Reflections on US-Zeroing: A Study in Judicial Overreaching by the WTO Appellate Body

Abstract:     
One of the underappreciated developments in international trade law is the degree to which the WTO Appellate Body is failing to abide by negotiated procedural norms in reviewing Member State action. This essay highlights systemic problems with Appellate Body decision-making as reflected in the controversial case of US-Zeroing. The problems reflected in US—Zeroing go to central issues of judicial restraint, including concerns regarding the standard of review, appellate fact-finding, and justiciable notions of ripeness. This essay concludes that the Appellate Body in US-Zeroing circumvented the particularized standard of review required under the WTO Agreement, took upon itself the unacceptable task of appellate fact-finding, and inappropriately expanded the authority to hear facial challenges of discretionary agency action. In short, the US-Zeroing decision belies the felicitous notion that WTO dispute resolution embraces an approach of judicial restraint.

The WTO Agreements require the Appellate Body to defer to reasonable Member State interpretations of WTO treaty obligations in a manner analogous to Chevron deference. As US-Zeroing underscores, the Appellate Body in fact has eschewed anything approaching Chevron deference. The essay suggests that the Appellate Body is overreaching in not adhering to its obligations to defer.

The essay also highlights the problem of Appellate Body fact-finding in US-Zeroing. The essay argues that the case is troubling because the WTO agreements require WTO panels to defer to the objective and unbiased factual findings of Member State authorities, and doubly troubling because the Appellate Body's assessment of the facts under the DSU requires deference to the factual findings of the WTO panels. As such, the WTO agreements require double deference to factual findings below. But the Appellate Body in US-Zeroing displayed no such deference.

Finally, the essay focuses on the movement away from the mandatory/discretionary doctrine. That doctrine was the essential limitation on facial challenges to Member State action that did not rise to the level of mandatory obligations. As a consequence of the Appellate Body's interpretation in US-Zeroing, facial challenges once reserved for provisions of binding legislation are now available for virtually any general and prospective agency action. Quite literally, the Appellate Body's decision in US-Zeroing suggests that review of discretionary agency action will be more robust and searching when undertaken by an exacting international body in Geneva than by a deferential federal court in New York.

Keywords: WTO, international trade, international tribunals

JEL Classifications: K33

Accepted Paper Series