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THE DISPUTE SETTLEMENT SYSTEM

THE DISPUTE SETTLEMENT SYSTEM. the GATT system - consensus rule and non adoption of reports - non compliance of reports (no sanctions) the WTO system - inverted consensus - sanctions - appellate stage. THE DISPUTE SETTLEMENT SYSTEM.

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THE DISPUTE SETTLEMENT SYSTEM

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  1. THE DISPUTE SETTLEMENT SYSTEM • the GATT system - consensus rule and non adoption of reports - non compliance of reports (no sanctions) • the WTO system - inverted consensus - sanctions - appellate stage

  2. THE DISPUTE SETTLEMENT SYSTEM • the WTO system is based on a balance of interests and advantages • the aim is not legality for itself • adversarial vs inquisitorial systems • complaints are introduced just by the interested State • violation and non violation complaints • proposal to introduce a “prosecutor”

  3. THE DISPUTE SETTLEMENT SYSTEM • obligation to engage in consultations (2 months) • even after the start of the judicial phase i can interrupt the procedure at any time if I find a mutually agreed solution • panel formation - ad hoc body - experts in the subject matter - report by 6 months

  4. THE DISPUTE SETTLEMENT SYSTEM • the interim review - before the report is issued - a draft report is circulated among the parties who can make comments - diplomatic feature • the panel report is adopted by inverted consensus by the DSB

  5. THE DISPUTE SETTLEMENT SYSTEM • The Appellate Body - standing organ of experts in legal matters - both parties can submit an appeal request - just issues of law and not of fact - just the issues proposed by the appealing party (“completing the analysis” technique) - report in 2 months adopted by inverted consensus

  6. THE DISPUTE SETTLEMENT SYSTEM • States are obliged to put their legislation in conformity with WTO rules (no compensation) • determination of a reasonable period of time • the implementation phase - possibility of countermeasures under authorisation of the DSB - compliance report

  7. MEMBERSHIP • - equality of members • - special and differential treatment • - observers • - “conditionality” and “WTO plus” obligations • procedure: negotiations + working party + General Council decision • - the accession Protocol is an integral part of the WTO system

  8. THE NORMATIVE POWER • normative power is very limited and trade relations are mainly managed through negotiations - amendment - interpretation - waiver • ex: decision on access to essential medicines 1. Doha Declaration 2. Declaration on TRIPs

  9. THE NORMATIVE POWER (continued) 3. Decision about TRIPs and access to essential medicines and the amendment of the TRIPs agreement - compulsory licence: the holder of a IP right is obliged to allow exploitation by other persons - according to the TRIPs agreement compulsory licence is only for national sale and use - compulsory licences can be used by WTO members to export medicines to DCs and LDCs

  10. THE MAIN PRINCIPLES • The most favoured nation principle “any advantage granted by any contracting party to any product originating in or destined for any other country shall be accorded immediately and unconditionally to the like product originating in or destined for the territories of all other contracting parties” - promotion of better int'l relationships - efficient allocation of resources - exceptions: only 5% of world trade is managed through the MFN!

  11. THE MAIN PRINCIPLES • the stand-still clause “each contracting party shall accord to the commerce of the other contracting parties treatment no less favorable than that provided for in the Schedule annexed to this Agreement” • the Harmonised System identifies goods example: 01 LIVE ANIMALS 0101 horses, asses, mules and hinnies, live 0102 bovine animals, live

  12. THE MAIN PRINCIPLES • the national treatment clause par.1 : internal taxes and laws should not be applied to imported or domestic products so as to afford protection to domestic production” par.2 : the imported products shall not be subject to taxes higher than those applied to like domestic products. Moreover, no contracting party shall otherwise apply taxes to imported or domestic products in a manner contrary to the principles set forth in paragraph 1

  13. THE MAIN PRINCIPLES • national treatment (continued) par.4 : imported products shall be accorded treatment no less favorable than that accorded to like products of national origin in respect of all laws, regulations and requirements affecting their internal sale, offering for sale, purchase, transportation, distribution or use.

  14. THE MAIN PRINCIPLES • prohibition of quantitative restrictions “no prohibitions or restrictions other than duties, taxes or other charges, whether made effective through quotas, import or export licences or other measures, shall be instituted on the importation of any product or on the exportation or sale for export of any product ” - mainly under the form of technical requirements

  15. THE LIKENESS ISSUE • likeness: equality of competitive relationship • - physical characteristics (risk) • - consumer tastes and habits • - custom classification • - end-use • process and production methods issue • - extraterritoriality • - no traces in the final products

  16. TRADE DEFENCE MEASURES • 1) dumping and antidumping - in a neoliberal economy dumping is not prohibited - WTO disciplines antidumping measures - in the DSS the complainant is the State against which the AD measure is taken

  17. TRADE DEFENCE MEASURES • the AD Agreement - determination of dumping - determination of injury - the investigation - evidence - imposition and collection of AD duties - duration and review of AD duties • Zeroing practice by US

  18. TRADE DEFENCE MEASURES • article VI GATT : • - definition of dumping : the “normal value” • - conditions under which dumping is condemned: • injury to an established industry or • the birth of an industry is delayed • remedies: the AD duty according to the margin of dumping = price difference • the aim of the AD duty is to re-balance the competitive relationship

  19. TRADE DEFENCE MEASURES • 2) subsidies and countervailing mesures (CVMs) • GATT art.XVI - definition of subsidy: any form of income or price support which determines a rise of exports or reduction of imports - obligations of the subsidising State: notification to other parties of the extent, nature and effect of the subsidy + why it is necessary - if serious injury = obligation to discuss the possibility of limiting the subsidy

  20. TRADE DEFENCE MEASURES • Agreement on subsidies • - definition of subsidy: financial contribution by the State under the form of : • 1. direct transfer • 2. non-collection of duties/taxes • 3. purchase by the State • 4. delegation of these functions by the gov't to another entity • + benefit

  21. TRADE DEFENCE MEASURES + specificity: - access explicitly limited to some firms - if there are clear and objective criteria specificity does NOT exist - if there are reasons to believe that specificity exists other factors can be considered: ex. predominant use by certain enterprises

  22. TRADE DEFENCE MEASURES • traffic lights approach - red light (prohibited) = contingent on export - yellow light: actionable 3 conditions: injury to domestic industry nullification or impairement of benefits serious prejudice to interests - in both cases duty to consult and possible referral to DSB for immediate creation of a panel but for red light subsidies timeframes are shorter

  23. TRADE DEFENCE MEASURES - green light (non actionable): - non specific - research activities assistance to disadvantaged regions adaptation of existing facilities to env'al requirements possibility of consultations referral to a Committee which issues a NON binding decision

  24. TRADE DEFENCE MEASURES • remedies - in the case of red and yellow light subsidies, if the defendant does not comply with the panel/AB report, the DSB can authorise CVMs - CVDs shall be levied on a non‑discriminatory basis on imports of such product from all sources found to be subsidized and causing injury, except as to imports from those sources which have renounced

  25. TRADE DEFENCE MEASURES 3) safeguard measures (GATT art.XIX) unchaining event: any product is being imported in such increased quantities and under such conditions as to cause or threaten serious injury to domestic producers in that territory of like or directly competitive products reasons: unforeseen developments and the effect of GATT/WTO obligations, including tariff concessions

  26. TRADE DEFENCE MEASURES • remedy: the contracting party is free, in respect of such product, and to the extent and for such time as may be necessary to prevent or remedy such injury, to suspend the obligation in whole or in part or to withdraw or modify the concession. • - this also works for the State which is the beneficiary of the concession! (ex. China)

  27. CUSTOM UNIONS AND FTAs - definition of FTA and custom union GATT authorises the creation of the custom unions and FTAs if trade creation is higher than trade diversion - creation of regional blocs - benefits or regionalisation vs “race to the bottom” argument - hub and spoke theory

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