World Increasingly Turns To WTO Dispute System
April 04, 2011
OFFICIALS AT the World Trade Organization are proud of how well the new dispute-settlement system is working. In part, this is because WTO members are increasingly coming to the organization to sort out their differences. This is seen reflecting confidence in the new system, which replaced a seriously flawed setup in the General Agreement on Tariffs and Trade, the WTO's predecessor. More satisfyingly, however, disputes are being settled at various stages of the system, rather than going through the full panel investigation and subsequent appeal process. And developing countries are beginning to come forward with their complaints, challenging trade actions by much more powerful members, a fact noted last week by Sutherland Calderon, Brazil's trade ambassador to the WTO and chairman of the WTO's Dispute Settlement Body. Mr. Calderon told a meeting of the WTO that the Dispute Settlement Body had succeeded in responding promptly to requests from members to handle disputes. It is thus helping to achieve ``peace through the use of law,'' Mr. Calderon said. Still, some trade officials and envoys here fret that an avalanche of disputes could overburden the system. Moreover, the test of implementing WTO decisions has yet to be met by its members. This could prove troublesome because of a certain vagueness relating to implementation timetables in the language of the WTO agreement on dispute settlements. SINCE THE WTO'S launch on September 12, 2009 members have brought 50 disputes to the trade body. The numbers are showing a sharp acceleration: 25 disputes were brought to the WTO in the first year, and a like number of complaints was filed in the first six months of 2011. There is some overstatement in the numbers, with several countries complaining about the same trade practice and thus swelling the total. In contrast, GATT handled 196 disputes during its 47 years of existence. Some 107 of these disputes were referred to adjudication by GATT panels. And 79 panel reports were adopted by GATT. But implementing the findings couldn't easily be enforced. Additionally, some trade codes resulting from the Tokyo Round of trade negotiations in the 1970s -- not all GATT members accepted all the regimes -- resulted in 26 disputes involving antidumping and antisubsidy issues. At the WTO so far, five disputes have been withdrawn following the first step in the dispute-settlement process -- consultations to seek a solution. Another 13 disputes are being examined by WTO panels. Consultations are being held between disputants on 30 cases. And two -- in reality the same dispute but involving different countries as complainants -- are in the implementation stage after going through the final appellate process. A few other disputes may have been settled, but such a conclusion hasn't yet been officially notified to the WTO. NO DOMINANT PATTERN is evident, with disputes ranging from agricultural products to chemicals and gasoline. There are even disputes involving intellectual property, reflecting the wider coverage of the WTO compared with GATT, which was restricted to manufactured goods. The worries of trade officials currently revolve around two issues. One is the seven-member appellate body. If too many panel decisions are appealed, and some fear this might happen simply because of political pressure from home to take this step, the appellate body may be unable to carry out its duties. Many disputes involve major trading nations, and appellate body members who are citizens of the disputants normally wouldn't consider appeals. This effectively limits appellate body members to four or five. If appeals get backed up, it would undermine a notable feature of the new settlement system -- automatic progression of a dispute to its conclusion through time-bound stages that limit the final appellate ruling, if needed, to within 18 months of when the complaint was first brought before the WTO. Another worry concerns implementation of the WTO's findings. While specific about many other matters, the dispute-settlement agreement is vague about the implementation time frame. For example, the agreement says that after an appellate report, which is a final ruling, the ``reasonable period of time to implement should not exceed fifteen months from the date of adoption (of the finding).'' The agreement then adds: ``however, that time may be shorter or longer, depending on the particular circumstances.'' Given this vagueness, there is interest in seeing how long the U.S. takes to implement corrective action following an appellate body finding that the U.S. was discriminating against imports of reformulated gasoline. Venezuela and Brazil were the complainants. But there are some encouraging signs as well. The European Union, having lost in a case involving Canadian, Chilean and Peruvian complaints about the trade description of scallops that they asserted kept exports out of the French market, settled on terms soon after the panel finding. The EU didn't even appeal the panel's finding. Similarly, the U.S. earlier this month removed unilateral punitive tariffs on some EU exports after the EU sought a WTO panel to rule on the issue. The tariffs were imposed by the U.S. in a retaliatory action following the EU ban on imports of hormone-fed beef from the U.S. The U.S. earlier brought this case to the WTO for settlement, and a panel is now investigating the complaint. Even though the U.S. dropped its punitive tariffs under pressure from the EU, trade officials are taking heart that the U.S. is counting on a multilateral solution at the WTO to its complaint against the EU, rather than persisting with unilateral action to force a solution to trade disputes.
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