The US – Venezuela political tension at the WTO doorstep
The World Trade Organization (“WTO”) may be facing yet another institutional crisis. At the end of March, the United States (“US”) decided to oppose the adoption of the agenda for the Dispute Settlement Body (“DSB”) meeting because one of the items had been proposed by the Venezuelan Nicolas Maduro government. The contested point related to a request for the establishment of a panel in a dispute initiated by Venezuela against the US in December 2018 relating to trade restrictions placed on the import of Venezuelan goods, measures affecting the liquidity of Venezuelan public debt, and transactions in Venezuelan digital currency. According to the US, the item could not be considered by DSB because it was submitted by the “illegitimate government” of Venezuela. It is worth noting that the US, along with more than 50 other states, including most EU and South American countries, have recognized the opposition leader – Juan Guaido – as Venezuela’s Interim President until free elections can be held. The US also adopted a similar strategy in other international fora, squeezing for example the Maduro representatives from the Inter-American Development Bank and International Chamber of Commerce. The WTO ultimately decided to postpone the meeting of the DSB. This was the easiest option, avoiding a number of difficult legal questions.
One of these questions is whether a decision to adopt a DSB agenda must be made by consensus. The Dispute Settlement Understanding (“DSU”) requires, with very limited exceptions, consensus for any decision of the DSB. On the other hand, majority voting is envisaged by Article IX:1 of the WTO Agreement if consensus is not possible. The WTO Agreement in Art. XVI:3 also gives the priority to its provisions in the event of conflict with any of the multilateral trade agreements annexed to it (which arguably includes the DSU). If we see the relevant relation between those provisions in terms of conflict (see for example the Kuijper’s post on this issue), this would mean that, at least from the formal point of view, majority voting is an available option.
Leaving aside this procedural question, there is also a question of general international law. Recognition of a government of one state by another is understood as accepting certain institutions or individuals as its lawful representatives in its international relations. Probably the most important consequence of such a recognition relates to diplomatic relations, as recognition effectively changes the entity that can legally represent a country to the recognizing state (the issue at the heart of the US opposition to Venezuela’s request). This also affects who is able to access the overseas assets of a state whose government is the subject of recognition. For example, the United Kingdom (“UK”), after recognizing Guaido, refused a request made by the Maduro administration to withdraw Venezuelan gold reserves held in the Bank of England. Similar restrictions have also been introduced by the US.
In public international law states enjoy a measure of discretion in recognizing governments. This however does not mean that there are no constraints. The traditional approach allows (but does not require) for the recognition of those governments that exercise effective control of the territory they purport to govern (and this may particularly include control over the armed forces and the security apparatus). Recognition that is premature (i.e. recognition of an authority which does not meet the above criterion) may constitute interference in the internal affairs of the country in question and result in international responsibility. In practice, however, states, motivated by their own national interests, sometimes do recognize authorities that are not in effective control. One recent example was the recognition in 2011 by the US and some West European countries of the Transitional National Council as the legitimate Libyan government, despite the fact that it controlled only a small part of the state’s territory, with the capital still held at that time by Moammar Gadhafi. Syria may serve as another example, with the Syrian National Council being recognized as a legitimate representative of the Syrian people by several (mostly Western) countries (despite the fact that at the moment of recognition it had only limited control over the Syrian territory). This also seems to be the case for the Guaido recognition, as he has only limited control over Venezuelan territory. Consequently, his recognition is predominantly political in nature, as it aims at isolating the Maduro regime at the international level and simultaneously strengthening the position of Guaido, both financially and diplomatically. Of course, formally the US relied on legal arguments in support of its recognition decision (other countries merely referred to legitimacy concerns). In particular, the statement of the US Department of State suggested that since there is no legally elected president in Venezuela (as the last election were held in violation of the Venezuelan Constitution), those provisions of the Constitution, which envisage the appointment of the Interim President by the National Assembly, apply.
Having said this, it should be also stressed that there are no legal instruments that could force the US (or any other country) to withdraw its recognition; the fact that recognition is premature does not make such recognition null and void, although it may lead to international responsibility on the part of a recognizing state (even if it cannot be asserted in front of any international court). This however means that in practice there are very limited avenues (if any) to “punish” premature recognition, particularly if it is granted by such a powerful state as the US. One may also argue that the Venezuelan case can be seen as a sign of the shift in the recognition practice. In the past, a number of countries (including the UK, US and France) have had policies of not formally recognizing governments because of practical and political complications that such move could create. The approach taken towards Venezuela goes in the opposite direction, indicating that formal recognition may play in the future more important role, becoming a conventional instrument of foreign policy.
There is no easy solution to the above situation in the WTO. Experimenting with majority voting in the context of the DSU seems improbable as it will further alienate the US and could potentially squeeze it from the WTO system. Equally unlikely is the withdrawal of the recognition of the Maduro government by the WTO. It may be possible however to persuade the current Venezuelan delegation to permanently or temporarily drop the item from the agenda of the DSB meeting. Indeed, meetings went ahead on 11 and 26 April and 28 May without the contested point on their agendas. However, it is not clear for how long the WTO will be able to keep Venezuela at bay on an issue that so substantially affects its interests.
Written by Lukasz Gruszczynski, Associate Professor at the Polish Academy of Sciences.