World Trade Organization Assignment: International Commercial Law

Question

Task: This task will require students to research a set topic in international commercial law.
Assignment question: Explain and critique the dispute resolution system and processes of the World Trade Organization (WTO). How does the WTO’s dispute resolution system work and are there any problems with it?

Answer

Introduction
The report on world trade organization assignment will highlight the dispute resolution methods under the rules of WTO. In the first question the dispute settlement processes will be defined in detail and different processes under the rules of WTO will be discussed for the understanding of the reader. The panel stage and the Appellate Body will be defined in this part. In the next question, it will be discussed in detail how the disputes under the rules of WTO are settled and resolved through various stages. In this part of world trade organization assignment, various problems under the WTO dispute resolution process will be discussed.

Explain and critique the dispute resolution system and processes of the WTO. 
The problem resolution procedures of the World Trade Organisation are based on the understanding of the rules and regulations of the problem resolution. The problem resolution methods explored in the context of this world trade organization assignment are not a newly created body but it is a business firm that was created in the GATT diplomacy-conciliatory base method and it is focused judicially on the business organisations[1]. Before the introduction of the DSB, all the problems were settled in an amiable manner with the help of diplomatic channels and with this any of the parties to the dispute became frustrated due to the lack of proper legal framework. Under the DSB a time frame has been set in which disagreement can be settled and the result can be implemented[2]. The DSB improvements have been done over a period of time. The DSB has been introduced by WTO with lots of improvements in the nature and has designed three stages for this:

Stage of consultation: It is a time of 60 days where parties to the dispute try to make solution their clash through tactful means. Near about half the cases were fetched to the WTO and in this step the defendant yields an allowance or two. Disputes that are not resolved at this stage are transferred to the second stage[3].

Panel stage: The panel stage discussed in the world trade organization assignment has three to five members who are appointed to make a settlement of dispute. The panel is authorised to think the submissions that come from the main parties to the dispute as well as to admit amicus curia from the other parties and also a report is produced by it after the consideration from the parties. Approximately 13 per cent of the dispute cases have been resolved by this stage. A final statement is also prepared by the panel which is accepted by the WTO and if any party to the dispute disagrees to admit the report then the case moves on to the next stage[4].

Appellate Body: The appellate body is an ultimate body containing jurists who finds points on the panel. In this stage issues are settled through interpretation, principles and procedures and give the parties a permanent belief. As per the evaluation considered to prepare this world trade organization assignment, approximately 73 per cent cases are referred to this stage through Appellate Body and the decision of the Appellate Body is admitted by the partiers. The Appellate Body has been given power for compensation and compliance[5].

The Appellate Body has a detailed representation of the dispute with trade experts from all the countries of the WTO. The DSB is prepared in such a way that that it can give prompts conclusion of problems and minimisation of costs for preventing the backlogs through procedural techniques[6]. The principles under the Appellate Body is for quick remedies of the dispute sin the developing countries and if those countries require time extension then extension is also available under the body.

The rules under the dispute settlement procedure are designed in such a way that they are suitable for any member under the WTO irrespective of their economic status. The dispute settlement mechanisms were expected to resolve many issues in the developing countries as the developing countries are considered to be less powerful countries[7]. The developing countries will find flexibilities because the dispute resolution mechanisms are based on the legal system that is based on the rights of the member countries. The findings obtained in the world trade organization assignment signifies that the majority members under WTO are the developing countries and the participation of the members is very important for the good execution of WTO and thus, the interests of all the member countries are protected[8]. However, in spite of the good aspects of the above mechanisms, there are some imbalances on the part of the members of WTO for not utilising the mechanisms properly. Lack of financial and technical capacity is deterring the members to participate with the DSB of WTO. Lack of enforcement procedures is also a barrier in this regard[9].

Some additional points can be discussed in the context of this world trade organization assignment for the criticism of WTO issue resolution mechanisms. Firstly, the WTO principles are based on the absolute fairness and all the members can participate in the dispute redressed programmes with their equal rights in terms of the organisational disputes. All the members have the equal right to attend meeting and give their recommendations and approve or disapprove a proposal in the meeting. The DSB is an offering for the developing countries to contribute to the problem resolution programmes[10]. On the contrary, decision is taken through an agreement under which the developing countries participate through a veto power which is not favourable for them. However, it is also noted in the world trade organization assignment that this system gives no assurance that the developing member countries can always have power over the direction under the WTO. The rule of third party quasi-judicial method is a process to make solution of the issues that has the potentiality for making decisions that can alter the guidance of the WTO through a negative mark of their veto power and this is because the Appellate body has not the emphasis of improvement and it gives focus on the positivist sign for the regulations of the WTO[11].

The dispute solution procedure is a settlement method of conciliation in the global business area which is supported by both the economic and political forces that make international relations between countries in the world[12]. The pioneers in the WTO have realigned the laws with Western laws for complying with the TRIPS and TRIMS Agreements for the developing members. This no doubt created some problems for the prospering countries when they came to understand the details of the law and wanted to implement them. In regard to TRIPs dispute, this study developed in this world trade organization assignment mentions that the knowledge of the prospering and developed members is not the same and they cannot apply the resolution rules in the same manner. This proves that there is no unique resolution process that the developing countries can accept[13].

The dispute solution method is open to all the members but all the members have to bear the expenses of the legal costs and it is a great challenging thing for the just beginning countries[14]. Thus, from this aspect presenting a case before WTO for settlement is very costly. As opined by Bown and Hoekman, it has also been noted in the world trade organization assignment that the skilled lawyers who provide their special advice in any proceedings charge from $89,950 for a simple case to $247,100 for a complex case. It has been noticed from the past experience that disputes under WTO can be settled in one round seldom and the cases go to the Appellate Body for final settlement (The EC above 3). On the other side the developed countries have the capacity to incur their all to meet the legal costs under WTO while it is a great obstacle to the poorer countries. Thus, the dispute settlement procedures under WTO are not equally acceptable to all the members.

2. How does the WTO’s dispute resolution system work in the context of this world trade organization assignment and are there any problems with it?
The steps for WTO dispute resolution system are the following:

1. Rules and procedures

There are rules and regulations for problem solution under the WTO and those rules and regulations have been developed under the GATT Agreement. However, from time to time, the rules have been developed and more accessible. A detailed time table is being followed for examining the cases for dispute. First three panellists are selected for the case and after their findings; they publish their report that can be appealed by any of the members related to the dispute. The approaches are considered by the Appellate Body of WTO in which there will be seven members. The rules and principles of the dispute settlement is settled on the problem Solution Understanding that is supervised by the body of problem settlement consisting of representatives from WTO members. At the time of complaint, the WTO members have to specify which WTO agreement is violated.

2. Dispute settlement system

Under this system, only the Government or the customs areas who are the members of WTO can take part in the dispute solution process as members or third members. According to WTO rules, a member of WTO does not have to show that it has interest in the legal or economic dispute. In this case of world trade organization assignment, the EC Banana dispute can be mentioned in which the United States made a complain that European Union give the special facility of entry to the African, Caribbean and Pacific countries violating the non-discrimination regulations of WTO while the United States do not export bananas to the EU countries[15]. The problem resolution process is started by an official complaint made by a member. The first step is called ‘request for advice process” process as the members to the dispute will try to solve the problems through discussion with one another. If this step is failed then the case of dispute is again examined. The judgement in the dispute settlement is not only accepted by the developed members but also it is accepted by the prospering countries. The DSU provisions aim at helping the just beginning countries to take part in the dispute resolution. According to the report, to date half of the complaints that have been brought under WTO are lodged by the developing members.

3. Efficient and easy system

This system is applicable when more than one WTO members lodge the dispute over the same subject. This can be done under the two heads.

Rules –based system
Under this system examined in the world trade organization assignment, the members of WTO agrees to bring the dispute under WTO rather than taking action in the case where they believe that another member has violated the WTO rules. It is the responsibility of the DSB to set up panels to verify the complaints and adopt the findings by the panels and also the Appellate Body unless the members agree at the DSB meeting. The Appellate Body has to see whether any special rules are violated or not that is prescribed by the WTO.

Determine a positive solution
The WTO settlement of dispute is based on the amicable settlement of dispute rather than winning in a case. It can be noticed in the segments of world trade organization assignment that till now more than half of the dispute cases have been settled amicably without considering other aspects. The Director-General helps the members to settle their dispute with mediation and conciliation process.

4. To comply with the settlement rules

According to the research carried on world trade organization assignment, it has been proved that the members of WTO have complied with all the rules and regulations of the dispute settlement procedures of WTO in 90 per cent cases. In this procedure, the members are given a specified period from eight to fifteen months for the implementation of the dispute rulings. During the period of implementation the member which wants to comply the rules and regulations, should provide a report at each of the meeting of the DSB. If a member cannot comply with the prescribed rules of WTO agreement within the specific time then the complainant will request the DSB for some restrictions on import for an amount by which the business is affected. The DSB continues to make a review on the compliance attitudes even when any retaliation process continues. In case there is any disagreement about the compliance of the rules, then the matter goes to the agenda of the DSB[16].

The problems in WTO settlement
Frustrations from the US in regard to the rules and regulations of WTO dispute settlement have come for different reasons. The biggest issue from the US discussed in this report of world trade organization assignment is that the decision by WTO is not a case in which the US is a party. The most important worry of United States is regarding the WTO panels and the Appellate Body. Apart from that, technical issue has also been raised by the US. The United States have appealed to DSU to resolve these problems but the concentration of DSU has been mainly on the cumbersome issues (Marrakesh Agreement Article X.8).

One of the technical issues can be mentioned herein world trade organization assignment. The United States have appealed the WTO members to indicate the problems through DSB when the Appllate Body is not offline. Some of the Appellate Bodies have resolved the dispute after the expiry of four-year term without the proper approval from DSB. According to the Rule 15 of AB Working methods, it is noted in this world trade organization assignment An Appellate Body has a responsibility to complete its work on the on-going phase after getting approval from the Appellate Body with a notification to the DSB. It is a charge by the United States that rule 15 violates the right of DSB for deciding the appointment or reappointment of the member of Appellate Body. Further, it has also been observed in the study developed in this world trade organization assignment that United States has also brought a charge about the resignation of Hyun Chong Kim in the year 2017 without giving any notice of 90 days. United States charges that it is the right of the DSB to decide the consequences and not for the Appellate Body. The United States further state that Kim could be replaced to another member’s place at the time of dispute.

Finally, United States have shaded their concern on the unwritten procedure of quasi-automatic reappointment of a member of the Appellate body. The practice has been going from the year 2011 and it blocked the appointment of its own nominee. In this way, the United States have shown their negative concerns regarding various rules of WTO in terms of dispute settlement[17].

Conclusion
From the overall analysis done in the above sections of world trade organization assignment, it can be concluded that the dispute solution process is one of the major processes in the field of laws. Both the developed and underdeveloped countries are benefitted by these dispute resolution processes. DSB and Appellate Body are the two units under WTO which incorporates and handles the rules and regulations for dispute resolution process. DSB mainly applies the regulations and Appellate Body incorporates the rules. It has been noticed that the rules of WTO in regard to the dispute resolution process has given importance to the developing countries and support them. The dispute settlement measures have been divided into four phases – rules and procedures, dispute settlement system, efficient system and finally compliance with the WTO rules. However, in spite of so many good aspects, the WTO dispute settlement processes have some drawbacks. According to some critiques used to prepare this world trade organization assignment, the settlement processes are expensive and time-consuming and hence these are the burden to them. Further, there are many issues examined in the segments of world trade organization assignment that have come from the United States in regard to the settlement processes.

Reference List

[1] Simon Lester & Bryan Mercurio, World Trade Law Text, Materials and Commentary (2008) Hart Publishing 155

[2] Ibid Art. 22

[3] Marc L. Busch, ‘The WTO Dispute Settlement Mechanism and Developing Countries’ (2004) SIDA Trade Brief available at www.sida.se/publications date accessed 13 May 2013 2

[4] Busch (note 8) 3

[5] Ibid at note 12.

[6] Lacarte-Muro & Gappah Ibid at note 12, 396

[7] WTO former Director-General, Renato Ruggiero

[8] Ibid (note 12) 401

[9] Douglas S. Ierley, ‘Defining the Factors that Influence Developing Country Compliance with and Participation in the WTO Dispute Settlement System: Another Look at the Dispute over Bananas’ (2001-2002) 33 Law & Pol'y Int'l Bus. 615 616

[10] Ierley Ibid (note 23) 622

[11] James Smith Ibid (note 28)

[12] Ierley (note 23) 616

[13] Ibid

[14] Chad P. Bown ‘Participation in WTO Dispute Settlement: Complaints, Interested Parties and Free Riders’ (005) Vol 19 No 2 Wld.Bank Econ.Rev. 294

[15] The EC- Bananas and Dolphin-Tuna cases

[16] Wto.org. (2014). Resolving Trade Disputes between WTO members. [online] Available at: https://www.wto.org/english/thewto_e/20y_e/dispute_brochure20y_e.pdf [Accessed 26 Sep. 2019].

[17] Payosova, T., Hufbauer, G.C. and Schott, J.J., 2018. 18-5 The Dispute Settlement Crisis in the World Trade Organization: Causes and Cures.