in rules. WTO members automatically adopt AB and unappealed panel rulings unless they agree by consensus not to, while negotiated outcomes require affirmative consensus to conclude the negotiations. In other words, holdouts can block negotiations, but not decisions from panels and the AB interpreting the WTO agreements.

   The United States had multiple grievances, but, at bottom, most of the grievances stemmed from a belief that the AB was not reading the WTO agreements as they were written. With respect to substantive commitments, the United States believed that AB decisions imposed new trade liberalization commitments to which the members had not agreed, especially with regard to disciplines on trade remedies. But the United States also believed that the AB was ignoring textual limits on its own authority, such as time limits on AB proceedings. Straddling these issues, the United States attacked the AB's decision to follow its own previous decisions, a practice of precedent. The Dispute Settlement Understanding (DSU) does not explicitly authorize a system of precedent in any form and certainly does not countenance a firm rule of stare decisis. Evidence that professional staff at the WTO Secretariat exert disproportionate influence over WTO dispute reports further fueled US concerns. (11) The United States worried about a transfer of decision-making from appointed (and thus at least somewhat accountable) panels and AB members to unaccountable and entrenched bureaucrats who might be wedded too strongly to prior decisions on which they had worked. (12) While the objection to the use of precedent goes to the AB's mode of deciding cases, the US objection to the use of precedent focused, of course, on the use of precedent in substantive decisions with which the United States disagreed, which are primarily in the trade remedies area.

   Because the United States ultimately paralyzed the AB by blocking the reappointment of members, addressing the United States' concerns is essential to reanimating the AB or constructing a successor organization. To that end, Kucik and Puig have conducted what is to my knowledge the first comprehensive study of how the AB uses its prior decisions to decide disputes. Their study provides a critical starting point for any conversation about how to reform the AB. This Part describes Kucik and Puig's study and discusses some limitations as to what one can infer from their results.

   1. How the AB Used Precedent

      Kucik and Puig begin by coding the AB's use of its prior decisions. Their framework for coding AB precedent begins by asking, with respect to each citation the AB makes to its own prior cases, whether the AB applied its own prior decision or failed to apply its own prior decision. (13) Each of those two categories can then be broken down into two further categories. Applications of past precedent can either "follow" or "extend" past precedent. (14) Failures to apply past precedent can either "distinguish" prior decisions or "narrow" them. (15)

      The...