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UWI Study TourUWI Study Tour 7 May 20087 May 2008

Presented by:Jan Yves Remy

Appellate Body Secretariat

Enforcing the Agreements:Enforcing the Agreements:DDISPUTE ISPUTE SSETTLEMENT IN THE ETTLEMENT IN THE

WTOWTO

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Structure of the WTO AgreementStructure of the WTO AgreementWTO Agreement

GATT

GATS

TRIPS

TradePolicyReview

DisputeSettlement

A A

A A

A A

A A

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• Agriculture

• Sanitary and Phytosanitary Measures

• Technical Barriers to Trade

• Trade-related Investment Measures

• Anti-Dumping

• Rules of Origin

• Valuation

• Import Licensing

• Subsidies and Countervailing Measures

• Safeguards

WTO

GATTGATSTRIPS

TPRMDSU

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Dispute Settlement under the GATT 1947Dispute Settlement under the GATT 1947

• Articles XXII and XXIII of GATT 1947Articles XXII and XXIII of GATT 1947– Very limited rules– Central concept was “nullification and impairment” of

benefits flowing from the agreement

• Diplomatic character of dispute settlementDiplomatic character of dispute settlement:No judicial arm, rather all matters were within powers of GATT Contracting Parties

• ““Evolved” practice under GATT 1947Evolved” practice under GATT 1947

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Dispute Settlement in the WTO: AimAim

• Dispute Settlement Understanding:Dispute Settlement Understanding:– Mechanism aimed at securing compliance with

the Covered Agreements (CA)

– Preserves the rights and obligations of Members under the CA (Art 3.2 DSU)

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New innovations of the DSUNew innovations of the DSU

• More detailed procedures for the various stages of dispute

• Appellate review of panel reports and surveillance of implementation by the DSB

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Dispute Settlement in the WTO: ObjectivesObjectives

To secure a “positive solution” to the dispute.(Art. 3.7 DSU)

• Preferred outcome:Preferred outcome:– To reach a mutually agreed solution

• If not,If not,– Panel Proceeding ….– [….and AB review.]

• And then,And then,– Implementation, or ….– Retaliatory trade sanctions may be imposed

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Dispute Settlement in the WTO: ScopeScope

• An integrated An integrated systemsystem:

• Applies to all the WTO multilateral agreements (Appendix 1)

• 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:Dispute Settlement in the WTO: Main FeaturesMain Features

• compulsory jurisdictioncompulsory jurisdiction• detailed procedures and deadlinesdetailed procedures and deadlines• ““complainant-driven”complainant-driven”• ““quasi-judicial”quasi-judicial”• ““automaticityautomaticity”

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Dispute Settlement in the WTO:Dispute Settlement in the WTO: Main charactersMain characters

• Parties to the dispute: WTO Members onlyParties to the dispute: WTO Members only

• Dispute Settlement Body (all the Members)Dispute Settlement Body (all the Members)

• Panel ( 3 or 5 panelists) Panel ( 3 or 5 panelists)

• Appellate Body (7 persons)Appellate Body (7 persons)

• WTO & AB SecretariatsWTO & AB Secretariats

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Consultations

Panel

Appeal

Implementation

Adoption

Good Offices,

Conciliation,Mediation,

Arbitration

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Dispute Settlement in the WTO: Consultations Consultations

• Who?Who?– One or more Members (complainants) against

another Member (respondent)– Possibility for third party Members to join

• Confidential processConfidential process

• Minimum time limits for complainantMinimum time limits for complainant

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Dispute Settlement in the WTO: PanelsPanels

• Establishment of a Establishment of a panelpanel: Automatic

• CompositionComposition

“well-qualified government and/or non-governmental individuals”

• 6 months or 9 months to issuance of final report

• Process confidential, report public

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Dispute Settlement in the WTO:Dispute Settlement in the WTO: The “matter” in dispute The “matter” in dispute

• The specific The specific measures at issuemeasures at issue

• The The legal basislegal basis (claims)(claims)

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Dispute Settlement in the WTODispute Settlement in the WTO:The MandateThe Mandate

Panel RequestPanel Request

Measures Claims

MandateMandate

JurisdictionJurisdiction Inform the parties Inform the parties for their defencefor their defence

Matter

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Dispute Settlement in the WTO:Panel Procedures: deadlines

Establishment of a panel

Composition of a panel

Final Report circulated

max. 6 months

max. 9 months

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Dispute Settlement in the WTO:Dispute Settlement in the WTO:Adoption of Panel Reports

Art. 16 DSUArt. 16 DSU

• Panel reports not considered for adoption until 20 days after circulation

• Adoption within 60 days of circulation, unless negative consensus….

… Except Except if if appealedappealed

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Dispute Settlement in the WTO:Dispute Settlement in the WTO: Appellate Review

• WTO dispute settlement system innovation

• Rules applicable to Appellate Review

– Dispute Settlement Understanding(Article 17; Article 16.4; Articles 1, 3, 18 and 19)

– Working Procedures for Appellate Review

– Rules of Conduct

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Dispute Settlement in the WTO: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”

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“broadly representative of membership” – Art. 17.3 DSU

Dispute Settlement in the WTO:Dispute Settlement in the WTO: Appellate Body Members

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Dispute Settlement in the WTO: Appellate BodyAppellate Body

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Dispute Settlement in the WTO:Dispute Settlement in the WTO: Article 17 DSUArticle 17 DSU

• WHAT?WHAT? appeals limited to “issues of law and legal appeals limited to “issues of law and legal interpretations” developed by the panel, including interpretations” developed by the panel, including “cross-appeals”“cross-appeals”

• WHO?WHO? appeal only open to parties to the disputeappeal only open to parties to the dispute

• WHEN?WHEN? Appeal must be commenced no later than Appeal must be commenced no later than 60 days after the Panel Report is circulated to 60 days after the Panel Report is circulated to Members; takes 60-90 daysMembers; takes 60-90 days

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• Notice of Appeal Notice of Appeal

• Written SubmissionsWritten Submissions

• Oral HearingOral Hearing

• Exchange of Views Exchange of Views

• Circulation of the ReportCirculation of the Report

Dispute Settlement in the WTO:Dispute Settlement in the WTO: Appellate ProcedureAppellate Procedure

60/90 days

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Outcome of AppealsOutcome of Appeals

16%

82%

2%

upheldmodifiedreversed

Number of appeals to date < 78Frequency of Appeals: 66 %

Outcome of Appeals:

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Caribbean participation in appealsCaribbean participation in appeals

WTO Member Appellant/

Appellee

Third

Party

Antigua and

Barbuda

2 0

Barbados 1

Dominica 2

Grenada 1

Guyana 1

Jamaica 3

St. Kitts and Nevis 1

St. Lucia 2

St. Vincent and the Grenadines

1

Trinidad and Tobago 1

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• Adoption by the DSB of the Panel Report, as upheld, modified or reversed, by the Appellate Body Report

• Within 30 days circulation (60 days if no appeal)

• Negative consensus

Dispute Settlement in the WTODispute Settlement in the WTO: Adoption by the DSBAdoption by the DSB

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Dispute Settlement in the WTO: ImplementationImplementation

• What if it cannot be implemented What if it cannot be implemented immediately?immediately?

Determination of “reasonable period of timereasonable period of time” for implementation (Guideline: 15 months)

• Is it properly implemented?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 ImplementationSurveillance and Implementation

• Surveillance by the DSBSurveillance by the DSB: Status reports on implementation

• If Member fails to bring measure into conformity within reasonable period of time, possibility of temporary measures : compensationcompensation or “suspension of concessionssuspension of concessions” (retaliation)

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Dispute Settlement in the WTO: Facts and FiguresFacts and Figures

• Requests for consultations: 363

• Mutually agreed solutions: 83

• 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

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Dispute Settlement in the WTO Selected Disputes in ProgressSelected Disputes in Progress

• Continued EC Hormones Dispute

• New Bananas dispute

• Zeroing disputes

• EC/US cases on aircraft subsidies

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Case reviewCase review

United States – Measures affecting the United States – Measures affecting the cross-border supply of gambling and cross-border supply of gambling and

betting servicesbetting services

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Major IssuesMajor Issues

• The US measures affecting the cross-border supply of gambling and betting services– 3 federal laws: Wire Act, Travel Act, Illegal Gambling

Business Act– 54 State laws, government practice

• Whether “total prohibition” on the supply of Internet gambling and betting services constitutes a numerical quota for purposes of GATS MA commitments

• Interpretation of “public morals” defence in GATT Article XX

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The PartiesThe Parties

• The complainant: Antigua and Barbuda

• The respondent: United States

• Third Parties (Panel and Appellate Body): EC, Japan, Mexico, Chinese Taipei, Canada

• Appellant/appellee: both Antigua and Barbuda and the United States

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Findings of the Panel and ABFindings of the Panel and AB

• Panel + AB: The United States’ Schedule (sub-sector 10.D) includes specific commitments on “gambling and betting services” – AB confirms, but for different reasons

• The US laws prohibiting cross-border supply constitute a numerical limitation in the form of a “zero quota ”; consequently, the laws are inconsistent with the United States’ specific commitments under Article XVI:2;

The AB confirms the Panel’s findings with respect to the federal laws, but reverses the findings concerning the State laws because Antigua failed to provide a prima facie demonstration of inconsistency.

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• The measures inconsistent with Article XVI are designed to protect public morals and maintain public order (Article XIV(a)) against money laundering, fraud, pathological gambling and underage gambling (AB confirms).

• On the other hand, the Panel finds that the measures were not necessary for that purpose in that the United States did not explore and exhaust the reasonably available WTO-consistent alternatives because it did not hold consultations with Antigua before imposing the prohibition

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• The AB rejects the Panel’s interpretation of “necessity” and finds that it was not indispensable for the United States to hold prior consultations with Antigua before taking measures to protect the public order;

• The AB upholds the final conclusion that the United States did not demonstrate that the prohibition (for example the Interstate Horse Racing Act) is applied both to foreign suppliers and domestic suppliers in a manner consistent with the requirements of a chapeau of Article XIV (prohibition of arbitrary or unjustifiable discrimination and disguised restriction).

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Current state of Gambling case?Current state of Gambling case?

• In June 2007, Antigua requests authorization from In June 2007, Antigua requests authorization from the DSB, to suspend concessions and related the DSB, to suspend concessions and related obligations of Antigua and Barbuda under the obligations of Antigua and Barbuda under the GATS and the TRIPS Agreement. GATS and the TRIPS Agreement.

• Arbitrator determined that the annual level of Arbitrator determined that the annual level of nullification or impairments is US$21 million and nullification or impairments is US$21 million and that Antigua may request authorization from the that Antigua may request authorization from the DSB to suspend obligations under the TRIPS DSB to suspend obligations under the TRIPS Agreement at a level not exceeding US$21 million Agreement at a level not exceeding US$21 million annually. annually.

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Dispute Settlement in the WTODispute Settlement in the WTO Trends?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

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Dispute Settlement in the WTO: The Doha MandateThe Doha Mandate

• Doha Declaration, paragraph 30:

– “improvements and clarifications” – Original May 2003 deadline, extended to May

2004, then July 2004 Package. Negotiations suspended second half 2006, then resumed.

• Continued negotiations outside the single undertaking, but on what basis and what timeframe?

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Dispute Settlement in the WTO: Selected Issues in the NegotiationsSelected Issues in the Negotiations

• Streamlining procedures at consultation and panel stages

• “Transparency”

• Remand

• Enhance Special & Differential treatment

• Implementation – Sequencing– Remedies (compensation, retaliation)

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Dispute Settlement in the WTODispute Settlement in the WTO Final ThoughtsFinal Thoughts

• What changes needed and how extensive?

• Relationship dispute settlement/decision-making?

• Relationship dispute settlement/rule-making (negotiations)?

• Bottom line: system is being used and is working -- security and predictability

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Information and ResourcesInformation and Resources• Legal Texts (agreements etc.):

http://www.wto.org/english/docs_e/legal_e/legal_e.htm

• Panel and Appellate Body Reports:http://www.wto.org/english/tratop_e/dispu_e/distabase_e.htmhttp://www.wto.org/english/tratop_e/dispu_e/distabase_e.htmhttp://www.wto.org/english/tratop_e/dispu_e/gt47ds_e.htmhttp://www.wto.org/english/tratop_e/dispu_e/gt47ds_e.htm

• Official WTO Documents:http://docsonline.wto.org/gen_home.asp

• Advisory Centre on WTO Law:http://www.acwl.ch

• Register for news and informationhttp://www.wto.orghttp://www.wto.org (at very top of the page, click “register”)