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WTO Dispute Settlement
A short introduction

How were disputes settled under the GATT 1947?
 Articles XXII and XXIII of the GATT 1994
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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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

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Structure of the WTO Agreement
Marrakesh Agreement Establishing the World Trade Organization (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

DSU builds on Articles XXII and XXIII of the GATT 1947
 Article 3.1 of the DSU
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 elaborated and modified in the DSU as further
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Main actors the WTO Main actors in the in WTO Dispute Dispute Settlement System 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

The Appellate Body

Standing body of 7 members, 4-year term Assist panels and the AB

WTO and AB Secretariat

How the Dispute Settlement System works
The Dispute Settlement Body, All Members
Establishes No appeal? DSB adopts the report DSB adopts the reports

Panel

Report

Appellate Body

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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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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 9 case

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)

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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:

Consultation period 30 days rather than the standard 60 days 11

 Article 4.4 of the SCM Agreement ...

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
 Article 3.2 of the DSU
Security and predictability in international trade
Preserving Members‟ rights and obligations Clarifying the existing provisions of the CA
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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

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...and if no mutually agreed solution reached
• Panel proceedings • (Appellate Body review) • Inconsistent measures...
Measure

– Withdrawal – Compensation / Suspension of concessions
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Main Stages
Consultations 60 days Panel review 6 – 9 months
Good offices, conciliation and mediation possible at any moment

AB review 60 – 90 days
Adoption of report by the DSB Implementation

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...Consultations
 Article 4 of the DSU
• Diplomatic method of settling the dispute
• Confidential – No intervention by the Secretariat • “Without prejudice to the rights of any Member in further legal proceedings”

!

As of April 2010: 406 requests for consultations

!

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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

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Consultations according to the Covered Agreement invoked
Others, 129

SPS, 37 TRIPS, 27 Safeguards, 35 TBT, 39 Licensing, 33 Anti-Dumping, 82 Agriculture, 65

GATT 1994, 309

SCM, 80
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Complainants
Others (developing), 90 US, 93

Others (developed), 34 Korea, 14 Argentina, 15 Mexico, 21 India, 18 Brazil, 24 Canada, 33 EC, 81

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Panel establishment
Matter not resolved in the consultations?  Article 6 of 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)
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Request for the establishment of a panel
Form? To whom?
In writing 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 Legal basis? settlement provisions of the CA

Distributed

to Members as document WT/DSXXX/X
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Rationale for precision in the request
Measure 1

Defines measures + claims …

Which form the panel‟s mandate …

Panel request
Jurisdiction + due process …

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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 ...)
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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
 Article 8 of the DSU
• 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)

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!

Third Parties
 Article 10 of the DSU
• “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”

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Panel proceedings
1. First written submissions of the parties 2. [Third party submissions]

Appendix 3 DSU –
General working procedures



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
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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
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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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Thecurrent currentmembers membersof ofthe the The AppellateBody Body Appellate
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

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What can be appealed?
 Article 17.6 of the DSU
• 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
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Third participants

• Only those Members that were third parties on the panel stage • Cannot appeal • Right to file written submissions participate in the oral hearing and to

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

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