Kenya Nominates Renowned Scholar to the Appellate Body of the WTO

The government of Kenya has nominated Professor James Thuo Gathii a renowned international scholar for appointment to the Appellate Body of the World Trade Organization (WTO), for a slot opening up after David Unterhalter's term comes to an end in December this year.

Professor Gathii is currently a professor of Law at Loyola University Chicago where he holds the distinguished Wing-Tat Lee Chai in International law. He teaches International trade law, facilitates international law student and faculty exchanges, plans and develops international programs and conferences. Gathii has also consulted for a variety of United Nations agencies on WTO law and is a graduate of the prestigious Havard Law School with  SJD (Phd.) 1999

The WTO Appellate Body was established in 1995 under Article 17 of the Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU) and is a standing body of seven persons that hears appeals from reports issued by panels in disputes brought by WTO Members. The Appellate Body sits in Geneva Switzerland and Members appointed by the DSB to serve, do so for four-year terms, with the possibility of being reappointed once. The Appellate Body membership is broadly representative of the Membership in the WTO.

Case for a Multilateral Investment Agreement?

Despite the importance of FDI, its governance is fragmented and is found in multilateral agreements, RTAs and in BITs. There is however no single, comprehensive multilateral treaty or institution to oversee investment activity. Previous attempts to bring FDI under multilateral purview have failed. The result is a complex and confusing overlay of disciplines at different levels. To address this issue, a recent study on Investment under the auspices of the World Economic Forum makes a case for multilateral rules on investment and six reasons are stressed. 

First, the rise of Global Value Chains (GVCs) sharpens the need for global and holistic regulations; GVCs need global rules. Second, there is a proven appetite for international investment regulation; nations are “voting with their pens” for more discipline – signing hundreds of BITs and RTAs. But the result lacks coherence in terms of rules and application. Third, the North-South divide is disappearing on the investment-governance issue. Emerging markets’ role in FDI has grown tremendously in recent years –both as home and host nations. Fourth, the stigma that has been historically attached to FDI has sharply abated in recent years. Many countries are pursuing economic liberalization for the recognized benefits it brings. Fifth, and by contrast, the fragile and slow recovery of the world economy has led some countries to adopt protectionist measures against trade and investment. This regression heightens the need for multilateral rules. Sixth, increased FDI by State Owned Enterprises (SOEs) and Sovereign Wealth Funds (SWFs) presents new challenges to ensuring that competition conditions in the global marketplace remain equitable and do not give rise to national security concerns.

The report further argues that if an International Investment Agreement (IIA) is to emerge in the future, the WTO is the logical home for it. The WTO has the potential to yield more equitable outcomes and ensure non-discrimination, and it provides access to a dispute settlement mechanism that has worked well. This IIA may entail provisions in different areas, including the protection of investors, establishing investor-state dispute settlement and subjecting the agreement to the WTO state-state system, and providing post establishment national treatment. Pre-establishment or access provisions on investment are also important, as are notions of corporate social responsibility. In any case, there is a sense that the balance of rights and obligations needs to be revisited.

However another Study by Econstor states that the case for a WTO agreement on investment is weak. Four main reasons are given. 

• The absence of such an agreement has not prevented the recent boom of FDI in developing countries through RTAs, BITs and unilaterally.
• Likewise, substantial unilateral liberalization of FDI regulations was undertaken in the past even though multilateral obligations to do so did not exist. 
• The coverage of protections provided for investors in various BITs (and RTAs) goes beyond what can be expected from the Doha Round. Nevertheless, BITs do not appear to have had a significant impact on FDI flows to signatory countries. 
• It is also questionable whether RTAs such as NAFTA as well as MERCOSUR had a strong and lasting effect on FDI flows to developing member countries.