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DISPUTE SETTLEMENT PROCEDURE
One of the unique features of the WTO is its provision
relating to dispute settlement mechanism . In fact the power to settle trade disputes is what is the difference between the WTO and GATT . When a member files a complaint against another , the dispute settlement body of the WTO steps in immediately . Decisions have to be taken in less than 1 year 9 months if the case is urgent , 15 months if the case is appealed . The dispute settlement system of WTO is faster and automatic and the decisions cannot be ignored or blocked by members .
Offending countries must realign their trade policies according to the WTO guidelines or suffer financial penalties and even trade sanctions . Because of its ability to penalize offending member nations ,the WTO dispute settlement is the backbone of the global trading system The costs of dispute settlement proceedings are disproportionately heavy for developing countries. In general , developing countries do not enjoy a neutral playing field. Although the dispute settlement procedure is not biased against any party in a dispute , developing countries are less well equipped to participate in the process. Necessary training , they are less experienced and as noted above , they face resource constraint.
Dispute Settlement in the WTO: Overview
Overall aim: • to secure compliance with the Agreements Quasi-judicial Nature • Secured access • Detailed procedures • Automaticity in the proceedings • Deadlines • Possible appeal
good offices. 5.Compliance . Implementation of reports by members .Periodic review of trade policies .Authorisation of retaliatory action (suspension of concessions/obligations) Trade Policy Review Mechanism. Consideration and adoption of Panel/AB reports by the DSB If the report concludes that a measure is inconsistent with a covered agreement the Panel (/AB) must recommend that the Member concerned bring the measure into conformity with that agreement. Panel proceedings 3.Negotiation of compensation (voluntary. Appellate Body 4. Consultations. Adoption of Panel (/AB) reports by the DSB is automatic. mutually acceptable) . conciliation and mediation 2.The WTO as a dispute settlement forum and a monitoring body Settlement of disputes under the DSU 1.
and 500 staff •6 .G. and so on Numerous specialized committees and working groups Secretariat: Day-to-day operations by DirectorGeneral. Meet every two years General Council: Ambassadors or heads of delegation in Geneva.World Trade Organization (WTO) Structure Ministerial Conference: Highest authority. Meets as Trade Policy Review Body Dispute Settlement Body Goods Council. Service Council and Intellectual Property Council.s. Four Deputy D.
but seek resolution thru Multilateral dispute settlement system.World Trade Organization (WTO) Resolution of Trade Disputes Trade disputes are settled according to the Understanding on Rules and Procedures Governing the Settlement of Disputes Member should not take unilateral action against perceived violations of trade rules. and abide by its rulings and findings A petition is filed with WTO Dispute Settlement Body (DSB) is convened •7 .
Can be brought to WTO Director-General.World Trade Organization (WTO) Resolution of Trade Disputes 1st stage: Bilateral consultations within 30 days of request by another member. Panel reports are adopted by DSB within 60 days of issuance. If failed after 60 days from request for consultation 2nd stage: Complainant requests DSB to establish a panel to examine the case 3rd stage: Panel's final reports are given to parties within 6 months or 3 months in urgency such as perishable goods. unless one party notifies its decision to appeal or parties agree not to adopt report 4th stage: Either party appeals to a standing Appellate Body •8 .
party concerned presents intentions on how to implement the adopted recommendations and rulings of DSB 7th stage: If party concerned fails to comply. obligated to enter into negotiation with complainant to determine mutually acceptable compensation •9 .World Trade Organization (WTO) Resolution of Trade Disputes 5th stage: Appellate Body decision: Generally within 60 days. 6th stage: At a DSB meeting. but in no case longer than 90 days. Reports of Appellate Body are accepted by DSB in 30 days of issuance.
complainant requests authorization from DSB to suspend concessions or obligations to the other party 9th stage: DSB should grant this authorization. unless DSB decides by consensus to reject the request.World Trade Organization (WTO) Resolution of Trade Disputes 8th stage: If no satisfactory compensation is agreed. 10th stage: DSB continues to monitor implementation of adopted recommendations •10 .
Stages of Dispute Settlement I Consultation Stage: Upto 60 Days. To be decided within 60 days. To see if dispute can be avoided II Appt of Panel: Upto 45 days + 6 mths for Panel to conclude III Appeals from Panel to Appellate Body. max 90 days IV DSB to accept AB report within 30 days. Rejection possible only by consensus .
„Prompt compliance‟ reqd. a „Compliance Panel‟ will hear the matter & rule within 90 days. DSB will give Member „reasonable time period‟ to do so. If dispute whether measures adopted comply with DSB ruling. Party to tell DSB its intention of compliance within 30 days. . If immediate compliance impractical.After DSB Adoption Losing Party to bring its policy in line with the decision.
action under another agreement. If this is not „effective‟ or „practical‟. . In principle. in the same sector as the dispute. complaining side may seek DSB‟s permission for ltd trade sanctions Trade sanctions: Suspension of concessions or obligations.After DSB Adoption (Cont‟d) Failure to act Adequate Compensation to Complaining party/parties Amount of Compensation through negotiations If no satisfactory agreement.
WTO :DISPUTE SETTLEMENT Enforcement of trade rules Cases brought up by members Basis of any case is a violation of commitments by a member vis a vis other member in the WTO. •14 .
•15 .RULES AND REGULATION How long to settle a dispute? 60 days consultation. etc 45 days panel setup and panelists appointed 6 months final panel report to parties 3 weeks final panel report to WTO 60 days dispute settlement body adopts report (no appeal) Total = 1 year without appeal/ 60-90 days appeal report 30 days dispute settlement body adopts appeals report Total = 1 year 3 months with appeal. medication.
WTO: Dispute settlement Priority: Settle disputes through consultations Dispute Settlement Body. Panel process Appellate body Rules are binding and automatically adopted •16 .
•All Members • •Establishes •No appeal? DSB adopts the report •DSB adopts the reports •Panel •Report • Appellate Body •17 .How the Dispute Settlement System works • •The Dispute Settlement Body.
Dispute Settlement under the GATT 1947 Articles XXII and XXIII of GATT 1947 – Very limited rules – Central concept was “nullification and impairment” of benefits flowing from the agreement Diplomatic character of dispute settlement: No judicial arm. rather all matters were within powers of GATT Contracting Parties “Evolved” practice under GATT 1947 •18 .
2 DSU) •19 .Dispute Settlement in the WTO: Aim Dispute Settlement Understanding: – Mechanism aimed at securing compliance with the Covered Agreements (CA) – Preserves the rights and obligations of Members under the CA (Art 3.
New innovations of the DSU More detailed procedures for the various stages of dispute Appellate review of panel reports and surveillance of implementation by the DSB •20 .
7 DSU) Preferred outcome: – To reach a mutually agreed solution If not. – Implementation. – Panel Proceeding ….Dispute Settlement in the WTO: Objectives To secure a “positive solution” to the dispute. (Art.and AB review.] And then. 3. – Retaliatory trade sanctions may be imposed •21 . – […. or ….
Dispute Settlement in the WTO: Scope An integrated system: Applies to all the WTO multilateral agreements (Appendix 1) A single set of rules for all disputes (Art 23) Only a few special or additional rules in some CA (Appendix 2) •22 .
Dispute Settlement in the WTO: Main Features compulsory jurisdiction detailed procedures and deadlines “complainant-driven” “quasi-judicial” “automaticity” •23 .
Dispute Settlement in the WTO: Main characters Parties to the dispute: WTO Members only Dispute Settlement Body (all the Members) Panel ( 3 or 5 panelists) Appellate Body (7 persons) WTO & AB Secretariats •24 .
Consultations Panel Appeal Adoption Implementation •25 .
Dispute Settlement in the WTO: Consultations Who? – One or more Members (complainants) against another Member (respondent) – Possibility for third party Members to join Confidential process Minimum time limits for complainant •26 .
Dispute Settlement in the WTO: Panels Establishment of a panel: Automatic 6 months or 9 months to Composition “well-qualified government and/or nongovernmental individuals” issuance of final report Process confidential. report public •27 .
Dispute Settlement in the WTO: The “matter” in dispute The specific measures at issue The legal basis (claims) •28 .
Dispute Settlement in the WTO: The Mandate Panel Request Measures Matter Claims Mandate Jurisdiction Inform the parties for their defence •29 .
9 months •30 . 6 months Final Report circulated max.Dispute Settlement in the WTO: Panel Procedures: deadlines Composition of a panel Establishment of a panel max.
16 DSU Panel reports not considered for adoption until 20 days after circulation Adoption within 60 days of circulation. … Except if appealed •31 . unless negative consensus….Dispute Settlement in the WTO: Adoption of Panel Reports Art.
3.4. Articles 1. Article 16. 18 and 19) – Working Procedures for Appellate Review – Rules of Conduct •32 .Dispute Settlement in the WTO: Appellate Review WTO dispute settlement system innovation Rules applicable to Appellate Review – Dispute Settlement Understanding (Article 17.
Dispute Settlement in the WTO: Appellate Body Members A standing body of 7 Members Appointment by DSB 4-year term. renewable once Requirements – authority and expertise in international trade law – “unaffiliated with any government” •33 .
Dispute Settlement in the WTO: Appellate Body Members “broadly representative of membership” – Art. 17.3 DSU •34 .
Dispute Settlement in the WTO: Appellate Body •35 .
including “cross-appeals” WHO? appeal only open to parties to the dispute WHEN? Appeal must be commenced no later than 60 days after the Panel Report is circulated to Members.Dispute Settlement in the WTO: Article 17 DSU WHAT? appeals limited to “issues of law and legal interpretations” developed by the panel. takes 60-90 days •36 .
Dispute Settlement in the WTO: Appellate Procedure Notice of Appeal Written Submissions 60/90 days Oral Hearing Exchange of Views Circulation of the Report •37 .
by the Appellate Body Report Within 30 days circulation (60 days if no appeal) Negative consensus •38 .Dispute Settlement in the WTO: Adoption by the DSB Adoption by the DSB of the Panel Report. as upheld. modified or reversed.
Dispute Settlement in the WTO: Implementation What if it cannot be implemented immediately? Determination of “reasonable period of time” for implementation (Guideline: 15 months) Is it properly implemented? If there is disagreement. refer to compliance panel (original panel preferred) under Article 21.5 •39 .
Dispute Settlement in the WTO: Surveillance and Implementation Surveillance by the DSB: Status reports on implementation If Member fails to bring measure into conformity within reasonable period of time. possibility of temporary measures : compensation or “suspension of concessions” (retaliation) •40 .
Dispute Settlement in the WTO: Facts and Figures Requests for consultations: 363 Mutually agreed solutions: Panels established: Panels composed: Panel reports: 83 148 129 110 Appellate Body reports: Compliance panels: Appeals from compliance panels: Arbitrations on "retaliation" : Authorizations to "retaliate" : 68 23 14 16 7 •41 .
Dispute Settlement in the WTO Selected Disputes in Progress Continued EC Hormones Dispute New Bananas dispute Zeroing disputes EC/US cases on aircraft subsidies •42 .
Dispute Settlement in the WTO Trends? Increasing composition of panels by DG Increasing number of compliance cases Decreasing rate of appeal Increasing use of dispute settlement system by developing countries Private lawyers / pro bono / ACWL •43 .
then July 2004 Package. extended to May 2004. but on what basis and what timeframe? •44 . paragraph 30: – “improvements and clarifications” – Original May 2003 deadline. Continued negotiations outside the single undertaking. then resumed. Negotiations suspended second half 2006.Dispute Settlement in the WTO: The Doha Mandate Doha Declaration.
retaliation) •45 .Dispute Settlement in the WTO: Selected Issues in the Negotiations Streamlining procedures at consultation and panel stages “Transparency” Remand? Enhance Special & Differential treatment? Implementation – Sequencing – Remedies (compensation.
Dispute Settlement in the WTO Final Thoughts What changes needed and how extensive? Relationship dispute settlement/decision- making? Relationship dispute settlement/rule-making (negotiations)? Bottom line: system is being used and is working -.security and predictability •46 .
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