CAPITULO V DHL MATRIMONIO
DE LOS CRÍMENES Y DELITOS CONTRA EL ORDEN DE LAS FAMILIAS Y LA MORALIDAD PÚBLICA
Summarising the evolution of multilateral trade dispute settlement between the earliest days of the GATT and ITO drafts on the one hand and the new DSU procedure under the WTO on the other, one finds a gradual and very cautious evolution of the dispute settlement system from a rather diplomacy-oriented towards a more adjudication-oriented mechanism. That evolution, however, has not been free of setbacks. Initially, the failure of the ambitious ITO with its ultimately legal procedures highlighted an unwillingness of governments fully to subordinate their trade policies to an international organisation in general and to third party adjudication in particular as both remained outside their control. Sovereignty concerns and power considerations stood in the way of the establishment of a powerful organisation with strong and explicit adjudicating powers. Consequently, parties chose a cautious, pragmatic and rather gradual evolution from political negotiations towards third party adjudication. The strong prevalence of negotiatory and diplomatic instruments with characteristic vagueness and rather implicit than explicit statements in earlier stages needs, however, not be interpreted as a sign of weakness. At least initially, the early GATT was more like a ‘club’ of like-minded nations and country representatives that basically followed common goals of freer trade. The system lived from normative pressures and strong political will. Moreover, one may assume that all parties were aware of the crucial role that safeguarding reciprocity in trade relations would have for the stability of the system and that, therefore, negotiated outcomes might be closer to the objective of safeguarding a ‘balance of rights and obligations’ than the outcome of pure adjudication.
The foundations of the system were shaken with the consolidation of the EC that was anxious to build a politically coherent block and a counterweight to the so-far dominant US, as well as with the entry of many developing countries in the 1960s. The latter believed more in political interventionism and import-substitution policies than in the benefits of free trade. As the objectives of the multilateral trading system had become less obvious, an erosion of GATT discipline took place which also affected dispute settlement activity that consequently broke down. It was only restored by the addition of new treaty text, first (albeit incompletely and on a fragmented basis) in the Tokyo Round and later (in a consolidated, single-package approach) in the Uruguay Round. Throughout this evolution, one constant feature seems to be that WTO dispute settlement evolved positively whenever there was political
convergence between members on the substance of the multilateral trade provisions and their mutually beneficial nature. It was blocked, however, whenever members pursued strongly diverging views on what the world trade order should look like, or when important countries or country groups were dissatisfied with the outcome achieved by the mechanism. This finding is in line with the basic rationale of reciprocity that underlies the logic of international trade agreements and (through the nullification and impairment clause) dispute settlement practice.
A second common denominator seems to be a certain pendulous movement. Periods of law-abidance and legal enthusiasm alternated with periods of resignation and a dominance of political power-play. Efforts to reform or further develop the mechanism were the answer of members to the latter, sometimes with certain delays. Strong rules on dispute settlement in the ITO had raised fears of sovereignty loss in the US and contributed to the demise of the ITO. Later on, the rapid and positive evolution of the dispute settlement system in the 1950s caused an anti-legalist backlash in the 1960s with governments growing tired of having their hands tied by a too rigid system as they wished to adapt to new political realities. However, whenever the system threatened to degenerate into insignificance, members reunited their efforts to bring it back on track. Yet, more radical efforts to strengthen the system (such as those undertaken by Denmark in the 1950s or that by Uruguay in the 1960s) never materialised. Clearly, governments always wished to keep their hands on the system.
In sum, the evolution reflects the concerns of a membership that is torn between its desire for an effective, rules-based dispute settlement system and its desire for trade policy flexibility. We will see that many of these elements are still present today in the DSU review discussions.
According to Article III.3 WTO agreement, dispute settlement is one of the key functions of the WTO.1 The rules are laid down in the Dispute Settlement Understanding (DSU).2 In this chapter, the various stages in the technique of WTO Dispute Settlement will be presented to the extent that is necessary to allow readers to understand the nature and scope of the reform proposals discussed in Part II. As a detailed discussion of the procedure and its reception in literature is beyond the scope of this study, readers are invited to consult the rich body of literature on this topic.3 Certain aspects will also be considered more deeply in the context of the proposals on the DSU review in Chapters 6 and7.
3.1 The (National) Dispute Initiation Stage
The initiation stage of WTO dispute settlement is governed by national law. Although it is not part of the DSU, the question of dispute initiation is useful for the overall positioning and understanding of the procedure in a larger trade policy context.
One feature of WTO dispute settlement is that only governments have access to WTO dispute settlement in terms of dispute initiation. Private
1 The legal texts which resulted from the Uruguay Round are available at http://
www.wto.org/english/docs_e/legal_e/legal_e.htm and in WTO (ed) (1999). For general presentations of and comments on the Uruguay Round and its results, see, for instance, Senti (2001), Senti (2000), Senti and Conlan (1998), Trebilcock and Howse (1999), Krueger (ed) (1998), McDonald (1998), Thürer and Kux (1996), Cottier (ed) (1995), Hauser and Schanz (1995), Schott (1994) and Senti (1994).
2 Annex 2 to the Marrakesh Agreement Establishing the World Trade Organisation (‘WTO
agreement’).
3 The text of the WTO Dispute Settlement Understanding (as laid down in Annex 2 to the
Marrakesh Agreement Establishing the World Trade Organisation) is available via the internet (http://www.wto.org/english/docs_e/legal_e/28-dsu.pdf) as well as in WTO (ed) (2002b) and WTO (ed) (1999). For an introduction and a discussion of the system, see, for instance, Pescatore, Stewart, Dwyer and Prado (looseleaf), Gallagher (2002) (for a detailed guide to the procedure), Jackson (2001) (for an introduction), Davey (2002b), Goh and Witbreuk (2001), Feliciano and van den Bossche (2001), Hoekman and Kostecki (2001) (Chapter 3), Palmeter and Mavroidis (1999), Trachtman (1999), Trebilcock and Howse (1999) (Chapter 3 for an introductory overview), Cameron and Campbell (1998), Jackson (1998a), Jackson (1997), Chapter 4 (pp 107–37), Petersmann (1997) and Petersmann (1997a).
economic actors such as exporters, importers and consumers do not have the right to bring complaints. More generally, private parties do not have standing at the WTO as has been pointed out above.4 Although this is a common feature of intergovernmental organisations, it is nevertheless worth noting, because these private actors are those mostly affected by trade measures. The initiation of a dispute under the DSU therefore still requires a government decision.5
Probably the best-known national trade policy instrument is Section 301 of the Trade Act of 1974 in the United States which does also include the initiation procedure for US complainants. It has been the topic of much research.6 The EC established its own procedure with the so-called New Commercial Policy Instrument (NCPI)7 in 1984 which was replaced by the Trade Barriers Regulation (TBR) in 1994 and which co-exists with other procedures for government-initiated disputes.8 These national initiation instruments differ in many aspects, including the type of contestable foreign actions, admitted categories of complainants, the effects of foreign trade barriers required to make action necessary, allocation of the authority for decision on whether to lodge a complaint and the availability of judicial review.
Given the importance of this stage in the mechanism, it comes as a surprise, at least at first sight, that only a few countries have published procedures that allow companies or industries to request their governments to initiate a dispute settlement procedure. Many countries do not have publicly known rules, and the question on whether to initiate
4 On the role and position of private parties in the WTO system in general and in its
dispute settlement mechanism in particular, see, for instance, Charnovitz (2001) (focusing on the individual rights perspective), Esty (1998) (with a focus on NGOs), Schleyer (1998) (on allowing private parties to raise claims before the WTO), Charnovitz (1996), Shell (1996), Lukas (1995) and Abbott (1992).
5 For a brief introduction into the concept of national dispute initiation, see, for instance,
Jackson (1998), pp 127ff.
6 On Section 301 and its relationship to the WTO system, see Shaffer (2001) (including
reference to the EC’s TBR), Blázquez Navarro (2000), Chang (2000) (focusing on the panel decision on US Section 301), Hudec (1999), Bhala and Kennedy (1998) (Chapter 10), Lash (1998), Jackson (1997), pp 127–133 (briefly), Schaefer (1998), O’Neal Taylor (1997), Puckett and Reynolds (1996), Schede (1996) (focusing on the relationship with Article 23 DSU concerning the priority of the multilateral dispute settlement procedure), Bayard and Elliott (1994), Mavroidis (1993), Sykes (1992), as well as Bhagwati and Patrick (1990).
7 Council Regulation no 2641/84; OJ L252 of 20 September 1984. For an analysis of the
NCPI, see Mavroidis (1993).
8 OJ L349 of 31 December 1994, last modified by Council Regulation no 356/95; OJ L41 of
23 February 1995. The Trade Barriers Regulation and its operation have been analysed in Shaffer (2001) (including reference to US Section 301), Bronckers and McNelis (2001), Sundberg and Vermulst (2001), MacLean (1999), McNelis (1999), Van Eeckhaute (1999), Mavroidis and Zdouc (1998), Shaffer (1998), McNelis (1998) and Bronckers (1997).
a dispute rests primarily in the hands of the government which has considerable discretion to decide. At a second glance, however, this fact may be interpreted as a clear sign that governments are unwilling to have their trade policy flexibility reduced by laying their trade policy agenda into the hands of the private sector. Moreover, it may underline the foreign policy context in which trade policy takes place.
3.2 The Consultation Stage
Once the government of the complainant country ‘C’ has decided to bring a trade dispute to the WTO, the provisions of the Dispute Settlement Understanding (DSU; Annex 2 to the WTO Agreement) govern the proceedings.
The first stage of any dispute settlement procedure consists of mandatory consultations between the complainant (C) and the defendant (D). C who alleges that D has violated WTO provisions, thereby nullifying or impairing C’s benefits under the agreements, has the right to ask D to enter into consultations in order to find a mutually acceptable solution to the problem.9 Such consultation requests shall be made in writing. They shall contain the reasons for the request, and identify the measures and the legal basis for the complaint.10 Consultation requests shall be notified to the Dispute Settlement Body.11
D is normally obliged to answer within 10 days after receipt of the consultation requests, and it shall enter into such consultations within 30 days.12 The consultations are confidential.13 However, a third party which considers that it has a ‘substantial trade interest’ in the consultations may notify the consulting Members and the DSB of its interest. It shall be joined in the consultations if the other parties agree to the claim of substantial interest. If the third party is not allowed to join the consultations, it may request its own consultations.14
9 For the area of trade in goods, see Article XXII GATT. The other annexes to the WTO
agreement contain similar provisions regarding consultation requests.
10 Article 4.4 DSU.
11 In principle, the Dispute Settlement Body is identical with the General Council; Article
IV.3 of the WTO agreement: ‘The General Council shall convene as appropriate to discharge the responsibilities of the Dispute Settlement Body provided for in the Dispute Settlement Understanding. The Dispute Settlement Body may have its own chairman and shall establish such rules of procedure as it deems necessary for the fulfilment of those responsibilities.’
12 Article 4.3 DSU. Shorter time-frames apply in the case of perishable goods; see Article
4.8 and Article 4.9 DSU.
13 Article 3.6 DSU. 14 Article 4.11 DSU.
If a mutually acceptable solution for the dispute has been found, it shall be notified to the DSB.15 The DSU has a clear preference for mutually acceptable solutions over the solution of disputes through panel procedures.16 It prescribes, however, that such mutually agreed solutions shall be consistent with the multilateral trade agreements, and that they shall not nullify or impair the benefits accruing to any member under these agreements.17
If D refuses to enter into consultations, or if no mutually acceptable solution can be found within 60 days, C has the right to ask the DSB to establish a panel.18
3.3 The Panel Stage
Panel requests must be formulated in writing. They must contain details on whether consultations have been held, which measures are the subject of the complaint and which rules of the multilateral trade regime are concerned.19 Following a request a panel is usually established at the second meeting of the DSB where the panel request appears on the DSB’s agenda, unless the DSB decides by consensus not to establish the panel.20 In other words, the time between the first and the second DSB meeting with the request on the agenda may be used for further consultations. By the time of the second meeting, agenda control shifts to the complainant as the latter would have to consent not to establish a panel. The reverse consensus rule for the establishment of panels is a new feature of dispute settlement in the WTO, as has been pointed out in the preceding chapter.21
Panels typically consist of three panellists, unless the parties agree to a panel composed of five panellists.22 Panellists are usually governmental or non-governmental trade experts, including officials, diplomats or
15 Article 3.6 DSU.
16 ‘ ... The aim of the dispute settlement mechanism is to secure a positive solution to a
dispute. A solution mutually acceptable to the parties to a dispute and consistent with the covered agreements is clearly to be preferred. ...’ (Article 3.7 DSU).
17 Article 3.5 DSU.
18 Article 4.3 and 4.7 DSU. Exceptionally, longer time-frames may apply in cases involving
developing country defendants; see Article 12.10 DSU.
19 Article 6.2 DSU. 20 Article 6.1 DSU.
21 The reversed consensus is one of the main innovations of the new Dispute Settlement
Regime compared to its predecessor. Under the old GATT, panels were established only by consensus, ie if the member which was the subject of the complaint agreed to the establishment of a panel.
academics. They are appointed ad hoc, although the WTO maintains a roster from which panellists can be chosen.23 Citizens of members whose governments are involved in a specific dispute shall not serve on that panel.24 The secretariat shall propose nominations for the panel which shall be accepted by the parties. Such nominations shall not be opposed by Members, except for ‘compelling reasons’. If the parties cannot agree on the panellists, the Director General of the WTO is called upon to determine the composition of the panel.25 When acting on a panel, panellists shall serve in their individual capacities and independent from instructions of their governments.26 Further rules for observance by panellists are contained in specific rules of conduct.27 In disputes involving developing countries, at least one panellist from a developing country shall be included if the developing country members so request.28 The panel’s task is to assist the DSB in making rulings and recommendations under the covered agreements. In practice, this usually means the establishment of a report on whether or not a trade measure constitutes a violation of multilateral trade rules.29 To this purpose, a panel shall make an objective assessment of the matter before it, including an objective assessment of the facts of the case and the applicability of and conformity with the relevant covered agreements.
Panel procedures include written submissions30 of the parties to the disputes and panel hearings. Two so-called ‘substantive meetings’ normally take place before the interim report (see below) is issued, and another meeting takes place after the interim report is issued. If necessary, more meetings can be arranged.31 The panel enjoys a right to seek
23 Article 8.4 DSU.
24 Article 8.2 DSU. For details on the composition of panels, see Article 8 DSU and Leier
(1999), p 205 and p 208, with further references. As far as the panellists are concerned, additional rules are laid down in the ‘Rules of Conduct for the Understanding on Rules and Procedures Governing the Settlement of Disputes’ of 11 December 1996; WT/DSB/ RC/1.
25 Article 8.7 DSU. 26 Article 8.9 DSU.
27 Annex II (Rules of Conduct for the Understanding on Rules and Procedures Governing
the Settlement of Disputes) to the Working Procedures for Appellate Review, most recent version of 1 May 2003; WT/AB/WP/7.
28 Article 8.10 DSU.
29 Article 7 DSU on the ‘terms of reference’ of the panel reads as follows: ‘Panels shall
have the following terms of reference unless the parties to the dispute agree otherwise within 20 days from the establishment of the panel: “To examine, in the light of the relevant provisions in (name of the covered agreement(s) cited by the parties to the dispute), the matter referred to the DSB by (name of party) in document ... and to make such findings as will assist the DSB in making the recommendations or in giving the rulings provided for in that/those agreement(s).”’
information and technical advice from anyone it deems appropriate.32 Panels may also request advisory reports from expert review groups.33 Parties’ submissions to the panel shall be treated as confidential but shall be made available to the parties to the dispute. Disputing parties have a right to disclose statements of their own to the public. Members may also ask disputing parties to provide a non-confidential summary of the information contained in written submissions which may be disclosed to the public. However, there is no time frame for the fulfilment of this obligation.34
Even during the panel stage, both parties are encouraged to continue their search for a mutually acceptable solution. To this end, panels should also consult regularly with the parties to the dispute and give them adequate opportunity to develop a mutually satisfactory solution.35 Moreover, the panel has the authority to suspend its procedures for a maximum of 12 months upon the complainant’s request in order to allow for further bilateral negotiations. If the work of a panel has been suspended for more than 12 months, its authority lapses.36
As during consultations, third parties enjoy specific rights during the panel stage. Having notified their substantial interest in a matter to the DSB, they shall be heard by panel and their submissions shall be reflected in the panel report. They also receive the submissions of the disputing parties to the first meeting of the panel and they may request their own panel under the DSU.37 Specific rules apply for cases involving multiple complainants.38
If no mutually acceptable solution can be agreed upon during the panel stage, the panel shall issue its final report within six or, under exceptional circumstances, within nine months.39 The deliberations of the panel are confidential, and the reports are drafted without the presence of the parties. Opinions expressed by individual panellists in the report are anonymous.40 Before the final report, the panel issues an interim report which is circulated to the parties to the dispute.41 If this interim report is
31 See Article 12 DSU and the Working Procedures laid down in Appendix 3 of the DSU
for an overview of the panel procedure.