2. WTO dispute settlement Flashcards
DSU (Dispute Settlement Understanding) is based on those Articles of GATT:
- Article XXII Consultations- Provides for preliminary (wstepne) consultations between countries to resolve disputes before formal action is taken
- Article XXIII: If no resolution is reached through consultations, the dispute is referred to the Contracting Parties (i.e., WTO members) for further action
Articles XXIII- Prerequisites for filling a case
1. Nullification or Impairment: A country feels like it’s not gettingthe trade benefits it expected from WTO agreements.
2.Non-violation Complaints: This happens when a country takes a legal action (like introducing a new law or policy) which doesn’t technically violate any WTO rules, but still disrupts the balance of trade between countries
DSU Art. XXIII- the process
1. Members must follow the DSU process, they can’t take matters into their own hands
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2. The Formal Procedures:**
* Consultations: trying to resolve the issue through informal discussions
* Panel: reviews case and reports with its findings
* Appelate Body: reviews the Panel’s finding (if one of the parties wants it to) and makes a final ruling
3. Compliance with Panel or AB: Countries must follow the rulings
4. What happens if a country doesn’t comply?
If no adjustments after reasonable period, other party may be allowed to suspend trade concessions to offset the damage, however it needs such countermeasures must go through proper procedures first to be legal and fair
Improvements of DSU in the Uruguay Round
- Clear timelines for dispute resolution
- A permanent Appelate Body
- Negative Consensus Rule (in setting up a Panel)
- Multilateral surveillance- system monitoring wheter countries are following through on the decisions made in disputes
DSU Timeframe
9-12 months, depends if AB or no AB
Appeal in DSU
AB as a second instance to review cases. Focuses only on legal legitimacy, doesn’t reconsider facts established by Panel
Decision Making in DSU
Usually not by formal voting, but throuhg unopossed consensus. In certain sensitive cases the negative consensus rule applies, NO WIDESPREAD OPPOSITION= DECISION GOES FORWARD
Once Panel’s or AB’s decisions are adopted by DSB, its findings are automatically binding
Implementation phase in Dispute Settelment (compensating)
A dispute is considered settled whether through
* a final agreement between parties
or
* by the implementation of the Panel/AB’s recommendations
What enforcement for Panels/AB’s rulings?
1. Communication by losing party: withing 30 days, losing party declares how it will comply and may request up to 15 months for compliance agreed by parties or decided through arbitration
2. Non-compliance measures:
* Compensation Agreement- a temporary deal between parties. Temporary measures end when the losing party removes the inconsistent measure or a satisfactory solution is reached
* Suspension of concessions: The winning party may impose trade restrictions authorized by the DSB to offset the damge
Case of European Union not wanting Hormone Beef without proper risk assesments about its health dangers
Resolution: EU agreed to import quotas of high-quality meat
US and Canada lifted some sanctions
In 2017 Canada and EU reached final agreement through CETA negotiations
WTO and MPIA
Trump administration boycotted the WTO by blocking new judge appointments to its AB
in december 2019, AB became non-functional with only 1 judge left
in 2020 MPIA temporarily established instead of AB; signed by 54 members
WTO Agreements and EU law
The European Court of Justice has consistently ruled that WTO agreements do NOT have a direct effect in EU law
GATT is seen only as framework for negotiated solutions between countries in case of trade disputes
Allowing direct effect would reduce EU’s institutions’ discretion and create imbalances with WTO partners who do not grant direct effect to WTO rules
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EXCEPTIONS**:
1) When the EU explixitly implements a WTO obligation
2) When an EU measure explicitly refers to WTO provisions
