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DOHA WTO MINISTERIAL 2001: BRIEFING NOTES

DISPUTES
The dispute settlement system

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Contents

> Director-General’s letter to journalists
> Background
>
Least-developed countries (LDCs)
>
Agriculture
>
Sanitary and phytosanitary (SPS) measures
>
Trade in services
>
Implementation issues
>
Intellectual property (TRIPS)
>
Textiles and clothing
>
Information technology (IT) products
>
Trade and environment
>
Trade and investment
>
Trade and competition policy
>
Transparency in government procurement
>
Trade facilitation
>
Trade and labour standards
>
Disputes
>
Electronic commerce
>
Members and accession
>
Regional trade agreements
>
Some facts and figures
>
Glossary of terms

 

 

 

 


Overview back to top

After more than six years of operation the dispute settlement system of the WTO continues to be used extensively by the WTO members. Up until 1 October 2001 some 240 complaints had been brought by members. In some 56 cases the dispute was resolved by a final Panel or Appellate Body Report. In quite a number of cases further reports have been handed down on the implementation of the Panel or Appellate Body Report and (in five cases) on the level of the authorized suspension of concessions and other obligations (so-called retaliation).

It is clear that developed countries are the biggest users of the system: they file almost twice as many complaints as developing countries; two-thirds of these are directed at other developed countries, while developing countries also direct about two-thirds of their complaints against developed countries. The United States and the European Communities are the biggest users of the system by far: the United States is complainant in some 70 cases and respondent in 56; the European Communities is complainant in 55 cases and respondent in 32. Naturally, these two are also the biggest users of the appeals system. Research has demonstrated that if the number of cases in which the United States and the European Communities are involved is corrected for the volume of their trade and the number of countries with which they trade, they are not disproportionate users compared to other members of the WTO. Of the developing countries Brazil and India are the heaviest users. They have resorted to the system and responded to complaints in about the same amount as Canada (the third ranking developed country user of the system): between 10 and 20 cases as complainant and respondent each.

 

How disputes are resolved back to top

The Dispute Settlement Understanding (DSU) is the legal text that spells out the rules and procedures for settling disputes in the WTO. It contains 27 articles, is a legally binding negotiated agreement among all the WTO member governments, and is the ultimate means of enforcing the WTO’s trade rules. That makes it the backbone of the multilateral trading system.

Disputes in the WTO arise when one government accuses another of violating an agreement or being in breach of its commitments. Briefly, the dispute settlement system has three stages, with rules, procedures and strict timeframes for each stage.

  • First: consultations between the governments involved in the dispute. They have 60 days to reach a mutually agreed settlement. If they don’t, the complaining government that initiated the dispute can move the dispute to the next stage.
     

  • Second: the legal stage where the case is examined by an independent panel of three legal/technical experts. The panel has between six to nine months to complete its examination and to produce a detailed report with its findings based on written and oral statements by the governments involved.

If the panel report is appealed, a standing Appellate Body has between two to three months to examine the appeal and produce a detailed report with its findings. The DSB then considers whether to adopt both the panel and the Appellate Body reports. Normally the reports are adopted because the rules say they can only be rejected by consensus.

If the DSB rules that the accused country is innocent, the case stops there. But if the accused country is found to have violated an agreement or commitment, the dispute moves into its final stage.

  • Third: implementation. The government concerned is given a reasonable period of time to implement the DSB’s ruling. Throughout this reasonable period of time, the DSB monitors how the government concerned is implementing the ruling, to ensure full compliance. If at the end of the reasonable period of time it appears that there is no implementation or that compliance is controversial between the parties to the dispute, two things can happen: the party that has “lost” may offer (trade) compensation; or, if that is not acceptable to the party that “won”, the latter may request authorization to retaliate. In order to determine whether there has been less than full compliance in the first place, the DSU provides for a special procedure (often referred to as the “implementation” or “compliance” panel).

Sequencing” problem: However, on the first occasion when this special procedure was initiated in late 1998 (in the “bananas” case), it gave rise to a serious divergence of interpretations among the members, particularly between two of the parties to the dispute — the US and the EC. The issue became known as the “sequencing” problem and resulted from the fact that this procedure is described without sufficient detail fashion in the DSU text and, in particular, that a literal reading of the text seems to provide that an authorization to retaliate should be given priority over an application of the procedure for the special implementation panel.

 

The review of the Dispute Settlement Understanding (DSU) 1998–1999 back to top

The review of the Dispute Settlement Understanding was mandated by a ministerial decision at Marrakesh (1994), to be completed by the end of 1998. Many subjects and possible improvements to the DSU were discussed during the review process, but without much result. The period for the review was extended to the summer of 1999, but again without success. According to a group of WTO members, chaired by Japan, it was important to remedy at least one major problem, commonly called the “sequencing” problem, and some smaller issues directly or indirectly linked to it. To this end, they took the initiative to present a draft amendment to the Third Ministerial Conference of the WTO at Seattle in December 1999. The Conference ended indecisively as did the official review of the DSU. In late 2000 and early 2001, a group of members tried to revive the discussion on the proposed amendment, but without success. By late September 2001, informal discussions had started among members on the possibility of the Doha Ministerial Conference agreeing to launch negotiations on possible amendments to the DSU.

The solution to the ‘sequencing’ problem in implementation (Articles 21 and 22)

The DSU does not spell out clear procedures for handling a possible disagreement on whether the accused government has implemented the DSB’s ruling fully or not. Members now agree in principle that it is first necessary to determine whether there has been proper implementation before moving to the questions of compensation and retaliation. They also agree that the judgement has to be made within the WTO system and not unilaterally.

The main difference of opinion appears to be over the amount of time needed to determine whether the accused government has implemented correctly, which in turn depends on the procedures to be followed to reach a decision.

For example, do the two sides have to try to settle this new disagreement by consulting each other, and if so, for how long? Must the DSB meet — and if so, how many times — to refer the matter to the panel or Appellate Body for a judgement?

Should the panel make the judgement with the possibility of an appeal? Or should it only be made by the Appellate Body if the original matter had been appealed, or by the panel if it had not?

Must the DSB adopt the judgement automatically or must there be a consensus to adopt? How quickly can authority to retaliate be requested? And if the amount of retaliation is challenged, how long should the arbitration take?

Transparency and access to the dispute settlement system

Panel and Appellate Body reports (and all other WTO documents relating to specific disputes) are published on the WTO website immediately after distribution to all member governments. However, panel and appeals deliberations are confidential, giving rise to complaints, particularly by non-governmental organizations (NGOs), that the proceedings of the dispute settlement system lack transparency.

Some governments say the WTO system is exclusively intergovernmental in nature. In their view, if an NGO wants to make an argument to a panel it should convince one of the governments involved in the dispute to present that argument to the panel. Other governments hold the view that the credibility of the system would be enhanced if it were more open and that openness would have no significant disadvantages.

It should be noted that the Appellate Body ruled (in the “Shrimp/Turtle” case) that panels have the right to accept submissions that they have not requested from sources other than governments involved in the dispute (such as NGOs). It should also be noted that Article 18.2 of the DSU states:

… Nothing in this Understanding shall preclude a party to a dispute from disclosing statements of its own positions to the public. Members shall treat as confidential information submitted by another member to the panel or the Appellate Body which that member has designated as confidential. A party to a dispute shall also, upon request of a member, provide a non-confidential summary of the information contained in its written submissions that could be disclosed to the public.”

 

Disputes facts and stats back to top
Situation as of 1 October 2001

To date, 239 disputes have been brought to the WTO, of which:

38

were withdrawn following consultations;

103

are under consultations;

26

are being examined by panels;

2

subject of panel reports which have been appealed;

36

are in implementation stage following adoption by DSB of panel & appellate reports;

21

implemented;

9

closed without the need for implementation;

4

authority for panel elapsed.

  

Number of disputes involving some of the biggest users of the DSU

Disputes involving

As complainant

As respondent

With developing countries

 

 

 

US/EC/Japan
as complainant

US/EC/Japan
as Respondent

United States

69

56

29

22

EC

55

32

23

13

Japan

8

12

3

0

Developing countries

79

92

 
WTO members involved in disputes

 

As complainant (case nos.)

Total

As respondent (case nos.)

Total

Argentina

35, 111, 207, 226

4

56, 77, 121, 123, 145, 155, 157, 164, 171, 189, 190, 196, 233, 238

14

Australia

35, 91, 169, 178, 217

5

18, 21, 57, 106, 119, 126

6

Belgium

 

 

80, 127, 210

3

Brazil

4, 69, 70, 71, 112, 154, 190, 208, 209, 216, 217, 218, 219, 222, 224, 239

16

22, 30, 46, 51, 52, 65, 81, 116, 183, 197. 199, 229

12

Canada

7, 9, 10, 18, 20, 35, 46, 48, 92, 135, 137, 144, 153, 167, 180, 194, 221, 234, 236

19

31, 103, 113, 114, 117, 139, 142, 170, 222

9

Chile

14, 97, 217, 227, 232, 238

6

87, 109, 110, 193, 207, 220, 226, 228, 230

9

Colombia

78, 188, 228, 230

4

181

1

Costa Rica

24, 185, 187

3

 

 

Czech Rep.

159

1

148

1

Denmark

 

 

83

1

Ecuador

27, 237

2

182, 191

2

Egypt

 

 

205, 211

2

European Communities

8, 15, 38, 39, 40, 42, 53, 54, 63, 66, 73, 75, 77, 79, 81, 85, 87, 88, 96, 98, 100, 107, 108, 110, 114, 116, 117, 118, 120, 121, 136, 138, 142, 145, 146, 147, 149, 150, 151, 152, 155, 157, 160, 165, 166, 176, 183, 186, 189, 193, 200, 212, 213, 214, 217, 225

56

7, 9, 12, 13, 14, 16, 17, 25, 26, 27, 48, 62, 69, 72, 104, 105, 115, 124, 134, 135, 137, 140, 141, 153, 154, 158, 172, 174, 209, 219, 223, 231

32

France

 

 

131, 173

2

Greece

 

 

125, 128

2

Guatemala

16, 27, 158, 220

4

60, 156

2

Honduras

16, 27, 158, 201

4

 

 

Hong Kong, China

29

1

 

 

Hungary

143, 148

2

35, 159

2

India

19, 32, 33, 34, 58, 134, 140, 141, 168, 206, 217, 229, 233

13

50, 79, 90, 91, 92, 93, 94, 96, 120, 146, 149, 150, 175

13

Indonesia

123, 217

2

54, 55, 59, 64

4

Ireland

 

 

68, 82, 129

3

Japan

6, 51, 55, 64, 95, 139, 162, 184, 217

9

8, 10, 11, 15, 28, 42, 44, 45, 66, 73, 76, 147

12

Korea

89, 99, 179, 202, 215, 217

6

3, 5, 20, 40, 41, 75, 84, 98, 161, 163, 169

11

Malaysia

58

1

1

1

Mexico

16, 27, 49, 60, 156, 158, 182, 191, 234

9

53, 101, 132, 203, 204, 216, 232

7

Netherlands

 

 

130

1

New Zealand

35, 72, 93, 113, 177

5

 

 

Nicaragua

 

 

188, 201

2

Pakistan

58, 192

2

36, 107

2

Panama

105, 158

2

 

 

Peru

12, 231

2

112, 227

2

Philippines

22, 61

2

74, 102, 195, 215

4

Poland

122, 235

2

19

1

Portugal

 

 

37

1

Romania

 

 

198

1

Singapore

1

1

 

 

Slovak Rep.

 

 

133, 143, 235

3

South Africa

 

 

168

1

Sri Lanka

30

1

 

 

Sweden

 

 

86

1

Switzerland

94, 119, 133

3

 

 

Thailand

17, 35, 47, 58, 181, 205, 217

7

122

1

Trinidad & Tobago

 

 

185, 187

2

Turkey

211

1

29, 34, 43, 47, 208, 237

6

United Kingdom

 

 

67

1

United States

3, 5, 11, 13, 16, 21, 26, 27, 28, 31, 35, 36, 37, 41, 43, 44, 45, 50, 52, 56, 57, 59, 62, 65, 67, 68, 74, 76, 80, 82, 83, 84, 86, 90, 101, 102, 103, 104, 106, 109, 115, 124, 125, 126, 127, 128, 129, 130, 131, 132, 158, 161, 163, 164, 170, 171, 172, 173, 174, 175, 195, 196, 197, 198, 199, 203, 204, 210, 223

69

2, 4, 6, 24, 32, 33, 38, 39, 49, 58, 61, 63, 78, 85, 88, 89, 95, 97, 99, 100, 108, 111, 118, 136, 138, 144, 151, 152, 160, 162, 165, 166, 167, 176, 177, 178, 179, 180, 184, 186, 192, 194, 200, 202, 206, 212, 213, 214, 217, 218, 221, 224, 225, 234, 236, 239

56

Uruguay

25

1

 

 

Venezuela

2

1

23

1

 

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Other material:

> A more detailed account of the dispute settlement procedure can be found in “Understanding the WTO”
> See more information on disputes

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