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WTO Dispute Settlement Mechanism: A Critical Analysis [Type the document subtitle] WTO is the Central Pillar of the multilateral trading system. The dispute settlement body of the WTO is deciding the trade disputes between nations following the dispute settlement understandings and the covered agreements. The existing system under GATT, 1947 was renewed with the separate body called DSB. The cases decided by the body and the problems with the settlement proceedings were analysed in this article.
Balaji P Nadar 3rd Semester, ILI New Delhi
Contents I.
Introduction
II.
WTO over GATT
III.
IV.
GATT Dispute Settlement Scheme
Establishment of WTO and its Specific Objectives
Dispute Settlement Understanding
Procedure to be by the DSB
Consultation and Mediation
Establishment of Panel
Report of the Appellate Body
Necessary Implications
Case Analysis
Cases Filed by Less Developed Countries
Cases Filed against LDC
India in DSB
V.
Criticism
VI.
Conclusion
Introduction: Economy of a nation depends heavily on the trade and commercial activities within and outside its jurisdictions. Jurisprudence of trade in the classical era was that there should be no restriction and there was no state to control the affairs over trade. But with the industrial revolution, it was felt by majority nations that the trade between two individuals having consequence in the income of the nation as whole and needs to be regulated with their own laws and external agencies. Trade between two individuals belongs to a same nation can be regulated by the law of that particular nation. But with regard the commercial transactions between nations, there was no uniform mechanism or a body to systemize the international trade, particularly when it comes a dispute between the parties or states. Immediately after the World War II, negotiations between large counts of nation were initiated in the year 1944 at Bretton Woods to form a body and treaty to coordinate international trade and successfully concluded with the preparation of multilateral treaty with the General Agreement on Tariffs and Trade in the Geneva meetings, 1947 and the GATT provisionally came into effect from January 1, 1948. At the same time the attempt to establish an international body called International Trade Organization was completed with the charter but failed to exist as it was not adopted by the United States of America’s congress which was an important arm intended in creating such an international body. From then, GATT was the only international instrument administering international trade until 1995 when World Trade Organization was established.
1
One of the important purposes for the establishment of GATT agreement was settling any kind of trade disputes arising between nations. This article will discuss the provisions and the procedures under GATT and WTO regarding international trade dispute settlement. Discussion in the first part would be on the evolution of GATT and the emergence of the international body WTO for settling disputes and the agreements under it. Second part will give a brief overview of the Dispute Settlement Understanding followed by the WTO Dispute Settlement Body in deciding trade disputes. In the third part, cases decided by the DSB will be analysed with a special focus on the disputes which has involved developing countries. Then in the last part some criticism of the DSB process will be looked into. 1
Safia Gupta, “From GATT to WTO”, available at: http://legalserviceindia.com/article/l378-From-GATT-toWTO.html (Visited on September 12, 2011).
WTO over GATT: GATT Dispute Settlement Scheme:
Main objective of the GATT was to limit the tariff charges and facilitating free trade for the benefit of all the GATT contracting parties. Under the GATT, there was a procedure for settlement of disputes in consensus mode, intended to provide an alternative measure to 2
retaliation, under two provisions. Article XXII allows for consultation among the disputed nations and Article XXIII provides for panels comprising of all the contracting parties to investigate and present its recommendations to resolve the conflict. Retaliation can also be recommended under Article XXIII but it has occurred only once in the GATT history, almost all 3
the parties agree to windup the policies in question. In the beginning, disputes under the GATT procedure were decided by rulings of the chairman of the council and later on disputes were referred to the working parties which comprise of all the interested party’s representatives. Then all these procedures were replaced by a new process of establishing an independent expert panel consists of three or five experts who are not associated to the disputed parties.
4
The report of the
expert panel will sent for approval to the GATT council and once the recommendations of the panel got approved, it will become binding on the parties. This evolution of GATT dispute settlement process was the basis for the foundations for WTO Dispute Settlement Mechanism. In spite of the salient features of the DSP under GATT, it was not effectively enforceable due to many reasons like positive consensus and retaliation measures which are not possible in all the cases. The defects in the GATT underwent eight rounds of multilateral trade negotiations to reduce tariffs and other barriers to international trade, but none of them were succeeded in 5
restoring the faith in world trading system. The seventh round of multilateral trade negotiations named as Tokyo round (1973-79) concentrated on a new way of promoting free trade by reducing non-tariff barriers. Tokyo round had a significant role in reducing the blocking of 2
Mitsuo Matsushita, Thomas J. Schoenbaum and et. al., The World Trade Organization- Law, Practice and Policy 5 (Oxford University Press, New York, 2 nd edn., 2006). 3 Dan Kovenock and Marie Thursby, “GATT, Dispute Settlement and Cooperation”, Working Paper available at: http://www.nber.org/papers/w4071.pdf (Visited on September 12, 2011). 4 Historic Development of WTO Dispute Settlement System, available at: http://www.wto.org/english/tratop_e/dispu_e/disp_settl http://www.wto.org/english/tr atop_e/dispu_e/disp_settlement_cbt_e/c2s1p1_e.htm# ement_cbt_e/c2s1p1_e.htm#txt4 txt4 (Visited on March 14, 2011). 5 Surendra Bhandari, World Trade Organisation and Developing Countries 3(Deep & Deep Publications Pvt. Ltd., 2001).
consensus by a single party in the dispute settlement process. The inborn defects in the GATT dispute settlement process led to number of problems in the mid-80s and the need for improving and strengthening the process was felt by almost all nations. 6 Establishment of WTO and its Specific Objectives:
In addition to the non-tariff barrier reduction method introduced in the Tokyo round, dispute settlement was also included and given higher importance in the later negotiation called Uruguay round(1986-94) which was the last round of GATT multilateral negotiations concluded with the creation of a new body to regulate and administer international trade. The final act of the Uruguay round singed in the ministerial meeting at Marrakesh transformed the GATT in to new international organization called WTO came into being from 1
st
7
January 1995. The new WTO
had its notable feature of creating a new procedure for adjudicating legal disputes under GATT 8
and WTO with a dispute settlement procedure. WTO established with four main tasks under the agreement: i)
to provide a forum for negotiations among members both to current matters and any future agreements,
ii)
to administer the system of dispute settlement,
iii)
to administer the trade policy review mechanism, and
iv)
to cooperate as needed with the IMF and the World Bank.
9
Settling trade disputes between the members is the primary objective of the WTO. For this purpose the Uruguay round established a new system of dispute settlement with the Understanding on Rules and Procedures Governing the Settlement of Disputes, in short the Dispute Settlement Understanding. The concept of Appeal was introduced in the dispute settlement under WTO in order to have an effective decision making authority called Appellate Body
6
Supra note 4. Supra note 2 at 7. 8 Robert E. Hudec, “The New WTO Dispute Settlement Procedure: An Overview of the First Three Years”, 8 Minn. Journal of Global Trade 2 (1999). 9 Art III of the WTO Agreement. 7
Dispute Settlement Understanding:
The scheme of the DSU is to be an overall framework for the resolution of disputes in field of international trade under WTO.
10
The understanding consists of 27 articles providing the
rules and procedures to be followed by the Dispute Settlement Body in interpreting and enforcing all the covered agreements that make up the WTO.
11
DSU itself under Article 3.1
provides for the application of Article XXII and XXIII of the GATT 1947.
12
General provisions
contained under Article 3 of the understanding addresses a set of objectives of the dispute settlement mechanism under WTO. It says that the dispute settlement system of the WTO is the central pillar of the multilateral trading system and the decision or rulings of the DSB shall be aimed at achieving a satisfactory settlement of the disputes in accordance with the provisions of the understandings and the covered agreements.
13
Furthermore, Article 3.2 provides for the
application of customary rules of interpretation of public international law to clarify the provisions of the understandings and the covered agreements. But the link between article 31 and 32 of the Vienna Convention and the interpretation requirement stated in Article 3.2 of the understanding is now almost eliminated in the WTO law.
14
In November 2001, at the Doha
Ministerial Conference, member governments agreed to negotiate to improve and clarify the DSU, which was compelled in the 1994 decision itself to review the DSU after five years.
15
Under Article 2 of the understanding, the general council has to establish a DSB which is responsible for the administration of entire mechanism. DSB is composed of the ambassadors from all the member countries representing their nation. The conclusion reached by the DSB should be done only by consensus among the members, but not like the positive consensus as in GATT. This new procedure under the understanding eliminates the blocking possibility through a procedure known as ‘reverse consensus’. 10
16
It is the sole authority responsible for establishing
M B Rao and Manjula Guru, WTO Dispute Settlement and Developing Countries 38 (Lexis Nexis, New Delhi, 2004). 11 Bryan Mercurio and Mitali Tyagi, “Treaty Interpretation in WTO Dispute Settlement: The Outstanding Question of the Legality of Local Working Requirements”, 19 Minnesota Journal of International Law 275 (Summer, 2010). 12 Understanding on Rules and Procedures Governing the Settlement of Disputes(DSU), Art 3.1: Members affirm their adherence to the principles for the management of disputes heretofore applied under Articles XXII and XXIII of GATT 1947, and the rules and procedures as further elaborated and modified herein. 13 Id Art 3.4. 14 Supra note 10 at 50. 15 Source: http://www.wto.org/english/tra http://www.wto.org/english/tratop_e/dispu_e/dispu_e.htm top_e/dispu_e/dispu_e.htm (Visited on October 17, 2011). 16 John H. Jackson, “International Law Status of WTO Dispute Settlement Reports: Obligation to Comply or Option to ‘Buy Out’?”, 98 American Journal of International Lsaw 109 (2004).
panel, appellate body and implementing the findings or recommendation of the panel or appellate body. DSU explicitly establishes in the text itself the procedure for implementation of the reports of the panel or the recommendation of the appellate body. It addition, it clearly establishes a choice for an obligation to implement the findings and the matter shall be kept under surveillance until the necessary implementation.
17
Article 3.7 of the DSU warns the member countries to be
prudent while invoking the DSB procedures and they should consider whether such action under the procedure would be fruitful and the aim of the mechanism is to secure positive solution to a dispute.
18
Only when any positive solution is not possible, a member can invoke the dispute
settlement procedures. WTO members have filed over 427 complaints in just fifteen years. The detailed procedures to be followed by the DSB will be briefly explained under the following heads.
Procedures to be followed by the DSB: Generally a dispute arises when it seems to a member government that another member government is violating an agreement or commitment under WTO. The dispute settlement mechanism proceeds through three main stages i) Consultation, ii) Formal Litigation and iii) Necessary Implementation. Settling dispute is the responsibility of the DSB and it is the sole authority to do four main functions: i)
establish a panel of experts to consider the case,
ii)
to accept or reject the report(findings) of the panel,
iii)
to accept or reject the results of an appeal,
iv)
to retaliate the parties which has failed to comply with the rulings.
Consultation and Mediation:
The formal proceeding starts, before taking over any action, when a member country requests bilateral consultation at the WTO under article 4.
19
This discussion process is to provide
an opportunity to the parties to the dispute to negotiate themselves to see if they can settle their 17
John H. Jackson, “The WTO Dispute Settlement Understanding – Misunderstandings on the Nature of Legal Obligation”, 91(1) American Journal of International Law 60 (Jan 1997). 18 Supra note 2 at 113. 19 Henrick Horn, Petros C. Mavroidis and et. al., “Is the Use of the WTO Dispute Settlement System Biased?”, available at: www.econ-law.se/Papers/Disputes00 www.econ-law.se/Papers/Disputes000117.PDF 0117.PDF (Visited on March 14, 2011).
differences amicably. This is a private process and there will be no secretariat or other member’s involvement. But additional (third) parties can join the consultation proceedings with the consent of the respondent. Strict time period should be maintained during the consultation. Once the process started after joinder of third parties, the parties should complete their consultation within 60 days and if it fails to settle the disputes between parties, the parties can ask the WTO director general to mediate or try to help in any other way.
20
46% of the disputes filed before the DSB
resolved among the parties themselves in this consultation process itself. Establishment of Panel:
Complainant can request the DSB to establish the panel of experts to decide the case when there is no response from the respondent on their request for consultation within 10 days or the consultation process did not reach any solution within 60 days.
21
A panel of experts should be
appointed by the DSB within 45 days and the panels should consists of three or five persons, well qualified governmental or non-governmental individuals, including persons who have served on or presented a case to a panel, picked from a list of persons suggested by the members of the WTO.
22
Generally the panel should start hearings on the basis of written submission made
by the parties. The procedures to be followed by the panels are given under Article 12, which mandates the panel to afford enough opportunity to the parties by framing a suitable time table to make their submissions.
23
The third parties should also be given hearing opportunity by the panel
and they can make their written submissions to the panel. The panel may seek information and technical advices from any appropriate individual or body when scientific and technical issues were raised by the parties. It should send its interim reports and should send its final report the parties and all the members of the DSB within 60 days of its establishment and in case of urgency, the deadline may be shortened to three months. The panel discussions are highly confidential and the reports shall be drafted by the panel even without the parties. If there is no consensus among the members against the findings of the panel, DSB must adopt the panel’s
20
Supra note 12 Art. 6. Id Art. 4.7. 22 Supra note 2 at 109 and Id Art. 8. 23 Supra note 10 at 74. 21
report within 60 days of its submission. The panel, officially, helps the DSB in making rulings or recommendations. The panel’s findings have to be based on the agreements cited.
24
Report of the Appellate Body:
Any party to a dispute, but not the third party, can appeal the report of the panel, even both the parties can appeal to the Appellate Body. An appeal is limited to issues of law covered in the panel report and legal interpretations developed by the panel. Factual findings and conclusions of the panel cannot be appealed.
25
Each appeal is to be heard by a three member
division from a permanent seven member Appellate Body. Permanent members of the AB are appointed by the DSB for a fixed term of four years, who are not affiliated to any government and at the same time broadly representing the range of WTO membership.
26
They have to be
persons with demonstrated expertise in law, international trade and the subject matter of the covered agreements.
27
The procedure to be followed by the AB should be drafted by the AB
itself in consultation with the Chairman of the DSB and the Director General. This AB can uphold, modify or overturn the legal findings of the panel but they cannot reexamine the existing evidence or examine a new issue. As like the panel’s proceedings, AB hearings are also confidential and AB can draft its final report in the absence of parties. The proceedings of the AB should be completed within 60 days and in certain cases additional 30 days shall be permitted. On submission of the AB’s report, the DSB has to adopt or reject it within 30 days. Rejection is possible only when the DSB decides by a consensus not to adopt the report. Unless otherwise agreed by the parties to the dispute, the period from establishment of the panel to adoption or rejection of the report of the panel or the AB by the DSB shall as a general rule not exceed nine months if the panel report is not appealed, and twelve months if the report was appealed.
28
Once adopted, the report will become the recommendation or rulings of the DSB and the same can advise the party concerned to bring their policies in conformity with the agreement, if they are found to be inconsistent with that covered agreement. In order to ensure transparency, 24
Source: “Understanding the WTO: Settling Disputes, A Unique Contribution” available at: http://www.wto.org/english/thewto_e/whatis_e/tif_e/disp1_e.htm http://www.wto.org/english/thewto_e/whatis_e/tif_e /disp1_e.htm (Visited on October 17, 2011). 25 Supra note 10 at 91. 26 Id. 27 Supra note12 Art. 17.3. 28 Id Art. 20.
all the written submissions made by the parties to the panel or the AB shall be treated as confidential only available to the parties, but the parties themselves can disclose any statements or their position to the public. Furthermore even a party to a dispute cannot disclose any details or any information which was designated as confidential by the party submitted it.
29
Necessary Implications:
Once the case is decided in favour of the complainant the DSB may accord the losing party(respondent) a reasonable period of time, not exceeding fifteen months, to bring their inconsistent laws, regulations, policies into conformity with the WTO agreements.
30
This is the
possible way or direction emerging from a WTO dispute and there is no concept of punishment or even restitution, but the trade sanction can be imposed only in exceptional cases. On the expiry of twentieth day of the ‘reasonable period’, the winning party may request the DSB for retaliation measures to induce action on the part of the losing party. This is very rare as almost all the WTO members voluntarily fulfill their obligation as per the DSB decisions in time. The DSB must grant the authorisation to impose trade sanctions (suspension of concessions or compensation) within 30 days of the expiry of the time limit given to the losing party.
31
Furthermore, when a losing party brings is laws into conformity with the concerned agreement, it can choose how to implement the decision and the DSB should monitor how the adopted rulings are being implemented. The losing party has no obligation to follow the way of implementation suggested by the winning party.
Case Analysis Cases Filed by Less Developed Countries: Coun tries:
Developing countries account for seventy five percent of the WTO membership and are increasingly able to use their power to influence negotiations traditionally dominated by developed countries.
29
32
Seven out of eleven most frequent complainants in the dispute settlement
Id Art. 18.2. Id Art. 21.3(c) and Supra note 19 at 4. 31 Id Art. 22. 32 Swapneshwar Goutam, “WTO & Development in Developing Countries Perspective”, available at: http://legalserviceindia.com/article/ http://legalserviceindia.com/article/l425-WTO-&-Development-I l425-WTO-&-Development-In-Developing-Countries-Pe n-Developing-Countries-Perspective.html rspective.html (Visited on October 2, 2011). 30
process are developing countries and they have filed 40% of the total complaints.
33
From the
introduction of the dispute settlement mechanism under WTO the less developed, particularly the developing nations actively performed in the process. Canada, Brazil, Indian and Mexico are noted as frequent complainants and third parties while USA and EU are the most frequent users of the mechanism.
34
The first case filed before the WTO DSB was by Singapore against
Malaysia on prohibition of imports of polyethylene and polypropylene which was settled on mutual agreement between the parties on March 1995. The second case filed by Venezuela and Brazil which was an important one on developing nation’s perspective is US Gasoline case
35
relating to some provisions of the USA’s Clean Air Act which imposes standards for reformulated and conventional gasoline. But the fact was that USA’s policy measures restricted imported gasoline and treated it in a less favoured manner. The panel’s report was in favour of the complainants but in the appeal, the AB has slightly modified the panel’s reasoning and held the measures taken by USA is not justifiable. Brazil has participated as a complainant in more than 25 cases and most of them are against USA, EU and Canada. Another important cases, which was initially succeeded by Malaysia along with India, 36
Pakistan and Thailand against USA is the US- Shrimp Case , in which the USA’s guidelines restricting certain countries from importing shrimp were questioned. Both the panel and the AB concluded that the measure at issue, the import prohibition on shrimp and shrimp products was inconsistent with the GATT provisions. The same issue was, later on, held not in contravention to the agreement on considering the provisions on preservation of natural resources. Though the ruling was not complied with by the USA, it was noted in the WTO report that the compliance proceedings completed without finding of non-compliance.
37
Some other countries like
Indonesia, Philippines, Thailand, Argentina and Mexico have also filed many cases against the developed fronts and failed in most of them. Another success of the developing countries over
33
Gregory Shaffer and Ricardo Melendez-Ortiz (eds.), Dispute Settlement at the WTO: The Developing Country Experience 2 (Cambridge University Press, Cambridge, 2010). also see: David Evans and Gregory Shaffer, “The Developing Country Experience in WTO Dispute Settlement”, available at: http://ssrn.com/abstract=1743727 (Visited on October 17, 2011). 34 Source: http://www.wto.org/english/tratop_e/dispu_e/speech_agah_4mar10_e.htm (Visited on October 2, 2011). The same source shows that the majority of cases filed in 2010 were brought by the developing countries, also see Infra note 67. 35 DS2 (1995). 36 DS58 (2000). 37 Source: http://www.wto.org/english/tra http://www.wto.org/english/tratop_e/dispu_e/cases_e/ top_e/dispu_e/cases_e/ds58_e.htm ds58_e.htm (Visited on November 14, 2011).
38
the developed nations is the Chicken Cuts case . This case was filed by Thailand and Brazil against the EU on their measures relating to tariff classification imposing duties on frozen boneless chicken cuts and the same measures were held violative of GATT articles. Korea’s case on imposing additional duty on their Dynamic RAMs by Japan in the year 2007 was held in consonance with the Agreements. Cases Filed against LDC:
Developed economies like USA and EU are the nations which are very well using the dispute settlement mechanism under WTO to enforce their economic rights. As noted earlier, USA and EU are accepted as the most frequent users of the system. Starting from its first case on Korean measures concerning the test and inspection of agricultural products
39
, USA has filed 98
cases as a complainant of which about 50% of the cases against LDCs. As like USA, European Union has filed 85 cases as a complainant with most of them against LDCs. Canada’s Aircraft case against Brazil’s export financing programme was a good example for the privileges enjoyed by the wealthier nations in the DSB proceedings, where Brazil was held violated the Agreement on Subsidies and Countervailing Measures. Indonesia Autos case
40
is another good example for
the national treatment obligations, where finally Indonesia was asked by the DSB to stop providing luxury tax exemption or import duty exemption to home car companies. Argentina’s provisional and definitive safeguard measures on imports of footwear, was held inconsistent with the Agreement on Safeguards.
41
In Korea Beef case
42
also the measures
taken by Korea to restrict the beef imports from Australia and USA on the domestic support programme was concluded as against GATT agreement and the measures accorded less favoured treatment to the imported beef. Statistics shows that more than 40% of the cases were filed by the developing countries and in about 35% of the cases they are the defendants.
38
43
It was observed by
DS269 and DS /286 (2003). DS3 (1995). 40 DS 54,54, 59 and 64. 41 DS121 (1998). 42 DS 161, 169(1999). 43 Gregory Shaffer, “Developing Country Use of the WTO Dispute Settlement System: Why it Matters, the Barriers Posed, and its Impact on Bargaining”, available at: http://ictsd.org/downloads/2008/05/shaffer_1.pdf (Visited on November 14, 2011). 39
some scholars that, comparing the WTO dispute settlement mechanism, success rate of developing countries over developed defendants are more under the GATT settlement process.
44
India in DSB:
India as a member of WTO has filed 19 cases before the DSB and involved in the consultation process of 72 cases as a third party. There were 20 cases filed against India till date. First case was filed by India on different import regimes for automobiles followed by Poland
45
and a mutually agreed solution was reached between the parties during the consultation process itself. First case filed in the DSB against India was by the USA in the year 1996 on India’s product patent stand. India was ruled to implement, in the patent laws, the mailbox rule and Exclusive Market Right for pharmaceutical and agricultural chemical product patents. So many cases have been filed by USA and EU against India regarding the patents regime followed by India. Another important case filed against India by USA and EU is India Autos case
46
regarding
the measures taken by India to impose certain restriction to use imported components on automobile industry in order to encourage domestic products was held violation of Article XI of the GATT. Similar case was filed by the USA on India’s quantitative import restrictions to protect balance of payments under GATT. The case was decided by the DSB in favour of USA stating that India's monetary reserves were adequate, and, thus, India's Balance of Payments measures were not necessary to forestall the threat of, or to stop, a serious decline in its monetary reserves within the meaning of Article XVIII and India had violated Art. XVIII.
47
This
observation clearly shows the biased nature of the dispute settlement system in favour of the wealthier nations. Many other cases brought by the developed nations against India like case on additional 48
import duty imposed by India on alcoholic beverages , patent case by EU against India. On the other hand, cases filed by India like, shrimp case 44
50
49
were decided
, steel plate case
51
and
Marc L. Busch and Eric Reinhardt, “Developing Countries and GATT/WTO Dispute Settlement”, available at: http://userwww.service.emory.edu/~erein/research/Berk http://userwww.service.emory .edu/~erein/research/Berkeley.pdf eley.pdf (Visited on October 17, 2 011). 45 DS19 (1995). 46 DS146 and DS175(2000). 47 DS90(1997). 48 DS360 (2007). 49 DS79 (1997(. 50 Supra note 36. 51 DS206 (2001) – US imposition of anti-dumping duties on certain i mports manufactured by SAIL.
textile case
52
were also decided not in favour of India. One recent case filed by India against the
EU, particularly Netherlands, is the case on seizure of generic drugs manufactured in India in transit. 53 This case is on the repeated wrongful seizure of generic drugs originating in India while transiting through ports and airports in Netherlands on patent infringement grounds. The consultation process was started with third parties like Canada, China, Ecuador, Japan and Turkey. The consultation process succeeded and the EU had accepted their seizure of generic drugs was wrong and their members will amend their rules soon and India said it will withdraw the case when EU ratifies that amendment.
54
Criticism:
Critic contends that the smaller countries in WTO exercise very little influence in the dispute settlement mechanism and despite the WTO was aimed at protecting the developed countries. The poorest countries in the WTO system are almost completely disengaged from enforcement of their market access rights through formal dispute settlement litigation.
55
It was
observed by some scholars that disputes filed by USA and EU appear to have ended with the defendant making the desired policy changes more frequently under WTO.
56
The reason for this
difference was very well analysed by a scholar and the reasons given by him for the poor performance of LDC in WTO dispute settlement are the lack of legal and political capacity in international trade and the fear of political or trade reprisal of the LDCs.
57
The reason for low
success rate of the LDCs are also analysed in the same study and the reasons were pointed on the LDCs concerns regarding experts, the need to hire experts for research and testimony to support their cases.
52
58
DS243 (2002) – Rules of origin applied by US to restrict import of textiles from one nation in protecting domestic industry. 53 DS408 (2010). 54 Source: http://articles.economictimes.indiat http://articles.economictimes.indiatimes.com/2011-04-06/news imes.com/2011-04-06/news/29388612_1_multilateral/29388612_1_multilateral-intellectualintellectualproperty-agreement-generic-drugs-valid-pat property-agreement-generic-drugs-valid-patents ents (Visited on November 14, 2011). 55 Chad P. Bown and Bernard M. Hoekman, “WTO Dispute Settlement and the Missing Developed Country Cases: Engaging the Private Sector”, available at: http://www.brookings.edu/views/papers/200505bown.pdf (Visited on October 2, 2011). 56 Marc L. Busch and Eric Reinhardt, “Transatlantic Trade Conflicts and GATT/WTO Dispute Settlement”, http://www.ppl.nl/bibliographies/wto/files/1546.pdf ies/wto/files/1546.pdf (Visited on October 2, 2011). available at: http://www.ppl.nl/bibliograph 57 Kristin Bohl, “Problems of Developing Country Access to WTO Dispute Settlement”, 9 Chi.-Kent J. Int'l & Comp. L. 130 (2009). 58 Ibid.
Two other major issues attached with the WTO dispute settlement process are on transparency and the right of private parties in the mechanism. Some scholars have emphasised on need for the participation of public and non-governmental organisations in the dispute settlement process in order to provide a way for the weaker economies to approach DSB and to attain better achievement in the liberalised and priviatised global trade.
59
Several ways have been
recognized by experts in which a private non-governmental party might participate in the system like rights to observe, rights to submit amicus briefs, and rights to bring lawsuits directly.
60
Opening the disputes procedures to public scrutiny and public participation was addressed by the USA in 1998 itself in the ministerial meeting.
61
At the same time it was observed by some other
scholars that the public access to documents and hearings will have some negative impact on the legitimacy of WTOs legal rulings.
62
Regarding the biased nature of WTO against developing
countries, the main cause for this situation is that the developing countries are far less likely than richer countries to induce a settlement before the ruling is issued.
63
It was observed by an expert,
Breuss that the system has a tendency to lead WTO members to shoot in their own feet via protectionary measures.
64
In addition there were some arguments on the involvement of third parties in the dispute settlement process which would complicate the dispute settlement and would make the process more costly with more voices and issues.
65
Another argument was regarding the powers of AB,
to ignore certain issues raised by the parties, given under Article 17.12 of the understandings.
59
66
Thomas J. Shcoenbaum, “WTO Dispute Settlement: Praise and Suggestions for Reform”, 47 Int’l & Comp. L. Q. 647(1998). and Supra note 55. 60 Joel P. Trachtman, Philip M. Moremen, “Costs and Benefits of Private Participation in WTO Dispute Settlement: Whose Right is it Anyway?”, 44(1) Harv. Int’l L.J. 221(2003). 61 The then president of USA Clinton’s address to the WTO Ministerial Ministerial Meeting, Meeting, May 19, 1998. also see Supra note 8 at 43. 62 Supra note 8 at 46. 63 Trade Brief on the WTO Dispute Settlement by SIDA, April 2004, available at: www9.georgetown.edu/faculty/mlb66/SIDA.pdf (Visited on October 17, 2011). 64 Wilhelm Kohler, “The WTO Dispute Settlement Mechanism: Battlefield or Cooperation?”, available at: http://papers.ssrn.com/sol3/papers.cfm?abstra http://papers.ssrn.com/sol3/papers.cfm?abstract_id=764168 ct_id=764168 (Visited on o n November 12, 2011). 65 Marc L. Busch and Eric Reinhardt, “Three’s a Crowd: Third Parties and WTO Dispute Settlement”, 58 World Politics 446(April 2006). 66 Art. 17.12 says that ‘the AB shall address each of the issues raised’. By exercising this power AB can simple address few issues and neglect to consider other issues separately
Conclusion: WTO established with the primary objective to promote free trade and stimulate economic growth and the DSU under the WTO is providing an effective mechanism to enforce the trade agreements which experience any violation by its member governments. The mechanism itself has its own positive and negative features. The Uruguay round and Doha declarations were focused primarily on the involvement of LDCs in the dispute settlement process. The understanding itself under many provisions gives some superior status for the LDCs to equally use the process, like Article 12.10 and 24 regarding time extension given for the developing countries in consultation process. But the reality learned from the decided disputes under the DSU clearly shows that the process does not manage the universal economy impartially. It generally focuses on the commercial interest of the profit making companies rather than the economic growth of all nations. Though it is having many inherent defects, as an organization to encourage trade and economic growth the WTO and the DSM are very well operating towards the stimulation of trade and economic progress. Regarding the developing countries participation in the panel process, by the end of 2010, 63 percent of the serving panelists were from developing countries.
67
Due to active participation of and the experience gained by certain developing
countries like India, Brazil, Argentina, Thailand, now there is a little shift in the mechanism. Nations started understanding their rights and obligations under the WTO agreements. At present, ignoring all the issues, the WTO DSB proceedings must be made in an impartial and more transparent manner keeping in view the economic progress and interest of the humanity rather than having 100% focus on trade.
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Analysis of WTO DSB developments by Frederick Agah, the then Chairman of the DSB (2010-11), available at: http://www.wto.org/english/tratop_e/dispu_e/speech_agah_4mar10_e.htm http://www.wto.org/english/tratop_e/dispu_e/speech_agah_4m ar10_e.htm (Visited on September 1 2, 2011).
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