Dispute Settlement under the World Trade Organisation Ms. Prewprae CHUMRUM Dept. of Trade Negotiations Ministry of Commerce
6/27/2012
Dispute Settlement in the WTO: Aim
Dispute Settlement Understanding: Dispute Settlement under the World Trade Organisation
Mechanism aimed at securing compliance with the Covered Agreements (CA)
Preserves the rights and obligations of Members under the CA (Art 3.2 DSU)
Ms. Prewprae CHUMRUM Dept. of Trade Negotiations Ministry of Commerce 2
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Dispute Settlement in the WTO: Objectives
Dispute Settlement in the WTO: Scope
The WTO dispute settlement system serves to preserve the rights and obligations of Members under the WTO Agreement and to clarify the existing provisions of the WTO Agreement in accordance with customary rules of interpretation of public international law. Preferred outcome:
• To reach a mutually agreed solution
If not,
• Panel Proceeding …. • *….and AB review.]
Applies to all the WTO multilateral agreements (Appendix 1)
And then,
• Implementation, or …. • Retaliatory trade sanctions may be imposed
An integrated system: 3
A single set of rules for all disputes (Art 23)
Only a few special or additional rules in some CA (Appendix 2)
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Dispute Settlement in the WTO: Main characters Parties to the dispute: WTO Members only
Dispute Settlement Body (all the Members)
Appellate Body (7 persons)
Complainants
Panel
Respondents
( 3 or 5 panelists)
WTO & AB Secretariats
*This statistics counts only standard DSU complaints, not those brought under Article 21.5 and counts each DS Number assigned by the WTO Secretariat as a separate complaint. Also, note that some complaints have been filed by multiple Members acting jointly.
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*This statistics counts only standard DSU complaints, not those brought under Article 21.5. Also, not that the statistics counts each DS Number assigned by the WTO Secretariat as a separate complaint.
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How are disputes settled?
Consultation
Consultations
Mutually agreed solution during Panel Procedure : Settlement
Panel Complaining Party wins and no Party appeals
Appeal
Complaining Party asks for compliance Review
Adoption
Establishment Of a Panel Panel Report
Mutually agreed solution during Consultations : Settlement Party complaint against wins and no Party appeals : Settlement
Appellate Review Implementation
Party complaint against wins : Settlement Complaining Party accepts implementation: Settlement
Compliance Panel Compensation/ Suspension Of Concession
Implementation 7
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Dispute Settlement in the WTO: Consultations
Consultations • The objective is to allow parties to obtain satisfactory adjustment (to solve the dispute amicably) of the matter before resorting to further actions. • The complaining party may make a written request for consultations to the party complaint against and enter into consultations in good faith. • Reply within 10 days /enter into consultations within 30 days after receipt of such request unless otherwise agreed. • Parties fail to settle a dispute within 60 days/ Parties jointly consider that consultations have failed to settle the dispute. • Trigger the right of the complaining Party to proceed directly for establishment of the Panel.
• Who? – One or more Members (complainants) against another Member (respondent) – Possibility for third party Members to join
• Confidential process • Minimum time limits for complainant
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3rd Party in consultations
The member other than parties to the dispute may request to join the consultations if: • that member has a substantial trade interest • The party complaint against agrees to
Consultations According to Agreement at Issue
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Good Offices, Conciliation and Mediation
Establishment of panels
• To be taken voluntarily
• Request for establishment:
• Confidential and does not preclude either Party to continue dispute settlement procedures. • May be requested / terminated at any time.
– must “identify the specific measures at issue and provide a brief summary of the legal basis of the problem sufficient to present the problem clearly”
• Establishment – at the latest at the second DSB meeting at which the request is made; decided by negative consensus
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3rd party in Panel process
The member other than parties to the dispute may request to join the consultations if: • that member has a substantial interest (different to the consultations stage)
Panels • Where the Members concerned cannot find a mutually agreed solution through consultations, the DSB must, at the request of a party to the dispute, establish a panel of three to five independent trade experts appointed on an ad hoc basis. • The panel must review the factual and legal aspects of the case and submit a report to the DSB.
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Terms of reference and composition of panels
Functions of the Panels
Terms of reference: (Article 7 DSU) • Standard, or • Special terms of reference
Panel Composition: (Article 8 DSU) • “well-qualified government and/or non-governmental individuals” • Secretariat proposals • indicative list of panelists • nomination by DG
“…a panel should make an objective assessment of the matter before it, including an objective assessment of the facts of the case and the applicability of and conformity with the relevant covered agreements…”
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Panel Procedures • Oral hearings (usually 2), on basis of written submissions • Descriptive part of report issued to parties • Interim review based on draft report • Final report issued to parties • Final report circulated to all Members
Dispute Settlement in the WTO: Panel Procedures: deadlines Composition of a panel
Establishment of a panel
max. 6 months
Final Report circulated
max. 9 months
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Panel Procedures: other sources of input
Panel Procedures: duration
– Third parties have make presentations • need “substantial interest” (Article 10 DSU)
– Panels may seek • factual information from any relevant source (Article 13
• As a general rule, 9 months from establishment of panel to consideration of report for adoption (if no appeal)
DSU)
• scientific or technical advice from an Expert review group (Appendix 4 DSU)
– Requirement of confidentiality (Article 14 DSU)
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Adoption of Panel Reports • Adoption within 60 days of circulation, by negative consensus…. • Unless either/ both parties appeal
Dispute Settlement in the WTO: Appellate Body Members • A standing body of 7 Members • Appointment by DSB • 4-year term, renewable once • Requirements – authority and expertise in international trade law – “unaffiliated with any government” 24
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Dispute Settlement in the WTO: Appellate Procedure
Appellate Body • Appellate Body composed of a permanent group of seven experts in trade issues and trade law. Three of them (called a Division) serve on any one case.
• If a party files an appeal against the report of the panel, the Appellate Body shall review the issues of law only • Only parties to the dispute (not 3rd party) can appeal
• Notice of Appeal • Written Submissions 60/90 days
• Oral Hearing • Exchange of Views • Circulation of the Report 26
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Appellate Review : report and
adoption Report of the Appellate Body: • “may uphold, modify or reverse the legal findings and conclusions of the panel” (Art. 17.12 DSU)
• Adoption of Appellate Body report: by negative consensus within 30 days of circulation to Members
Implementation • DSB adopt the Appellate Body report • The party complaint against must bring the certain measures or actions into conformity with WTO regulations within “Reasonable Period of Time: RPT” • RPT length is within 15 months or not later than 18 months.
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Dispute Settlement in the WTO: Implementation
Non-Compliance • In case rulings are not implemented within the RPT, the parties to the dispute shall enter into negotiations on mutually acceptable compensation. • If no such compensation has been agreed upon within 20 days after expiry of the RPT, complaining party may seek authorisation from the DSB to suspend concessions or obligations vis-à-vis the party complaint against.
• What if it cannot be implemented immediately? Determination of “reasonable period of time” for implementation (Guideline: 15 months)
• Is it properly implemented? If there is disagreement, refer to compliance panel (original panel preferred) under Article 21.5
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Dispute Settlement in the WTO: Surveillance and Implementation
Disputed Compliance • Complaining party may request the original panel (Compliance Panel) to consider whether the alleged measures has been correctly implemented • The compliance panel should circulate its report within 90 days after such request.
• Surveillance by the DSB: Status reports on implementation • If Member fails to bring measure into conformity within reasonable period of time, possibility of temporary measures : compensation or “suspension of concessions” (retaliation)
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Dispute Settlement cases of Thailand under DSU
Dispute Settlement in the WTO: Facts and Figures
• Thailand brings dispute cases to WTO, till now; 19 cases (including as a 3rd party) • Dispute cases recently ended (1) EC-Sugar (2) EC-Salted boneless chicken cuts
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Requests for consultations:
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Mutually agreed solutions:
•
Panels established:
148
•
Panels composed:
129
•
Panel reports:
110
•
Appellate Body reports:
68
•
Compliance panels:
23
•
Appeals from compliance panels:
14
•
Arbitrations on "retaliation" :
16
•
Authorizations to "retaliate" :
7
363 83
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Dispute Settlement in the WTO Trends? • • • •
Increasing composition of panels by DG Increasing number of compliance cases Decreasing rate of appeal Increasing use of dispute settlement system by developing countries • Private lawyers / pro bono / ACWL
Case Studies DISPUTES ON AGRICULTURE PRODUCTS
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Parties • Complainants: • Respondent: • Third Parties:
Brazil and Thailand EC Brazil (in complaint by Thailand), China, Thailand (in complaint by Brazil), U.S.
Product at issue
EC Customs Classification of Frozen Boneless Chicken Cuts
frozen boneless chicken cuts that have been deeply and homogeneously impregnated with salt, with the salt content of 1.2%-3%
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Background • On July 2002, the EC enacted the new regulations resulting in reclassifying frozen boneless chicken cuts impregnated with salt from item no. 02 10 90 20 which are subject to a final bound duty rate of 15.4% ad valorem to item no. 02 07 41 10 which are subject to a bound specific rate of 1024 ECU/T (or approx. 53%). • The EC considered that “salting” within the meaning of heading 0210, is a process used for long-term preservation.
Complainants’ argument Through EC regulations, the EC acted inconsistently with GATT Article II by according less favorable treatment to the products at issue that provided for in the EC Schedule.
The main issue
• Whether the concession includes the requirement that salting is for preservation and, more particularly, is for long-term preservation
– Complainants: the preparation – Respondent: the preservation
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The Panel/AB’s consideration
Findings (1)
• The Vienna Convention Art.31 and 32 – Ordinary meaning – Context – Matters to be taken into account together with the context: Subsequent practice – Object and purpose – Supplementary means of interpretation
• The term “salted” includes the product at issue. • Reject the EC’s argument that the key element of heading 0210 is the preservation. • The product at issue is covered by the concession contained in heading 0210 of the EC’s schedule.
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Findings (2)
Implementation
• The EC measures treat the products at issue as if they are under heading 0207 and subject them to the tariff which is potentially higher than that provided in heading 0210 and which has exceeded the tariff rate set out in heading 0210.
• The EC shall bring its measure into conformity with its obligation under the GATT by 27 June 2006. • The EC has published Commission Regulation (EC) No.949/2006 adopted on 27 June 2006 in order to bring its measure into conformity.
• The products at issue are not being accord the treatment provided for the heading 0210 of the schedule. The EC is, thus, violated Article II GATT.
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Parties • Complainant: • Respondent: • Third Parties:
Peru EC Canada, Chile, Colombia, Ecuador, Venezuela, U.S.
Product at issue • Sardina pilchardus Walbaum • Sardinops sagax sagax
EC Trade Description of Sardines
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Background • The EC has adopted Council Regulation (EEC) No.2136/89 of 21 June 1989 laying down common marketing standards for preserved sardines. • The regulation concerned prevents Peruvian exporters to continue to use the trade description “sardines” for their product. • Peru claimed the Codex Stan 94 as a relevant international standard to be used as the basis for the regulation.
Complainant’s argument The EC regulation at issue is inconsistent with Article 2.4 of TBT Agreement as the EC did not use the naming standard provided in Codex Stan 94 as a basis for its Regulation even though that standard would be an effective and appropriate means to fulfil the legitimate objectives pursued by the Regulation.
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Points of Consideration (1)
Points of Consideration (2)
• Whether the EC regulation at issue is a technical regulation under the TBT Agreement. • Whether the Regulation does not contain a labeling requirement and does not concern preserved Sardinops Sagax. • Whether Codex Stan 94 is a relevant international standard.
• Whether Codex Stan 94 is used as a basis for the technical regulation. • Whether Codex Stan 94 would be an ineffective or in appropriate means for the fulfilment of the legitimate objectives pursues.
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Findings The EC Regulation is inconsistent with Article 2.4 of the TBT Agreement.
of US Certain Shrimp and Shrimp product Import Prohibition
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Parties • Complainants: • Respondent: • Third Parties:
Background India, Malaysia, Pakistan and Thailand U.S. Australia, Colombia, Costa Rica, El Salvador, EC, Guatemala, Hong Kong, Japan, Mexico, Nigeria, the Philippines, Senegal, Singapore, Sri Lanka, Venezuela
The U.S. enacted Section 609 of Public Law 101-102 which prohibits the importation, to the U.S., of shrimp harvested, in all foreign nations, with technology that may affect certain sea turtles unless such harvesting nations are certified that they use the means specified in the Guideline which includes turtle excluder devices (TEDs) or other regulatory program comparable to that of the U.S..
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Complainants’ argument The embargo applied by the U.S. on the basis of Section 609 constitutes a prohibition or restriction on the importation of shrimp or shrimp products under Article XI:1 GATT.
The main issues • Whether the U.S. prohibition on imported shrimp and shrimp products violates Article XI GATT • Whether the import prohibition is not justified under Article XX GATT
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The Panel/AB’s considerations (1) • Under Article XX GATT, it must be first determined whether a measure is justified under one of the subparagraph (a) – (j). If it is, the measure must then be evaluated for compliance with Article XX chapeau.
The Panel/AB’s considerations (2) (1) Article XX(g) GATT • the sea turtles constitute “exhaustible natural resources”. • Section 609 is a measure “relating to” the conservation of an exhaustible natural resources. • Section 609 is a measure made effective in conjunction with the restrictions on domestic harvesting of shrimp.
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The Panel/AB’s considerations (3)
The Panel/AB’s considerations (4)
(2) Article XX Chapeau
The 1st requirement:
“ The purpose and object of the Article XX chapeau is generally the prevention of abuse of the exceptions of Article XX. The language of the chapeau makes clear therefore that each of the exceptions in the Article XX, paragraph (a)-(j) is a “limited and conditional” exception from the substantive obligations contained in the other GATT provisions.”
“ Such measures are not applied in the manner which would constitute a means of arbitrary or unjustifiable discrimination between countries where the same conditions prevail..”
The application of the U.S. measure
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The Panel/AB’s considerations (5)
The Panel/AB’s considerations (6)
• The U.S. measure is applied in the manner which would constitute a means of “unjustifiable” discrimination between the countries where the same conditions prevail.
• The U.S. measure constitutes “arbitrary discrimination” between the countries where the same conditions prevail.
- Unilateral nature of the decision-making respecting the grant, denial or withdrawal of certification. - The failure of the U.S. to provide the serious, across-theboard negotiations. Etc.
- Impose a single, rigid and unbending requirement - Little or no flexibility in how officials make the determination for certification. - No transparency, predictability in certification process.
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Findings
References
• The prohibition constitutes “arbitrary” and “unjustifiable” discrimination under Article XX chapeau.
• www.worldtradelaw.net • www.wto.org
• Therefore, the U.S. prohibition cannot be justified by Article XX and the violation of Article XI cannot be justified.
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