Implementation — Dispute Settlement

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5.1 Introduction

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Can decisions be appealed?  back to top

Either side can appeal a panel’s ruling before it is adopted by the Dispute Settlement Body. Sometimes both sides appeal. Appeals have to be based on points of law such as legal interpretation — they cannot re-examine existing evidence or examine new evidence.

Each appeal is heard by three members of a standing seven-member Appellate Body set up by the Dispute Settlement Body and broadly representing the range of WTO membership. Members of the Appellate Body have four-year terms. They have to be individuals with recognized standing in the field of law and international trade, not affiliated with any government.

The Appellate Body can uphold, modify or reverse the panel’s legal findings and conclusions. Normally appeals should not last more than 60 days, with an absolute maximum of 90 days.

The Dispute Settlement Body has to accept or reject the Appellate Body report within 30 days — and rejection is only possible by consensus. There is no possibility for further appeal.


The case has been decided: what next?  back to top

Obviously, there is no trade police. But if a country is not keeping its WTO commitments, it should quickly change its measures to bring them into conformity. And if it continues to violate an agreement, the country should offer compensation or suffer a suitable penalty until full compliance is achieved.

Once the case has been decided, the priority is for the losing “defendant” to bring its policy into line with the ruling or recommendations. The dispute settlement agreement stresses that “prompt compliance with recommendations or rulings of the DSB (Dispute Settlement Body) is essential in order to ensure effective resolution of disputes to the benefit of all Members”.

If the country that is the target of the complaint loses, it must follow the recommendations of the panel report and/or the appeals report. It must state its intention to do so at a Dispute Settlement Body meeting held within 30 days of the report’s adoption. If complying with the recommendation immediately proves impractical, for example because legislation has to be changed, the Member will be given a “reasonable period of time” to do so.

This “reasonable period of time” is undefined, although it should normally not exceed 15 months. Usually the parties to the dispute reach agreement on how much time is reasonably required in a particular situation. Where no agreement is reached, an arbitrator (normally an Appellate Body member) determines the reasonable period of time for compliance.

If the losing country fails to act within this period, it has to enter into negotiations with the complaining country (or countries) in order to determine mutually-acceptable compensation — for instance, tariff reductions by the losing country in areas of particular interest to the complaining side.

If after 20 days no satisfactory compensation is agreed, the complaining side may ask the Dispute Settlement Body for permission to impose limited trade sanctions (“suspend concessions or other obligations”) against the other side. This is often called “retaliation”. The Dispute Settlement Body should grant this authorization within 30 days of the expiry of the “reasonable period of time” unless there is a consensus against the request. Normally, the losing party will request arbitration on the amount of suspension of concessions, which cannot be more than the trade damage suffered as a result of the measure. In most cases this means that the original panel will be reconvened to calculate the approximate value of the trade being lost due to the measure under dispute. This “retaliation” is not retro-active, i.e. it covers only the time-period after the Dispute Settlement Body has granted the authorization to suspend concessions, not the whole period during which the measure in question was applied.

In principle, the sanctions should be imposed in the same sector as the dispute. If this is not practical or if it would not be effective, the sanctions can be imposed in a different sector of the same agreement. In turn, if this is not effective or practicable and if the circumstances are serious enough, the action can be taken under another agreement. The objective is to minimize the chances of actions spilling over into unrelated sectors while at the same time allowing the actions to be effective.

In any case, the Dispute Settlement Body monitors how adopted rulings are implemented. Any outstanding case remains on its agenda until the issue is resolved.

When the parties do not agree whether the losing Member has implemented the findings, they can request a panel under Article 21.5 of the Dispute Settlement Understanding (DSU). The DSB will then normally ask the original panel to examine whether any implementation measures have been taken, and whether these are in conformity with the agreements in question. This is supposed to be done in an expedited fashion, normally within a period of 90 days.



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