The dispute settlement mechanism of the World Trade Organisation (WTO) was hailed as the jewel in the crown at the time of the formation of the WTO. Having observed its functioning over the past 10 years, do you think it has lived up to that expectation?
The general consensus is that the WTO dispute settlement system (DSS) has worked reasonably well in the last 10 years. From the perspective of developing countries, a multilateral DSS is better than a bilateral DSS in which powerful trading states will always have the advantage. But this understanding needs to be viewed against the background of the fact that the multilateral trade rules themselves are often biased against developing countries. A rigid and legalistic multilateral DSS may only entrench them further.
There are also some other worrisome developments. First, given the wide range of ambiguities that characterise WTO agreements, scholarly writings play an important role in shaping the interpretations of the WTO appellate body (AB) and the panels. In this regard, the absence of scholarly work from the developing world has meant that interpretations that are in the interests of northern states and citizens tend to prevail. Cases on the interface between trade and the environment (for example, the shrimp-turtle case) and the EC preferences case are instances in point.
Second, while time schedules are set in the Dispute Settlement Understanding (DSU), the goal of prompt settlement of disputes is still to be achieved. Safeguard cases are an example. It takes nearly three years to settle them, causing much damage when it is noted that all existing WTO remedies are prospective.
Finally, as scholars like Peter Drahos have noted, bilateral dispute settlement systems are being established through the means of free trade agreements (FTAs) around the same normative universe as that of WTO rules. This may, in the long run, undermine the WTO DSS by effectively offering multiple dispute settlement forums to the more powerful states. They will invoke that which is most suitable to realising their “trade” interests.
Critics of the dispute settlement body (DSB) in the WTO have argued that it has not been able to achieve compliance, especially by developed countries. Do you agree with this criticism of the DSB? Do you think the retaliatory mechanism given in the DSB comes in the way of developing countries retaliating against developed countries?
I would tend to agree that developing countries are at a disadvantage when it comes to retaliating against the major trading partners, as the act of retaliation lacks credibility. There is also the fear of big trading partners reacting by withdrawing unilateral trade preferences or suspending foreign aid. Thought can, therefore, be given to variations of a decades-old proposal that would permit some form of collective retaliation by developing countries.
Many developing countries and least developed countries are unable to approach the DSB due to the high litigation costs and lack of expertise at the domestic level. What is the solution to this problem?
Lack of expertise is a serious problem even for major developing countries like India and Brazil that have been active users of the WTO DSS. Brazil has tried to address the problem through innovative methods like public-private partnership to enhance its long-term capabilities. Too much reliance should not be placed on foreign experts and law firms, or else indigenous expertise will never be developed. In this respect, it is important that developing countries take part in a large number of cases, especially as third party, in order to generate greater understanding of the system.
On the issue of litigation costs, there is little doubt that steep legal fees can pose an insuperable barrier. In a number of cases, developing countries have had to spend over $ 1,000,000 by way of legal fees. The Advisory Centre for WTO Law does provide subsidised assistance, but it is not all that cheap or entirely effective. Thought may be given to a proposal to award costs to a developing country when it wins a case.
Do you foresee the possibility of more and more disputes coming to the DSB in future, especially in today’s scenario where the Doha Round of talks has been suspended?
It is difficult to predict the number of disputes that will come before the DSB. On the one hand, the fact that a settled jurisprudence is emerging will mean fewer cases. On the other hand, states may pursue the dispute settlement route to delay bringing their laws in line with obligations under WTO agreements, or to safeguard special interests.
What should be the strategy of developing countries such as India in the ongoing negotiations on DSB in the suspended Doha Round?
India should, first, carefully assess its record before the DSB. While India has lost some cases (the patent and the QR cases) it has also been able to use the DSS to gain market access (for example, the EC bed linen case). From this it may be concluded that India is quite satisfied with the workings of the WTO DSS. Consequently, India has proposed minimal changes to the existing DSU (for example, calling for only one six-year term for AB members) to strengthen the system.
I would, however, recommend that thought be given to bringing about a structural change in the WTO DSS in order to strengthen it in favour of developing countries. It has been my argument for some time that India seek an extension of the national deference principle contained in Article 17.6 of the Antidumping Agreement to all other WTO agreements, as a special and deferential treatment for developing countries.
The national deference principle allows a state to implement its WTO obligations in a more flexible way, as it deems lawful any interpretation that falls within the definition of being a “permissible interpretation” of the concerned obligation even if a WTO panel or the AB reaches a different conclusion. This would make it possible for developing countries to safeguard the interests of their people through availing of a more flexible mode of interpretation of obligations that have been undertaken. |
