The meeting is at the Washington State Convention and Trade Center


SEE ALSO:
Director-General’s message
Background
Built-in Agenda
The WTO agreements and developing countries
Least-developed countries
Agriculture (1)
Agriculture (2)
Sanitary and phytosanitary (SPS) measures
Services
Intellectual property (TRIPS)
Textiles and clothing
Information technology products
Trade and environment
Trade and investment
Trade facilitation
Trade and competition policy
Transparency in government procurement
Trade and labour standards
Disputes (2)
Electronic commerce
Members and accessions
Some facts and figures
Glossary of terms

AND:

Other ministerial meetings


DISPUTES (1)

Review of the Dispute Settlement Understanding

This briefing paper focuses on issues raised in the recent review of the WTO’s dispute settlement rules, and a possible ministerial decision in Seattle

Overview

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.

Ministers at Seattle are expected to take a decision whether to continue, modify or terminate the DSU, although termination is not considered a likely option. The decision will be based on the review of how the DSU has operated during the period January 1995-July 1999. The review has been conducted by the WTO Dispute Settlement Body (DSB) which is made up of all WTO member governments and handles all disputes.

Present situation: the dispute settlement process

Disputes in the WTO arise when one government (sometimes joined by fellow-members) 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 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.

The review

The review has covered many aspects of the Dispute Settlement Understanding. Among the issues governments have highlighted are the following:

Implementation

The Dispute Settlement Understanding does not spell out clear procedures for handling a possible disagreement on whether the accused government has implemented correctly the DSB’s ruling. If the accused government concedes that it has not implemented correctly by the end of the reasonable period of time for implementation, members generally agree that the complaining government can then seek compensation or authorization to retaliate (as in the “Beef-Hormone” case). Authorization is given by the DSB.

Sometimes the two sides disagree about whether the accused government has implemented correctly. Again, members 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 the member governments. However, panel and appeals deliberations are confidential, and there have been 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.”

Developing countries and dispute settlement

Developing countries have made greater use of the WTO dispute settlement system than they made of the system under GATT (i.e. before 1995). To date, they have brought more than 40 disputes to the WTO system.

The DSU provides special treatment for developing countries in a number of respects. For example, it provides the possibility of a speedier process (Art.3.12), that special consideration should be given to developing countries in consultations (Arts.4.10, 12.10) and in the panel process (Arts.8.10, 12.10, 12.11) and that account should be taken of developing country interests in the surveillance stage (Arts.21.2, 21.7, 21.8). There are also special provisions for least-developed countries (Art.24).

One of the developing countries’ major concerns expressed in the DSU review has been their shortage of resources for participating in the dispute settlement system. For the moment, the DSU addresses this concern by requiring the WTO Secretariat to provide legal assistance to such countries. The Secretariat also conducts a number of special training courses on dispute settlement for officials from such countries.

See Part 2 of this briefing document for Disputes Facts and Stats.