Contents
Contents…………………………………………………………………………………….Page Numbers
Abstract………………………………………………………………………………………………3
Introduction………………………………………………………………………………………….4
Part I
The Establishment and Workings of the GATT/WTO…………………………………………5
WTO…….……………………………………………………………………………………………6
Part II
WTO dispute settlement without enforcement powers & recommended solutions………..8
Retroactive Retaliation……………………………………………………………………………9
Part III
The Purpose of WTO Dispute Settlement Remedies………………………………………….10
Part IV
Suggestion to Improve Dispute Settlement Remedies…………………………………………9
Conclusion and Recommendation………………………………………………………..…….12
References…………………………………………………………………………………………..13
Abstract
The dispute settlement process under the World Trade Organization share common mechanism as the public international law regarding the remedies available to affected members. The structure and remedies of WTO dispute settlement can be related to the ones in public international law. The International Law Commission’s draft on the Responsibility of States on International Wrongful Acts referred herein as the ILC Draft. There are only three remedial measures that the international law recognizes; a) Cessation, non-repetition, reparation and specified countermeasures while the WTO international law provides for withdrawal of any inconsistent measures that a violating member has failed to effect or offer compensation as remedy. The other form of remedy involves retaliation in the form of suspension of concessions or obligation and benefits that may accrue to the member that has violated the provisions of the WTO. The withdrawal of inconsistent acts or measures in WTO as provided for in the remedial measures of cessation and non-repetition that are available on the provisions of ILC Draft under Article 30. These paper outlines the dispute settlement remedies, there purpose and importance, achievements and ways of improving their effectiveness by reviewing the research work and publications of WTO reviews and various scholars in the field of international law.
Introduction
Part I. The Establishment and Workings of the GATT/WTO
After the end of the World War II, the nations that emerged victorious agreed to create international institutions that would prevent any disagreements international in an effort to eliminate all the probable causes of war. The basic principles were founded to resolve or prevent the outbreak of war through the implementation of the United Nations charter that recommended the elimination of all economic causes that may result to war by the establishment of three institutions to deal with international economics. The three institutions are what we currently refer to as the Bretton Woods System and these were: The World Bank, the International Monetary Fund (IMF) and the International Trade Organization (ITO). All the three institutions were based on neoliberalism economic principles. However, the US congress opposed the formation of the International Trade Organization on the basis that it required too much sovereignty to be ceded to an international foreign body but it supported the formation of the World Bank and the International Monetary Fund.
The ITO never kicked off but the provisional agreements that had been under the General Agreement on Tariffs and Trade (GATT) were adopted and the organization was restructured to an organization for establishing, enforcing and also implementing the international trade rules and dispute settlement in 1947. In 1995, the agreement on international trade in goods evolved to the World Trade Organization.
GATT 1947, excelled in lowering the tariffs which were a major barrier or stumbling block to international trade. The first five multilateral trade negotiations were very successful and trade barriers were substantially reduced. However, the problem of non tariff barriers brought more complications of protectionalism. GATT resolved these issues by engaging in multilateral trade negotiations and dispute settlements. The dispute settlement was however very weak as the losing party could avoid any consequences by simply blocking the adoption of a remedial or adverse decision. The initial multinational trade negotiations managed to successfully reduce the average trade tariffs from 50 to 12%.
The Kennedy Round dealt with the provisions of article 36 – 38 in part IV where the special and the differential treatment of developing countries problem were addressed. The Tokyo Round dealt with the antidumping and internal subsidies and other factors that implied general preferences and which were collectively considered as non trade barriers.
The Uruguay Round was actually the eighth Round and which actually established the WTO. The resolutions also amended the GATT, 1947 to GATT, 1994 which collectively governs the trade goods while also adding an extra twelve agreements to the amended GATT, 1994.
The Uruguay Round added more agreements and also expanded the trade in Goods by adding the General Agreement on Trade in Services (GATS) and the Trade Related Aspects of Intellectual Property (TRIPS). The other agreements were the agreement on Agriculture, the Agreement on Application of Sanitary, Agreement on Technical Barriers to Trade (TNT) and Phytosanitary Measures (SPS)
The Dispute Settlement Understanding (DSU) is founded on a three pillar or tier adjudication process whose major objective is to resolve trade disputes.
A complainant usually one of the member states seeks the attention of the organization in determination of the legality of an action of a member as a violation to the provisions of the WTO.
The Dispute Settlement Understanding is an ad hoc panel that consists of five trade law experts and who not related to the parties in terms of their nationalities. These professionals make recommendations and decisions on the factual and also legal matters that affect the organization and the disputing member states.
The decisions of the ad hoc panel are subject to WTO Appellate Body at the option of the aggrieved party and which consists of seven trade law experts. The decisions of the Appellate Body are automatically adopted by WTO Dispute Settlement Body but can be rejected by a consensus from WTO members (Choi, 2007).
The World Trade Organization Dispute Settlement Understanding working procedures involves the formation of a panel by a WTO member after unsuccessful consultations. The Director General of the WTO upon receipt of the petition by a member state establishes a panel. The panel is charged with the responsibility of receiving all the relevant evidence, written arguments and justifications from the disputing parties. After examining all the evidence and all the documentary information available the panel makes a recommendation to the World Trade Organization Dispute Settlement Body (DSB) which automatically adopts the report unless there is a unanimous consensus or agreement against the adoption of the report. The Appellate Body may be allowed to review the decisions based on the questions of law upon an appeal by any member state.
The DSB is charged with the responsibility of overseeing the implementation of the process through the Appellate Body and the panel. According to DSU Article 19:1, the Appellate or the panel shall recommend to the member state to rectify any inconsistency in actions that are against GATT to conform to the provisions of the WTO.