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WTO Dispute Settlement

WTO Dispute Settlement. A short introduction. 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.

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WTO Dispute Settlement

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  1. WTO Dispute Settlement A short introduction

  2. 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

  3. 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

  4. 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 Policy Review Mechanism Annex 4 Plurilateral Agreements Marrakesh Agreement Establishing the World Trade Organization (WTO Agreement)

  5. 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

  6. Main actors in the WTO Dispute Settlement System Main actors in the WTODispute 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 implementation Non-implementation? Authorizes retaliatory measures The panel 3 – 5 panelists, ad hoc body Standing body of 7 members, 4-year term The Appellate Body WTO and AB Secretariat Assist panels and the AB

  7. The Dispute Settlement Body, All Members Establishes No appeal? DSB adopts the report DSB adopts the reports Appellate Body Panel Report How the Dispute Settlement System works

  8. 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

  9. Recourse to WTO dispute settlement: Who? Only WTO Members (153 as of November 2009) 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

  10. Recourse to WTO dispute settlement: Regarding what?  Appendix 1 to the DSU 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)

  11. 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

  12. 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

  13. Objectives  Article 3.2 of the DSU • Security and predictability in international trade • Preserving Members’ rights and obligations • Clarifying the existing provisions of the CA

  14. Outcome  Article 3.7 of the DSU Positive solution to a dispute Preferred outcome: Mutually acceptable solution Withdrawal of measures inconsistent with the covered agreements

  15. Measure ...and if no mutually agreed solution reached • Panel proceedings • (Appellate Body review) • Inconsistent measures... • Withdrawal • Compensation / Suspension of concessions

  16. Main Stages Consultations 60 days Good offices, conciliation and mediation possible at any moment Panel review 6 – 9 months AB review 60 – 90 days Adoption of report by the DSB Implementation

  17. As of April 2010: 406 requests for consultations ! ! ...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

  18. Third parties joining consultations  Article 4.11 of the DSU 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

  19. Consultations according to the Covered Agreement invoked

  20. Complainants

  21.  Article 6 of the DSU • 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) Panel establishment Matter not resolved in consultations?

  22. Request for the establishment of a panel Form? In writing To whom? Addressed to the DSB Indicate whether consultations were held Identify the specific measures at issue Brief summary of the legal basis (claims) Content? Article 6.2 of the DSU and specific dispute settlement provisions of the CA Legal basis? to Members as document WT/DSXXX/X Distributed

  23. Rationale for precision in the request Measure 1 Panel request Defines measures + claims … Which form the panel’s mandate … Jurisdiction + due process …

  24. 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 ...) Law 1 Law 2

  25. 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’.” CL IM

  26. 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) As of April 2010: 148 panels composed (88 by the DG) ! !  Article 8 of the DSU

  27. 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

  28. Panel proceedings  Appendix 3 DSU – General working procedures 1. First written submissions of the parties 2. [Third party submissions] 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 parties 6. Descriptive part of the report to the parties 7. Parties’ comments on the descriptive part 8. Interim review 9. Final report issued to parties 10. Final report circulated to all Members

  29. Standard of review Objective assessment of the matter 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

  30. Established in 1995, innovation of the WTO dispute settlement system Requirements: Authority and expertise in international trade law “Unaffiliated with any government” Impartiality, broad representativeness A standing body of 7 Members. 4-year term, renewable once, a part-time job. Appointed by the DSB on consensus, based on nominations by WTO Members Appellate Body

  31. The current members of the Appellate Body The current members of the Appellate Body Ms Lilia Bautista – Philippines Mr Peter van den Bossche - Belgium (recently appointed) Ms Jennifer Hillman – United States Mr Shotaro Oshima – Japan Mr Ricardo Ramírez Hernández - Mexico (recently appointed) Mr David Unterhalter – South Africa (Chairman) Ms Yuejiao Zhang – China

  32. Issue of law What can be appealed? 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

  33. 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

  34. Adoption of Panel / Appellate Body reports • The DSB adopts • Panel Report (as upheld/modified/ reversed) • Together with the Appellate Body Report • By negativeconsensus Within 30 days from circulation of AB Report (60 days from circulation of Panel Report if no appeal)

  35. Implementation within reasonable period of time (RPT) Request for review of compliance (referred to original panel) Negotiations to agree mutually satisfactory compensation if no compliance Order of compliance-related procedures Order of compliance-related procedures DSB adopts report Arbitration to determine RPT if no agreement Request for DSB authorization to suspend concessions if compensation not agreed Arbitration on level and procedure DSB authorization to suspend concessions

  36. Thank you!

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