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Compliance with WTO dispute settlement decisions: Is there a crisis?
Conferences and symposia on the World Trade Organization (WTO) have been proliferating in connection with the organization’s tenth anniversary with a particular focus on the WTO dispute settlement system – how it is working what difficulties have arisen how its rules might evolve etc. These events typically feature a certain amount of hand-wringing over the fact that adopted WTO dispute settlement decisions have only a limited indirect influence on the subsequent behaviour of losing respondents and sometimes are not implemented promptly or at all. Some observers have gone so far as to proclaim the existence of a ‘compliance crisis’ with potentially ruinous consequences for the WTO and the trading system more generally.
Key Issues in WTO Dispute Settlement
This book examines aspects of the operation of the WTO dispute settlement system during the first ten years of the WTO. It covers a representative cross-section of the issues and situations WTO Members have dealt with under the Dispute Settlement Understanding. The book is unique in that it includes contributions from virtually the entire gamut of actors involved in the day-to-day operation of the WTO dispute settlement system: Member government representatives private lawyers who litigate on behalf of Member governments in the system Appellate Body members Appellate Body Secretariat staff and WTO Secretariat staff. It also includes contributions from several academics who closely follow and carefully scrutinize all that goes on within the system. It therefore provides fascinating insights into how the system has operated in practice and how the lessons of the first decade can be applied to make the system even more successful in the years to come.
The making of the ‘World Trade Court’: The origins and development of the Appellate Body of the World Trade Organization
The Appellate Body of the World Trade Organization (WTO) heard and decided its first appeals case in 1996. By 1 January 2005 the Appellate Body had heard and decided 64 appeals from WTO panel reports. The body of case law generated by the Appellate Body over the past nine years is both in quantitative and qualitative terms impressive. The Appellate Body’s case law is highly authoritative and has made a significant contribution to the development of international trade law. The decisions of the Appellate Body in for example US – Shrimp and EC – Asbestos have effectively put an end to complex and sensitive disputes between WTO Members. Both panels and parties in WTO disputes have shown and continue to show much deference to the case law of the Appellate Body. The Appellate Body is undisputedly the most important organ of WTO dispute settlement. The Appellate Body is all but in name the ‘World Trade Court’. The key question addressed in this article is: what explains the prominent status which the Appellate Body and its case law have achieved since 1996? Was the ‘success’ of the Appellate Body and its emergence as the World Trade Court ‘predetermined’ by its constituent instruments or is it primarily the result of other factors that have affected the Appellate Body and its case law in the past nine years?
The reasonable period of time for compliance with rulings and recommendations adopted by the WTO Dispute Settlement Body
The need for a reasonable period of time for the implementation of rulings and recommendations adopted by the Dispute Settlement Body (DSB) arises in two situations: first when the responding party in a dispute settlement proceeding has been found to have violated WTO rules or otherwise nullified or impaired benefits accruing to the complaining party; and second when the incriminated measure is still in existence at the time when the responding party that has ‘lost’ the case has to inform the DSB of its intentions in respect of implementation. For this purpose a DSB meeting has to be held within 30 days after the adoption of the panel report and if applicable the Appellate Body report.
The power of the WTO dispute settlement system
The dispute settlement system of the WTO is one of the most important elements of a rules-based multilateral trading system. By way of introduction to the very instructive chapters that follow I would like to make several observations about the nature of dispute settlement in a trading system based on national sovereignty followed by some comments on how the system is designed to ensure integrity and fairness in the WTO’s adjudicative process.
Key Issues in WTO Dispute Settlement
This book examines aspects of the operation of the WTO dispute settlement system during the first ten years of the WTO. It covers a representative cross-section of the issues and situations WTO Members have dealt with under the Dispute Settlement Understanding. The book is unique in that it includes contributions from virtually the entire gamut of actors involved in the day-to-day operation of the WTO dispute settlement system: Member government representatives private lawyers who litigate on behalf of Member governments in the system Appellate Body members Appellate Body Secretariat staff and WTO Secretariat staff. It also includes contributions from several academics who closely follow and carefully scrutinize all that goes on within the system. It therefore provides fascinating insights into how the system has operated in practice and how the lessons of the first decade can be applied to make the system even more successful in the years to come.
THE WTO Dispute Settlement Procedures
The third edition of The WTO Dispute Settlement Procedures collects together the treaty texts decisions and agreed practices relating to the procedures that apply in the settlement of WTO disputes. It affords ready answers to technical questions relating to matters such as: how disputes are initiated and conducted including at the appellate stage; what deadlines apply and how to calculate them; what rules of conduct bind individuals involved in WTO dispute settlement; and what rules of procedure apply to meetings of the Dispute Settlement Body. This highly practical work which includes cross-references and a subject index will prove invaluable to anyone working in WTO dispute settlement including lawyers civil servants working in the field of trade economists academics and students. This edition has been fully updated to take account of revised rules and procedures.
Preface
This volume contains a collection of the legal texts related to the settlement of disputes under the Agreement Establishing the World Trade Organization (WTO). To facilitate their use the texts have been grouped by subject matter and cross-references and a subject index have been added by the WTO Secretariat. These additions do not form part of the legal texts and therefore should not be used as sources of interpretation.
The WTO Dispute Settlement Procedures, 3rd Edition
The third edition of The WTO Dispute Settlement Procedures collects together the treaty texts decisions and agreed practices relating to the procedures that apply in the settlement of WTO disputes. It affords ready answers to technical questions relating to matters such as: how disputes are initiated and conducted including at the appellate stage; what deadlines apply and how to calculate them; what rules of conduct bind individuals involved in WTO dispute settlement; and what rules of procedure apply to meetings of the Dispute Settlement Body. This highly practical work which includes cross-references and a subject index will prove invaluable to anyone working in WTO dispute settlement including lawyers civil servants working in the field of trade economists academics and students. This edition has been fully updated to take account of revised rules and procedures.
United States - Sunset Reviews of Anti-Dumping Measures on Oil Country Tubular Goods from Argentina
On 7 October 2002 Argentina requested consultations with the US regarding the final determinations of the US Department of Commerce (“DOC”) and the US International Trade Commission (“ITC”) in the sunset reviews of the anti-dumping duty order on OCTG from Argentina issued on 7 November 2000 (65 Federal Register 66701) and June 2001 (USITC Pub. No. 3434) respectively and the DOC’s determination to continue the anti-dumping duty order on OCTG from Argentina issued on 25 July 2001 (66 Federal Register 38630). Argentina considered that general US laws regulations policies and procedures related to the administration of sunset reviews and the application of anti-dumping measures were inconsistent either on their face or as applied with Articles 1 2 3 5 6 11 12 and 18 of the Anti-Dumping Agreement (ADA); Articles VI and X of the General Agreement on Tariffs and Trade (GATT) 1994; and Article XVI:4 of the WTO Agreement. Furthermore Argentina claimed that the sunset review conducted by the DOC is inconsistent with Articles 2 5 5.8 11.3 11.4 12.1 and 12.3 of the ADA. It also claimed that the sunset review conducted by the ITC was inconsistent with Articles 3 and 11.3 of the ADA.
Dominican Republic - Measures Affecting the Importation and Internal Sale of Cigarettes
On 8 October 2003 Honduras requested consultations with the Dominican Republic concerning certain measures affecting the importation and internal sale of cigarettes. This request is a new and expanded version of a complaint filed by Honduras on 28 August 2003 (WT/DS300/1).
United States - Measures Affecting the Cross-Border Supply of Gambling and Betting Services
On 21 March 2003 Antigua and Barbuda requested consultations with the US regarding measures applied by central regional and local authorities in the US which affect the cross-border supply of gambling and betting services. Antigua and Barbuda considered that the cumulative impact of the US measures is to prevent the supply of gambling and betting services from another WTO Member to the United States on a cross-border basis. According to Antigua and Barbuda the measures at issue may be inconsistent with the US obligations under the GATS and in particular Articles II VI VIII XI XVI and XVII thereof and the US Schedule of Specific Commitments annexed to the GATS.
European Communities - Export Subsidies on Sugar - Complaint by Thailand
On 27 September 2002 Australia and Brazil requested consultations with the European Communities concerning the export subsidies provided by the EC in the framework of its Common Organisation of the Market for the sugar sector. The requests concerned Council Regulation (EC) No. 1260/2001 of 19 June 2001 on the EC’s common organization of the markets in the sugar sector and all other legislation regulations administrative policies and other instruments relating to the EC regime for sugar and sugar containing products including the rules adopted pursuant to the procedure referred to in Article 42(2) of Council Regulation (EC) No. 1260/2001 and any other provision related thereto. On 14 March 2003 Thailand requested consultations with the European Communities on the same matter.
European Communities - Export Subsidies on Sugar - Complaint by Australia
On 27 September 2002 Australia and Brazil requested consultations with the European Communities concerning the export subsidies provided by the EC in the framework of its Common Organisation of the Market for the sugar sector. The requests concerned Council Regulation (EC) No. 1260/2001 of 19 June 2001 on the EC’s common organization of the markets in the sugar sector and all other legislation regulations administrative policies and other instruments relating to the EC regime for sugar and sugar containing products including the rules adopted pursuant to the procedure referred to in Article 42(2) of Council Regulation (EC) No. 1260/2001 and any other provision related thereto. On 14 March 2003 Thailand requested consultations with the European Communities on the same matter.
European Communities - Export Subsidies on Sugar - Complaint by Brazil
On 27 September 2002 Australia and Brazil requested consultations with the European Communities concerning the export subsidies provided by the EC in the framework of its Common Organisation of the Market for the sugar sector. The requests concerned Council Regulation (EC) No. 1260/2001 of 19 June 2001 on the EC’s common organization of the markets in the sugar sector and all other legislation regulations administrative policies and other instruments relating to the EC regime for sugar and sugar containing products including the rules adopted pursuant to the procedure referred to in Article 42(2) of Council Regulation (EC) No. 1260/2001 and any other provision related thereto. On 14 March 2003 Thailand requested consultations with the European Communities on the same matter.
United States - Subsidies on Upland Cotton
On 27 September 2002 Brazil requested consultations with the United States regarding prohibited and actionable subsidies provided to US producers users and/or exporters of upland cotton as well as legislation regulations statutory instruments and amendments thereto providing such subsidies (including export credits) grants and any other assistance to the US producers users and exporters of upland cotton (“US upland cotton industry”). Brazil contended that these measures were inconsistent with the obligations of the United States under the following provisions: Articles 5(c) 6.3(b) (c) and (d) 3.1(a) (including item (j) of the Illustrative List of Export Subsidies in Annex I) 3.1(b) and 3.2 of the SCM Agreement; Articles 3.3 7.1 8 9.1 and 10.1 of the Agreement on Agriculture; and Article III:4 of GATT 1994. Brazil was of the view that the US statutes regulations and administrative procedures listed above were inconsistent with these provisions as such and as applied. On 9 October and 11 October 2002 Zimbabwe and India respectively requested to join the consultations. On 14 October 2002 Argentina and Canada requested to join the consultations. The United States informed the DSB that it had accepted the requests of Argentina and India to join the consultations.
Canada - Measures Relating to Exports of Wheat and Treatment of Imported Grain
On 17 December 2002 the United States requested consultations with Canada as regards matters concerning the export of wheat by the Canadian Wheat Board and the treatment accorded by Canada to grain imported into Canada. According to the United States the actions of the Government of Canada and the Canadian Wheat Board (entity enjoying exclusive rights to purchase and sell Western Canadian wheat for human consumption) related to export of wheat appear to be inconsistent with paragraphs 1(a) and 1(b) of Article XVII of GATT 1994.
United States - Final Dumping Determination on Softwood Lumber from Canada
On 13 September 2002 Canada requested consultations under Article 4.8 of the DSU (urgency procedure) with the United States concerning the final affirmative determination of sales at less than fair value (dumping) with respect to certain softwood lumber products from Canada (Inv. No. A-122-838) announced by the US Department of Commerce (USDOC) on 21 March 2002 pursuant to Section 735 of the Tariff Act of 1930 as amended on 22 May 2002 (Final Determination). The measures at issue include the initiation of the investigation the conduct of the investigation and the Final Determination. Canada considered these measures and in particular the determinations made and methodologies adopted therein by the DOC under authority of the United States Tariff Act of 1930 to violate Articles 1 2.1 2.2 2.4 2.6 5.1 5.2 5.3 5.4 5.8 6.1 6.2 6.4 6.9 and 9.3 of the Anti-Dumping Agreement and Articles VI and X:3(a) of the GATT 1994.
United States - Sunset Reviews of Anti-Dumping Measures on Oil Country Tubular Goods from Argentina (DS268)
On 7 October 2002 Argentina requested consultations with the US regarding the final determinations of the US Department of Commerce (“DOC”) and the US International Trade Commission (“ITC”) in the sunset reviews of the anti-dumping duty order on OCTG from Argentina issued on 7 November 2000 (65 Federal Register 66701) and June 2001 (USITC Pub. No. 3434) respectively and the DOC’s determination to continue the anti-dumping duty order on OCTG from Argentina issued on 25 July 2001 (66 Federal Register 38630). Argentina considered that general US laws regulations policies and procedures related to the administration of sunset reviews and the application of anti-dumping measures were inconsistent either on their face or as applied with Articles 1 2 3 5 6 11 12 and 18 of the Anti-Dumping Agreement (ADA); Articles VI and X of the General Agreement on Tariffs and Trade (GATT) 1994; and Article XVI:4 of the WTO Agreement. Furthermore Argentina claimed that the sunset review conducted by the DOC is inconsistent with Articles 2 5 5.8 11.3 11.4 12.1 and 12.3 of the ADA. It also claimed that the sunset review conducted by the ITC was inconsistent with Articles 3 and 11.3 of the ADA.
Introduction to the WTO Dispute Settlement System
The best international agreement is not worth very much if its obligations cannot be enforced when one of the signatories fails to comply with such obligations. An effective mechanism to settle disputes thus increases the practical value of the commitments the signatories undertake in an international agreement. The fact that the Members of the WTO established the current dispute settlement system during the Uruguay Round of Multilateral Trade Negotiations underscores the high importance they attach to compliance by all Members with their obligations under the WTO Agreement.
Preface
There have been over 300 disputes brought to the World Trade Organization (WTO) since its creation in January 1995 and these disputes cover a wide range of economic activities
Possible Object of a Complaint – Jurisdiction of Panels and the Appellate Body
The previous chapter explored what constitutes a valid basis for a complaint in the WTO dispute settlement system and explained the different types of complaints available under the covered agreements. The present chapter addresses the jurisdiction of WTO panels and the Appellate Body by exploring the question of the object of the complaint. To put it more simply: against what can the complaint be directed? For example in a violation complaint what types of action by a Member are covered by a commitment in a covered agreement? Can only acts of administrative authorities be challenged or also legislative acts? Can the complainant invoke the dispute settlement system only against legally binding acts of Members or also against non-binding acts taken by the Members’ authorities? Can the challenge only be directed against governmental conduct or also against behaviour of private individuals? Can it be directed only against positive action or also against omissions i.e. the failure to act?
Developing Countries in WTO Dispute Settlement
revious chapters have addressed at least in part where the DSU specifically refers to developing country Members and provides for special rules applicable to disputes involving a developing country Member. Nevertheless these rules providing special and differential treatment are the subject of this separate chapter in order to examine the subject in more detail. This chapter also addresses other aspects of the developing countries’ role in the dispute settlement system.
Introduction to This Handbook
The WTO dispute settlement system plays an important role in clarifying and enforcing the legal obligations contained in the WTO Agreement. It has gained a strong practical relevance as more than 300 disputes have been brought from 1 January 1995 through October 2003. While dispute settlement is certainly not the only activity taking place within the WTO it has become an important part of the practical reality of the Organization. WTO dispute settlement has also become an important tool in the management by WTO Members of their international economic relations at large.
Historic Development of the WTO Dispute Settlement System
The WTO dispute settlement system is often praised as one of the most important innovations of the Uruguay Round. This should not however be misunderstood to mean that the WTO dispute settlement system was a total innovation and that the previous multilateral trading system based on GATT 1947 did not have a dispute settlement system.
Legal Basis for a Dispute
This chapter will explain the conditions under which Members of the WTO can invoke the provisions of the dispute settlement system; that is what constitutes a valid basis for a complaint by one Member against another Member.
Legal Effect of Panel and Appellate Body Reports and DSB Recommendations and Rulings
The previous chapters gave an explanation of the various procedures set out in the DSU. This chapter and the following ones will address specific issues of interest. This chapter addresses the legal effect of rulings made by panels the Appellate Body and the DSB.
Dispute Settlement without Recourse to Panels and the Appellate Body
The previous chapters have devoted much attention to the involvement of panels and the Appellate Body in the WTO dispute settlement system. However it is important to stress that panels and the Appellate Body are not always involved in a WTO dispute and there are various other ways to solve disputes within the framework of the WTO. Indeed the parties often use these other ways and manage to solve their dispute in a cooperative manner and not through recourse to adjudication by panels and the Appellate Body. In this regard parties can settle a dispute by finding a mutually agreed solution in bilateral negotiations or with the help of dispute resolution mechanisms such as good offices conciliation or mediation. In addition they can also agree to refer their dispute to an arbitrator.
WTO Bodies Involved in the Dispute Settlement Process
The operation of the WTO dispute settlement process involves the parties and third parties to a case the DSB panels the Appellate Body the WTO Secretariat arbitrators independent experts and several specialized institutions. This chapter gives an introduction to the WTO bodies involved in the dispute settlement system. The involvement of the parties and third parties the primary participants in a dispute settlement proceeding has already been outlined above. The precise tasks and roles of each of the actors involved in the dispute settlement process will become clear in the later chapter on the stages of the dispute settlement process.
The Process – Stages in a Typical WTO Dispute Settlement Case
This chapter explains all the various stages through which a dispute can pass in the WTO dispute settlement system. There are two main ways to settle a dispute once a complaint has been filed in the WTO: (i) the parties find a mutually agreed solution particularly during the phase of bilateral consultations; and (ii) through adjudication including the subsequent implementation of the panel and Appellate Body reports which are binding upon the parties once adopted by the DSB. There are three main stages to the WTO dispute settlement process: (i) consultations between the parties; (ii) adjudication by panels and if applicable by the Appellate Body; and (iii) the implementation of the ruling which includes the possibility of countermeasures in the event of failure by the losing party to implement the ruling.
A Handbook on the WTO Dispute Settlement System
The primary purpose of this training guide is to explain the WTO dispute settlement system to an interested person with little or no knowledge of how this system functions. However with its detailed content it could also serve as a very useful “handbook” to experienced practitioners of WTO Law. It explains the historic evolution of the current system and explores the practices that have arisen in its operation since its entry into force on 1 January 1995.
United States - Final Dumping Determination on Softwood Lumber from Canada
On 13 September 2002 Canada requested consultations under Article 4.8 of the DSU (urgency procedure) with the United States concerning the final affirmative determination of sales at less than fair value (dumping) with respect to certain softwood lumber products from Canada (Inv. No. A-122-838) announced by the US Department of Commerce (USDOC) on 21 March 2002 pursuant to Section 735 of the Tariff Act of 1930 as amended on 22 May 2002 (Final Determination). The measures at issue include the initiation of the investigation the conduct of the investigation and the Final Determination. Canada considered these measures and in particular the determinations made and methodologies adopted therein by the DOC under authority of the United States Tariff Act of 1930 to violate Articles 1 2.1 2.2 2.4 2.6 5.1 5.2 5.3 5.4 5.8 6.1 6.2 6.4 6.9 and 9.3 of the Anti-Dumping Agreement and Articles VI and X:3(a) of the GATT 1994.
European Communities - Conditions for the Granting of Tariff Preferences to Developing Countries
On 5 March 2002 India requested consultations with the EC concerning the conditions under which the EC accords tariff preferences to developing countries under its current scheme of generalized tariff preferences (“GSP scheme”). India presented this request pursuant to Article 4 of the DSU Article XXIII:1 of the GATT 1994 and paragraph 4(b) of the so-called Enabling Clause. India considered that the tariff preferences accorded by the EC under the special arrangements (i) for combating drug production and trafficking and (ii) for the protection of labour rights and the environment create undue difficulties for India’s exports to the EC including for those under the general arrangements of the EC’s GSP scheme and nullify or impair the benefits accruing to India under the most favoured nation provisions of Article I:1 of the GATT 1994 and paragraphs 2(a) 3(a) and 3(c) of the Enabling Clause. In India’s view the conditions under which the EC accorded tariff preferences under the special arrangements could not be reconciled with the requirements provided in paragraphs 2(a) 3(a) and 3(c) of the Enabling Clause.
Canada - Measures Relating to Exports of Wheat and Treatment of Imported Grain
On 17 December 2002 the United States requested consultations with Canada as regards matters concerning the export of wheat by the Canadian Wheat Board and the treatment accorded by Canada to grain imported into Canada. According to the United States the actions of the Government of Canada and the Canadian Wheat Board (entity enjoying exclusive rights to purchase and sell Western Canadian wheat for human consumption) related to export of wheat appear to be inconsistent with paragraphs 1(a) and 1(b) of Article XVII of GATT 1994.
Mexico - Measures Affecting Telecommunications Services
On 17 August 2000 the US requested consultations with Mexico in respect of Mexico’s commitments and obligations under the GATS with respect to basic and value-added telecommunications services. According to the United States since the entry into force of the GATS Mexico has adopted or maintained anti-competitive and discriminatory regulatory measures tolerated certain privately-established market access barriers and failed to take needed regulatory action in Mexico’s basic and value-added telecommunications sectors.