WTO Dispute Settlement

A short introduction

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How were disputes settled under the GATT 1947?

Nearly 50 years of dispute settlement under the GATT 1947 ...

Positive consensus in the GATT Council to refer a dispute to a Panel, and to adopt a Panel report

Articles XXII and XXIII of the GATT 1994

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Challenges under the GATT 1947 dispute settlement system

• Rule of positive consensus

– Referring a dispute to a panel, adopting a panel report, authorizing countermeasures

– Risk of veto– Diplomatic character

• Yet, good results

– 101 adopted reports / 132 issued reports– Empirical research

Marrakesh Agreement Establishing the World Trade Organization (WTO Agreement)

Structure of the WTO Agreement

Annex 1

1A: MTAs on goods

(GATT + 12)

1B: GATS

1C: TRIPs

Annex 2

Dispute Settlement

Understanding

Annex 3

Trade PolicyReview

Mechanism

Annex 4

PlurilateralAgreements

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DSU builds on Articles XXII and XXIII of the GATT 1947

Members affirm their adherence...

To the principles for the management of disputes applied under Articles XXII and XXIII of GATT 1947...

And the rules and procedures as further elaborated and modified in the DSU

Article 3.1 of the DSU

Main actors in the WTO Dispute Settlement System

Art 2 DSU, The Dispute Settlement Body (DSB)

Administers the WTO Dispute Settlement System

Establishes panels

Adopts panel and Appellate Body reports

Maintains surveillance of implementationNon-implementation? Authorizes retaliatory measures

The panel 3 – 5 panelists, ad hoc body

The Appellate Body Standing body of 7 members, 4-year term

WTO and AB Secretariat Assist panels and the AB

Main actors in the WTODispute Settlement System

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How the Dispute Settlement System works

Panel Report Appellate Body

Establishes No appeal? DSB adopts the report

DSB adopts the reports

The Dispute Settlement Body,

All Members

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Novelties in the DSU

• Standing Appellate Body

• DSB establishes panels and adopts panel reports by negative or reverse consensus

– Difference from dispute settlement under the GATT 1947?

– Under the GATT 1947: positive consensus

• Surveillance of implementation

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Only WTO Members (153 as of November 2009)

Recourse to WTO dispute settlement: Who?

NOT NGOs, individuals (although may lobby governments – indirect access)

Right to bring claims

Appellate Body:– No DSU provision requiring “legal interest”– Members have a broad discretion whether or not to bring a case

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Recourse to WTO dispute settlement: Regarding what?

Disputes under the following agreements (so-called covered agreements, “CA”), must be resolved pursuant to the DSU

WTO Agreement Multilateral Trade Agreements (GATT 1994 + 12 other agreements on trade in goods) GATS TRIPS DSU (Plurilateral Trade Agreements)

Appendix 1 to the DSU

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Integrated system for Dispute Settlement

Article 23 of the DSU ... A single set of rules for all disputes

Article 1.2 of the DSU, Appendix 2 to the DSU … Only a few special or additional rules in the covered agreements which prevail over the DSU. For example:

Article 4.4 of the SCM Agreement ... Consultation period 30 days rather than the standard 60 days

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Nature

• Compulsory jurisdiction

– Members obliged to bring disputes under the Covered Agreements to WTO dispute settlement

– Accession: Consent to accept jurisdiction

• Exclusive jurisdiction

– No other fora– No unilateral action

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Objectives

Security and predictability in international trade

Preserving Members’ rights and obligations

Clarifying the existing provisions of the CA

Article 3.2 of the DSU

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Outcome

Positive solution to a dispute

Preferred outcome: Mutually acceptable solution

Withdrawal of measures inconsistent with the covered agreements

Article 3.7 of the DSU

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• Panel proceedings

• (Appellate Body review)

• Inconsistent measures...

– Withdrawal– Compensation / Suspension of concessions

...and if no mutually agreed solution reached

Measure

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Main Stages

Good offices, conciliation and

mediation possible at any

moment

Consultations60 days

Panel review6 – 9 months

AB review 60 – 90 days

Adoption of report by the DSB

Implementation

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...Consultations

• Diplomatic method of settling the dispute

• Confidential – No intervention by the Secretariat

• “Without prejudice to the rights of any Member in further legal proceedings”

Article 4 of the DSU

As of April 2010: 406 requests for consultations! !

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Third parties joining consultations

Request filed under Article XXII of the GATT

Substantial trade interest– Notification to the consulting Parties and the DSB– Within 10 days of the circulation of the original request

(WT/DSXXX/1)

Respondent decides:– Substantial interest? No review, but the Member can

separately request consultations

DSB informed about the decision to accept

Article 4.11 of the DSU

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Consultations according to the Covered Agreement invoked

GATT 1994, 309

SCM, 80Agriculture, 65

Anti-Dumping, 82

Licensing, 33

TBT, 39

Saf eguards, 35

TRI PS, 27

SPS, 37

Others, 129

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Complainants

US, 93

EC, 81

Canada, 33India, 18Mexico, 21

Argentina, 15

Korea, 14

Others

(developed), 34

Brazil, 24

Others

(developing), 90

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Panel establishment

Matter not resolved in consultations?

• Establishment of a panel

• Established by the DSB by negative consensus (2nd DSB meeting, defendant cannot block ( Article 6.1 of the DSU)

• Strict requirements for the request for the establishment of a panel (Article 6.2 of the DSU)

Article 6 of the DSU

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Request for the establishment of a panel

Form? In writing

To whom?

Content?

Legal basis?

Addressed to the DSB

Distributed

Indicate whether consultations were heldIdentify the specific measures at issueBrief summary of the legal basis (claims)

Article 6.2 of the DSU and specific dispute settlement provisions of the CA

to Members as document WT/DSXXX/X

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Rationale for precision in the request

Defines measures + claims …

Which form the panel’s mandate …

Jurisdiction + due process …

Measure 1

Panel request

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First element: Identify the measure(s) at issue

Definition of a measure

AB: “Any act or omission attributable to a WTO Member can be a measure of that Member for the purposes of dispute settlement proceedings”

Measures may take the form of...

Laws, regulations, administrative instructions, specific application of laws etc (tariffs, quotas, anti-dumping/CVD measures, safeguards ...)

Law1

Law2

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Second element: Identify the claims

Definition of a claim

AB: “A claim that the respondent party has violated, or nullified or impaired the benefits arising from, an identified provision of a particular covered agreement.”

How to identify the claims AB: “Provide a summary – and it may be a brief one – of the legal basis of the complaint that is ‘sufficient to present the problem clearly’.”

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Panel composition

• No permanent panels / panelists, ad hoc• Indicative list of panelists• Secretariat proposes nominations, parties can

oppose for compelling reasons• Well-qualified government and/or non-

governmental individuals• If disagreement: Nomination by DG

(at the request of complainant)

Article 8 of the DSU

As of April 2010: 148 panels composed (88 by the DG)! !

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Third Parties

• “Substantial interest”• No DSU deadline

– In practice Members notify their “substantial interest” at the DSB meeting at which the Panel is established

• Limited rights– Right to receive the first written submissions – Right to make written submissions to the panel– Right to be heard by the panel– Enhanced third-party rights? Granting within the“sound discretion of the panel”

Article 10 of the DSU

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Panel proceedings

1. First written submissions of the parties

3. First substantive meeting with the parties and third parties - Third party session

4. Written rebuttals of the parties

5. Second substantive meeting with the parties6. Descriptive part of the report to the parties

7. Parties’ comments on the descriptive part8. Interim review9. Final report issued to parties

10. Final report circulated to all Members

Appendix3 DSU –

Generalworking

procedures

2. [Third party submissions]

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Standard of review

Facts of the case

Applicability of covered agreements

Conformity of the measures with covered agreements

* More deferential standard of review under Art. 17.6 ADA

Objective assessment of the matter

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Appellate Body

Established in 1995, innovation of the WTO dispute settlement system

A standing body of 7 Members. 4-year term, renewable once, a part-time job.

Requirements: Authority and expertise in international trade law“Unaffiliated with any government” Impartiality, broad representativeness

Appointed by the DSB on consensus, based on nominations by WTO Members

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The current members of the Appellate Body

The current members of the Appellate Body

Ms Lilia Bautista – Philippines

Ms Jennifer Hillman – United States

Mr Shotaro Oshima – Japan

Ms Yuejiao Zhang – China

Mr David Unterhalter – South Africa(Chairman)

Mr Ricardo Ramírez Hernández - Mexico (recently appointed)

Mr Peter van den Bossche - Belgium (recently appointed)

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What can be appealed?

• Appeals limited to “issues of law covered in the panel report and legal interpretations developed by the panel”

• No factual findings by the Appellate Body

• Panels’ factual findings: In principle, outside the scope of appellate review

Article 17.6 of the DSU Issu

e of

law

What can be appealed?

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Third participants

• Only those Members that were third parties on the panel stage

• Cannot appeal

• Right to file written submissions and to participate in the oral hearing

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Adoption of Panel / Appellate Body reports

The DSB adopts • Panel Report (as upheld/modified/ reversed) • Together with the Appellate Body Report• By negative consensus

Within 30 days from circulation of AB Report (60 days from circulation of Panel Report if no appeal)

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Order of compliance-related proceduresDSB adopts report

Arbitration to determine RPT if no agreement

Request for DSB authorization to suspend concessionsif compensation not agreed

Arbitration on level and procedure

DSB authorization to suspend concessions

Order of compliance-related procedures

Implementation within reasonable period of time (RPT)

Request for review of compliance (referred to original panel)

Negotiations to agree mutually satisfactorycompensation if no compliance

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Thank you!