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Honduras proposes tweaks to WTO rules to resolve judicial crisis

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By Tom Miles

GENEVA (Reuters) - Honduras sent suggestions to the World Trade Organization on Monday that it hopes might help rescue the global system for settling trade disputes, by tweaking procedural rules to deal with U.S. complaints about the system being abused.

The intervention by Honduras is a rare bid by a small WTO member to deal with specific issues at the heart of the WTO crisis, and contrasts with much grander efforts by the European Union and others to push for wider reform.

The United States has caused a crisis at the WTO by blocking appointments of judges on the WTO's Appellate Body, effectively the supreme court of world trade, because it says they have exceeded their mandate and broken procedural rules.

Unless new judges are appointed, there will be only one left from December this year, fewer than the three needed to judge appeals. That means trade disputes are simply headed for legal limbo, with no agreed way of enforcing the WTO rules.

"In light of the situation currently faced with the Appellate Body appointment impasse, taking into account the importance of the dispute settlement system to the well-functioning of the WTO, and members' duty to ensure the proper functioning of it, Honduras believes that action is urgently needed," Honduras said in a statement to the WTO.

U.S. Ambassador Dennis Shea has repeatedly complained about the appeals system, including routine flouting of a 90-day deadline and judges continuing to work on their existing cases even after they have officially stepped down.

Honduras said it wanted to foster a discussion and proposed several ideas, including making the deadline refer to working days rather than calendar days, excluding the time needed for translation, and possible extensions if there were many appeals.

The time period might also be lengthened to 120 days, or set by the judges themselves, or set by the parties to the dispute, possibly in agreement with the WTO judges.

Honduras also suggested consultations before the appeal process, where the disputing parties could agree to extend the deadline or limit the scope of the appeal.

Alternatively, to meet the deadline, judges might be empowered to reduce the scope of an appeal, limit the length of written submissions or remand cases back to the panel of experts who made the initial ruling.

The parties to the dispute might be able to agree an extension, or late rulings might be subject to a veto.

Honduras also suggested tweaking the working procedures to allow judges to continue working on existing cases, potentially subject to a veto by countries not involved in the dispute.

There was no immediate response from the United States or other WTO members, but Shea has previously rejected calls for changes to the judges working procedures, saying the United States wants the rules obeyed rather than tweaked to accommodate the judges' rule-breaking.

(Reporting by Tom Miles; Editing by Alison Williams)

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