On The Operation Of The Appellate Arbitration Mechanism Of WTO

On July 25,2022,the Award of Turkey-Certain Measures Concerning the Production,Importation and Marketing of Pharmaceutical Products(DS583)was released.The first case to be heard and concluded under the appellate arbitration procedure since the Appellate Body was suspended at the end of 2019.Notably,while the EU,a party to this case,is a participant in the Multiparty Interim Appellate Arbitration Arrangement(MPIA),Turkey is not a party to the MPIA and the two completed this appellate arbitration through an agreement signed by both parties.The main issue in this case is whether Turkey’s localization measures for foreign pharmaceuticals violate the principle of national treatment and whether government procurement falls under Article 3,paragraph 8(a)of the GATT or fall under the general exception provided for in Article 20 of the GATT.In order to achieve its universal health plan,Turkey requires foreign pharmaceutical companies to produce its medicines in Turkey,otherwise it will no longer reimburse by Turkey,a measure known as the "localization requirement".The panel was established on September 30,2019,and ultimately ruled that Turkey had violated the principle of national treatment and requested Turkey to correct this measure of localization of medicines.In this appeal,Turkey argued that its localization requirements did not violate the relevant WTO rules and that the Panel Report in this case misanalysed the localization requirements,and therefore filed a notification of appeal to the DSB on April 25,2022,based on the Arbitration Agreement Procedure with the EU,requesting the arbitrators to make a decision,thus initiating the appeal arbitration process.This case is unique in terms of procedure and content in that it compares the model arbitration agreement provided in Annex I of MPIA and focuses on whether Turkey’s localization request falls under the government procurement in Article Ⅲ(8)of GATT 1994 and whether it constitutes a general exception for public health in Article ⅩⅩ(b)of GATT 1994.By sorting out the arbitral award in this case,this article first illustrates the points at issue in the case,and then,based on the procedures of this trial,analyzes whether,in practice,the theoretical framework of appellate arbitration provided by the MPIA can be operated,how far the existing appellate arbitration mechanism can respond to the needs of the dispute resolution mechanism,and In the end,I offer some solutions to the problems that still exist in this case and in the appellate arbitration mechanism.In terms of content,the tribunal overturned the panels assertion that there must be a transfer of ownership to the government in Article Ⅲ(8)of GATT 1994 for government procurement,holding that a non-governmental entity can be the subject of government procurement as long as the product is purchased for government purposes and a government agency is in control of the product.The tribunal also agreed with the panel’s finding on the general exception for public health in Article ⅩⅩ(b)of GATT 1994,holding that there needs to be a link between the measure imposed and the stated objective,and that measures restricting trade exchanges cannot be taken by assuming the existence of a risk.Based on the above analysis,the Tribunal found that the "localization requirement" imposed by Turkey on the production of pharmaceuticals did not fall under the "government procurement" in Article Ⅲ(8)and did not constitute a general exception under Article ⅩⅩ(b),and that the Panel did not err in its legal analysis and required Turkey to correct this measure.In terms of procedure,arbitrators was constituted as required,based on the agreement in the prior agreement.The arbitrators issued its award on time by strictly adhering to the 90-day deadline for hearings,by reasonably limiting the scope of the hearings,and by a series of measures to streamline the proceedings.Subsequently,in response to Turkey’s request for an appeal,and without prejudice to the time limit for hearing the case,the tribunal heard Turkey’s defense under Article 11 of the DSU as to whether the panel had failed in its task of objectively assessing the facts,and the tribunal held that the panel had discretion in the selection of evidence and therefore did not violate the mandate in Article 11 of the DSU requiring the panel to objectively assess the facts.Finally,arbitrators in this case provided a way to cite precedents.If the previous panel and the Appellate Body report cited by the panel are not decisive for the analysis of this case,it is not inappropriate to use the previous report as a reference and let it play a supportive role,but still focus on the differences between cases.In this case,the arbitral tribunal,through strict compliance with the Arbitration Agreement and careful analysis of the case,changed the situation that the previous appellate institution’s case was too long and the scope of the hearing was too broad,and broke through the MPIA to innovate in the composition of the arbitrators,responding to the public’s longstanding doubts about the use of arbitration as a way to resolve disputes on appeal,and whether appellate arbitration can really replace the appellate institution to reasonably resolve disputes.The answer is yes,judging from the outcome of this case.In addition,this case is an MPIA-like proceeding between MPIA participants and non-participants and has undoubtedly contributed to the development of the MPIA.However,this case,as the first case in the appellate arbitration process,inevitably has its limitations and does not solve all problems perfectly,and there is still a need to refine the terms of the agreement in the next appellate arbitration cases for better dispute resolution.In order to better resolve the current situation of the piling up of appeals cases and the damage of the authority of the multilateral trading system,WTO members need to accelerate the consensus on dispute settlement and continuously improve the theoretical framework of the appellate arbitration procedure,so that the appellate arbitration mechanism can better play the role of alternative dispute resolution.