The WTO’s dispute settlement procedure underscores the rule of law, and it makes the trading system more secure and predictable. It is clearly structured, with strict timetables set for completing a case. First rulings are made by a Panel. Appeals based on points of law are possible. All final rulings or decisions are made by the WTO’s full membership.
Equitable, Fast, Effective, Mutually Acceptable back to top
WTO Members have agreed to use the multilateral system of settling trade disputes with fellow Members instead of taking action unilaterally. That means abiding by the agreed procedures and respecting judgements.
Typically, a dispute arises when one country adopts a trade policy measure or takes some action that one or more fellow WTO Members consider to be a failure to live up to obligations. Other countries can express their interest in the case and have the right to be heard as “third parties”.
A procedure for settling disputes existed under the old GATT, but the Uruguay Round Agreement introduced a more structured process. The Agreement emphasizes that prompt settlement of disputes is essential if the WTO is to function effectively. It sets out in considerable detail the procedures and the timetable to be followed in resolving disputes. If a case runs its full course to a first ruling, it should not normally take more than one year — 15 months if the case is appealed. If the case is considered urgent (e.g. if perishable goods are involved), then consideration of the case should take considerably less time.
Dispute settlement rulings are adopted unless there is a consensus to reject the ruling. This means any country wanting to block a ruling has to persuade all other WTO Members (including its adversary in the case) to share its view.
Although much of the procedure does resemble a court or tribunal, the preferred solution is for the countries concerned to discuss their problems and settle the dispute by themselves. The first stage of the WTO process is therefore consultations between the governments concerned, and even when the case has progressed to other stages, bilateral settlement is still always possible.
How are Disputes Settled? back to top
Settling disputes is the responsibility of the Dispute Settlement Body (the General Council in another guise). The Dispute Settlement Body has the sole authority to establish “panels” of experts to consider the case, and to accept or reject the panels’ findings or the results of an appeal. It monitors the implementation of the rulings and recommendations, and has the power to authorize “retaliation” when a country does not comply with a ruling.
First stage: consultation (up to 60 days). Before taking any other actions, the countries in dispute have to talk to each other to see if they can settle their differences by themselves. If that fails, they can also ask the WTO Director-General or others to mediate or try to help in any other way.
Second stage: the panel (up to 45 days for a panel to be appointed, plus 6 months for the panel to conclude). If consultations fail, the complaining country can ask for a panel to be appointed. The country “in the dock” can block the creation of a panel once, but when the Dispute Settlement Body considers the request a second time, the appointment can no longer be blocked (unless there is a consensus against appointing the panel).
Officially, the panel is helping the Dispute Settlement Body make rulings or recommendations. But because the panel’s report can only be rejected by consensus in the Dispute Settlement Body, its conclusions are difficult to overturn. The panel’s findings have to be based on the agreements cited. They have to be based on existing law, and cannot create new law. The panel’s final report should normally be given to the parties to the dispute within six months. In cases of urgency, including those concerning perishable goods, the deadline is shortened to three months.
The Uruguay Round Agreement describes in some detail how the panels are to work. The main stages are:
Before the first hearing: each side in the dispute, as well as those that have announced they have an interest in the dispute (third parties) present their case in writing to the panel.
First hearing: the case for the complaining country and defence: the complaining country (or countries), the responding country, and third parties, make their case at the panel’s first hearing.
Rebuttals: complainant and respondent submit written rebuttals and present oral arguments at the panel’s second meeting.
Experts: if one side raises scientific or other technical matters, the panel may consult experts or appoint an expert review group to prepare an advisory report. According to Article 11.2 of the SPS Agreement, panels dealing with SPS disputes should seek expert advice.
First draft: the panel submits the descriptive (factual and argument) sections of its report to the two sides, giving them an opportunity to comment. This draft report does not include findings and conclusions.
Interim report and review: The panel then submits an interim report, including its findings and conclusions, to the two sides. A party may request that the panel review its interim decision. The period of review must not exceed two weeks. During that time, the panel may hold additional meetings with the two sides.
Final report: A final report is submitted to the two sides and once translated into all three WTO languages, it is circulated to all WTO Members. If the panel decides that the disputed trade measure violates a WTO agreement, it recommends that the measure be brought into conformity with WTO rules. The panel may suggest how this could be done.
The report becomes a ruling: The report becomes the Dispute Settlement Body’s ruling or recommendation within 60 days unless there is a consensus to reject it or either side decides to appeal the report.