WTO Dispute Resolution by wuyunqing


									U.S. & WTO -- Trade Litigation & Global Governance (1995-2010)

                  [Actual Practice 1995 – 2005]

                    Stuart S. Malawer, J.D. Ph.D.
               Distinguished Professor of Law & International Trade,
                            George Mason University.


                                       (2011)                          1
I.     Introduction & Some Questions.
II.    Basics of the WTO.
III.   Basics of the DSU.
IV.    Practice: 1995 – 2005.
V.     Observations & Research Note.
VI.    Closing Quotes.

                   (2011)               2
I. Introduction & Some Questions.

              (2011)                3
What has been the Experience of the WTO / DSU Litigation Process
                        over 10 Years?

                                                •   Main Question: What has been
                                                    the U.S‟s experience in WTO
                                                    litigation in light of its initial
                                                    expectations & concerns?
                                                     – Impact on U.S. sovereignty.
                                                     – Developing a rule-based
                                                       system that would enhance
                                                •   Question Two: Expectations /
                                                    concerns & experience of other
                                                     – To restrict U.S. unilateral
  • Since 1995 (as of Oct. 2004) ---                   action
      – 27,000 pages of case law.                    – Fear DSU used against them.
      – 315 cases filed.                             – U.S. wouldn‟t observe
      – 82 decisions.                                  decisions.

                                       (2011)                                     4
•   Additional Issues :
      – Issues decided by the DSU?
      – Role of consultations?
      – Compliance / Sanctions.
•   Lessons from the 15-Year history (1995 – 2010)?
      – Experience in light of expectations.
      – For the U.S., other states, trading system.
•   Method: Not a review of jurisprudence, but of actual practice. (Recent
    statistical studies.)

                                  (2011)                                     5
WTO Litigation in the News.

    U.S. Files Two Cases Against
USTR Seeks to Level Playing Field for American Companies and
       Workers in Steel Industries, Financial Services
           U.S.T.R. Press Release (Sept. 15, 2010)

Brussels Claims WTO Panel Backs
      Case Against Boeing.
             Financial Times (September 16, 2010)

                           (2011)                              6
    Recent U.S. – China Litigation Activity (Dec. 2010 – Feb. 2011) .

   The USTR filed two new cases concerning China's dumping charges
    (steel) and various market access restrictions (electronic payments).
    Feb. 2011.
   WTO ruled in favor of U.S. against China‟s concerning various export
    restrictions. Feb. 2011.
   The USTR files a new case against China concerning its subsidies in
    clean energy industry (wind turbine). December 2010.
   U.S. wins WTO case that China brought against it over U.S.
    safeguard measures on tire imports from China. December 2010

                                 (2011)                                     7
      Wall Street Journal (March 24, 2010).

U.S. Wins WTO High-Tech Case with EU
           USTR News August 16, 2010.

                    (2011)                    8
Wall Street Journal (Sept. 15, 2009).

 New York Time (Feb. 5, 2010)

         (2011)                         9
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             “Trade wars arise when you don‟t
           have dispute settlement mechanisms.”

    .….…………. Deputy USTR Karan Bhatla in China
    discussing U.S. – China trade relations. Financial Times 1: 2 (March 22, 2006).

 “Three significant issues will determine the future of the WTO: dispute
settlement, negotiations, and regional integration. Dispute Settlement is
widely regarded as one of the major successes of the WTO in its first
ten years.”
        ………….. The WTO in the 21st Century (WTO 2007).

“The shift from bilateral enforcement helps secure the legitimacy of the
 trading system and reduces the political costs associated with bilateral
dispute settlement.”

        ……….. The U.S. & the WTO Dispute Settlement System (2007).

                           (2011)                                                     14
With President Clinton‟s leadership the WTO
    agreements were implemented by a
  Republican controlled Congress in 1995.

                 (2011)                       15
               Significance of the WTO.

“No review of the achievements of the WTO would be complete
 without mentioning the Dispute Settlement system, in many ways the
 central pillar of the multilateral trading system and the WTO‟s most
 individual contribution to the stability of the global economy.”

          …… Renato Ruggiero, WTO Director-General, April 17, 1997.

                                (2011)                                16
             “For the first time in history … (the WTO) applies principles of
fairness, open-dealing and mutual benefit by „law‟ to trade relations between
sovereign economies …. (It is) a unique global effort to maintain peace in world
trade ….The WTO is the only international body dealing with the rules of trade
between nations …. Few areas of international relations see more passion, hot
tempers and bitter argument than trade and commerce.”
             ……. Peter Gallagher, “Guide to Dispute Settlement” (2002).

“[T]rade lobbying through the WTO (via) is its legal dispute settlement system …
          allows even the smallest country to take on the largest ……..”

      …….”Trade Advocacy …. ” Financial Times (Sept. 20, 2005).

                                    (2011)                                         17
“One of the main successes in the operation of the WTO dispute
settlement mechanism has been that in every single case where a
panel or an Appellate Body recommendation has been adopted to
date by the DSB, Members have either already complied with such
recommendations or have expressed their intention to comply.”
              ……. WTO Annual Report (2003).

  “The dispute settlement system of the WTO is one of the most
important elements of a rules-based multilateral trading system.”
   …Key Issues in WTOP Dispute Settlement – 10 Years.” (Yerka,

                             (2011)                                 18
                       The Future of the WTO (2005)
                         (Consultative Board to the D-G).

 “The WTO (is) now a major player not only in the conduct of     trade relations but in
                                 global governance.”
                 …. Supachai Panitchpakdi (Director-General, WTO)

“There is no doubt that this jurisprudence will have an effect on general international
               law broader than the borderlines of the WTO system.”

“The current WTO dispute settlement procedures …are a very significant and positive
   step forward in the general system of rules-based international trade diplomacy.”

“The WTO represents the most dramatic advance in multilateralism since the 1940s.”

                                         (2011)                                           19
 “The WTO as an institution has become one of the centerpieces of the
 international economic order – but that order is changing rapidly …. In this
 century, the organization will face an increasingly complex trading
 environment ….”

              ……….. Barton, Goldstone, Josling & Steinberg, THE EVOLUTION
                  OF THE TRADE REGIME xiii, 215 (Princeton 2006).

 “The WTO is central to trade relations today. The dispute resolution system is at
its core. This system is expanding as is the concept of global trade. That concept
 is expanding to include ever newer areas traditionally viewed as non-trade and
                            only of domestic concern.”
                           …….. Stuart Malawer (2006).

    WTO jurisdiction is compulsory for all WTO Members. No Member may
      oppose the initiation of a dispute settlement procedure by another
      Member: in other words, that Member must submit to WTO law.
                          …………. Lamy Pascal (2006)

                                     (2011)                                          20
                           Questions to Consider.

•   In 1995, what was established by the WTO & other Uruguay Round agreements?
    What has been the actual experience in light of the expectations at that time?
•   What is the relation of the DSU (adjudicating trade rules) with the negotiation
    process of the WTO (rule making) in establishing a rule-based trading system?
•   What are the basic provisions of the DSU?
•   Do adverse decisions override domestic law? Issue of sovereignty.
•   What has been the actual practice of the panels and AB? (What can be learned
    from the panel & AB decisions?)
•   What has the U.S. record been before the DSU? Record of other countries?
•   What about the newer cases – Airbus, “2007-2009 U.S. - China Trade Offensive”?
•   What about “retaliation” and “sanctions” and the U.S. compliance with adverse
•   What observations can be made at this time?
      – Role of negotiations or litigation in global trade relations?
      – Use of DSU by other states? EU? India? China? LDC‟s?
•   What are the benefits of litigation & legalization of the trading system for global
    governance of international economic relations? Any downside?

                                     (2011)                                       21
         Additional Questions.

• Use of the system by the United States?
• “Litigation” lessons (probability of success)?
• Use of the system by countries generally?
• Use of the system by member countries:
          » Legal implications for the global trade system &
             those countries?
• Significance of consultations?
          » “Rule development” for trade system v.
             “individual case settlement”?
• What other data to look at in the future?
          » Pending Cases (active panels and appeals)
          » Settled Cases (consultations / inactive panels)
• What is the issue of legalization or negotiation in the DSU?
  Transparency or secrecy (traditional Diplomacy)?
• Any new changes under President Obama?

                        (2011)                                   22
II. Basics of the WTO.

         (2011)          23
                  ACCOMPLISHMENTS OF THE
                      URUGUAY ROUND.

•   Establishment of a permanent trade institution (WTO).
•   WTO to negotiate trade rules & to apply them. (Global trade to be a rule-
    based system – not governed by power.)
•   Providing the WTO with a firm legal basis & detailed constituent rules.
    (Cured the GATT “legal defects.”)
•   Integrated package of substantive rules.
•   Further defined traditional trade issues: dumping, export subsidies,
    agriculture, procurement.
      – For example, list of prohibited subsidies.
•   Extended general GATT principles and disciplines to newer trade &
    transactional areas: investments, intellectual property, services &
    scientific concerns.
•   Greater institutional development: dispute resolution system.
      – Compulsory & binding dispute resolution in a transnational setting.

                                      (2011)                                    24
                New Aspects Replacing Older Defects.

•   The WTO created an integrated system replacing the ad hoc GATT
•   For the first time a permanent international institution was created with a
    firm legal foundation.
•   A new system of compulsory and binding dispute resolution was established
    with sanctions.
•   The dispute resolution system is as important as the trade negotiation
    mission of the WTO – two halves – rule-making & rule implementation.
•   The creation of a rule-based system with meaningful rule implementation &
    enforcement was central to U.S. foreign policy of relying on multilateral
    institutions in the new era of globalization and the reliance upon a U.S.-
    style legal / litigation approach to supplement traditional diplomacy.

                                     (2011)                                 25
Organization Chart of WTO.

            (2011)           26
                           URUGUAY AGREEMENTS as
                              „Executive Agreements‟

• WTO (Constituent)                      • Annex 1C (Intellectual
• Annex 1A (Goods)                         Property Rights / TRIPS)
      • GATT 1994                        • Annex 2 (Dispute Resolution /
      • TRIMS                              DSU)
      • A/D                              • Plurilateral: Gov‟t Proc.
      • CVD
                                               These agreements were
      • Safeguards
                                                concluded pursuant to
      • Agriculture                           “fast track” authority and
      • SPS                                     then implemented by
                                                      the URIAA.
• Annex 1B (Services / GATS)
   – Newer: Telecom, Fin. Service

                                    (2011)                                 27
    Trade Issues Negotiated at Uruguay Round.
• Traditional Issues.
  (Expanded).                      • Newer Issues.
   – Goods.                           – Services.
   – Agriculture.                     – Intellectual Property.
   – A/D.                             – Institutional.
   – CVD.                                 • WTO.
   – Safeguards.                          • DSU.
                                   • Singapore (1996).
                                      – Financial Services.
     •Issues NOT Included.            – Telecom.
                                      – Inform. Technology.
     •Environment, Labor,
   Investment, Competition.

                              (2011)                             28
                            Doha Trade Round.
•   “Doha Ministerial Declaration.” (Nov. 14, 2001).
     – List issues as to “expanded negotiating agenda” and “other activities.”
     – To determine whether the Singapore issues were to be part of further
     – Separate declaration on drug patents & compulsory licensing for production in
•   “Decision on Pharmaceutical Patents.” (August 30, 2003).
     – Follows the Doha declaration on “compulsory licensing” as a public health
        exception to TRIPS and allows for export to other LDC‟s.
•   “July 31, 2004 Package”-- After Cancun Ministerial 2003.
     – Agriculture& cotton.
          • Domestic support, export subsidies, S&D treatment, market access.
     – S & D treatment principle.
     – No inclusion of “Singapore Issues” – (Investment, Competition & Government
•   Hong Kong Ministerial – inconclusive, but kept round alive. (2005).
•   Trade round suspended July 2006 by WTO Director-General Lamy.
•   Expiration of TPA / Fast Track in 2007 complicates trade negotiations.
•   Recent Geneva meeting deadlocked (December 2009).

                                        (2011)                                    29
Ministerial Meetings under WTO.

       •   Singapore (1996).
       •   Geneva (1998).
       •   Seattle (1999).
       •   Doha (2001).
       •   Cancun (2003).
       •   Hong Kong (2005).
       •   Geneva (2009).

                   (2011)         30
     TRADE AGREEMENTS: Delegation of Authority, Implementation,
                   “Fast Track (TPA).”

Congress has
„exclusive authority‟         Congressional
over foreign trade              Authority
                                                  Delegation of Authority (1979 / 1988
                                                  Trade Acts). Sets negotiating
                                                  objectives. “Fast Track / TPA.”

                            President Concludes          Concludes WTO & Multilateral
                                                         Agreements as international
                             Trade Agreement
                                              Legislation implements trade
   Creates domestic law                       agreements (URIAA) as domestic law.
   obligations & approves
   agreements                  Implementing
                                Legislation                  Domestic law
                   Corp                                            XYZ
                                   (2011)                                      31
                          Dual Nature of Trade Agreements
                             (International & National)
                            & Federal-State Relations.

                            Trade Agreement (WTO)

                  U.S.                                       EU
                            International Obligation
Implementing              Federal                      Note on WTO & States.
Legislation.                                     WTO obligations apply to states.
                                                Problem is that state law may violate
  Domestic Law.            State
                                                WTO obligations and create liability
                                                for the U.S.
                                                Federal authority is limited to
               Corp. X                          consulting – may bring an action under
                in U.S.                         implementing legislation.

                                       (2011)                                   32
III. Basics of the DSU.

          (2011)          33
                The WTO & DSU.

• The WTO Agreement is the constituent agreement & one of a
  group of agreements resulting from the Uruguay Round of
  Trade Negotiations (1986 - 1994).
• The WTO became effective on Jan. 1, 1995.
• DSU is annexed to the WTO Agreement.
• In the U.S. the URIAA (1994) implemented the Uruguay
  Round of Agreements.

                         (2011)                           34
     U.S. Concerns at Time of Implementation.

• Generally, transfer of “sovereignty” to the WTO?
• Specifically, as to the authority of the DSU to override U.S.
• Issue of “transparency” (confidentiality / procedural rules)
  concerning the process.
• How would the system develop -- for or against U.S.

                          (2011)                              35
                       Additional Concerns

• Would the U.S. be able to avoid implementation? Would
 other countries?

• Would other countries use the DSU? Against the U.S.?

•Would the new system in fact encourage greater global trade, investment and
business and perhaps ultimately freer markets and freer societies?

     • Note:

          •Countries were concerned about U.S. Use of the
          DSU and its implementation of decisions?

          •Primary purpose for the U.S. was to create a litigation-based system to
          enforce global trade rules & the primary purpose of other countries was
          to restrict the use of unilateral trade sanctions by the U.S. (to
          multilateralize sanction) -- Both achieved their aims.

                                   (2011)                                       36
    The Dispute Resolution System

• Four Historic Accomplishments:

              • Compulsory
               • Binding
              • Integrated
               • Sanctions

                   (2011)           37
                Aims of the DSU
                        (Article 3).

• To provide security and predictability to the multilateral trading
• That a prompt settlement of disputes is essential.
• To secure a positive solution to a dispute. (Negotiated solution is
  preferable to litigated decisions.)
• Once a violation is determined the aim is to secure the withdrawal
  of the offending measure.
• Compensation is to be resorted to only if the withdrawal of the
  measure is impracticable.
• As a last resort, have suspension of concessions or other
  obligations (“Retaliation”).

                           (2011)                                  38
                                     DSU Articles --
                           Article 19 – (Panel & AB Recommendations)
                           Article 21 -- (Surveillance of Implementation)
                           Article 22 -- (Suspension of Concessions)

•   Article 19 --- Recommendation is to “bring the measure into conformity” with the WTO
•   Article 21 --- Prompt compliance is essential. The panel reviews a disagreement over
    consistency of compliance measures taken and keeps under surveillance implementing actions.
            • Parties need to inform of intentions to comply with DSB.
            • Arbitration as to “reasonable period.” Art. 21(3).
            • “Consistency of compliance” – original panel. Art. 21(5).
•   Article 22 --- Full implementation is preferred. Sanctions (withdrawal of concessions) may be
            • Authorization for sanctions to DSB.
            • Arbitration (by panel) for amount of sanctions. Art. 22(6).

                                            (2011)                                            39
                        Basic Procedures.

•   First stage is consultations.
•   Upon failure of consultations panels are established by the Dispute Settlement
    Body (DSB) (General Council).
•   Panels have detailed rules of procedures providing for “descriptive sections,”
    interim reports, and final reports.
•   If appealed the Appellate Body (AB) reviews the panel report.
                 – Issues of law covered by the panel
                 – Legal interpretations developed by the panel.
•   The DSB automatically adopts the reports of the panels and the Appellate
    Body unless there is a “consensus” (unanimity) against its adoption. (Concept
    of automaticity.)
•   DSB keeps surveillance of implementation.

                                   (2011)                                       40
                  Basic Characteristics of Procedures.

•   Three member panels and Appellate Body.
     – Panels are selected from a roster and the AB members are permanent
          (but not full time).
•   Quasi-Judicial
            • Panel members chosen by parties if have agreement
            • Rebuttal arguments
            • Experts
            • Third Parties
            • No jury / No examination of other party
            • AB members not selected by parties
•   Substantial confidentiality and secrecy of proceedings provided. (This has
    come under attack by those wanting more transparency and a greater role for
    civil society – NGOs.)

                                    (2011)                                        41
                     Two Methods of Litigation Before WTO / DSU –
         Direct Attack on Foreign Restriction or In Response to Unilateral Remedy.

                                     EU                                                  #2
           U.S.                                                                                       EU

                                 Restriction –
                                  Dumping or
                                                                                                    Restriction –
                                                                                                    Market Access

Unilateral remedy –                                                                  WTO ACTION.
  ADD, CVD …
                           WTO ACTION.                                            AGAINST RESTRICTION.
                           UNILTATERAL                                 If the WTO determines a restrictions it then
                           RESTRICTION.                               may authorize sanctions (remedies) by the U.S.

                              • The DSU will review the foreign restriction – if in response to a
                                 unilateral remedy then it will also review the remedy itself.
                            • The WTO intends to preclude unilateral sanctions but allows them if
                               they are consistent with WTO obligations as to “trade remedies.”
                                                        (2011)                                                      42
                          Flow Chart of Litigation Stage

Dispute Settlement Body

 Appellate Body



                                    (2011)                             43
             Impact of Litigation.

•   Binding only on the parties to the litigation.

           Benefits to Trading System.

•   Non-party (third-party) takes advantage of removal of
    trade restriction by the losing party.

•   Non-party (third party) may remove own national
    restriction – once the trade rule is clarified by the
     – Further benefits other states.

                           (2011)                           44
                                  Post-Litigation Stage
                              (Implementation / Enforcement).

                                                          Arts. 21 – 23 (DSU)

                                                        Removal of offending
       Stage # 2 --
Surveillance / Compliance
  (of implementation).


   Final DSB action --after            Stage # 1 --
     panel/AB decision.
                                    Litigation Stage.
                                        (2011)             smalawer @2006       45
                         Sanctions & Compliance.

 Authorization of Sanctions.                       Removal of Sanction.

WTO authorizes winning party                     Winning state to remove
to impose sanctions when have                  sanctions when it determines
    non-compliance – WTO                       implementation is sufficient.
    determines compliance.

                                               But if winning states fails to
                                             remove sanctions, losing state to
                                               return to WTO and ask for
                                                compliance determination.

                                 (2011)                               46
 These approximate periods for each stage of a dispute settlement procedure are target
  figures — the agreement is flexible. In addition, the countries can settle their dispute
                  themselves at any stage. Totals are also approximate.
60 days
Consultations, mediation, etc
45 days
                                                       Time Periods for the
Panel set up and panelists appointed
                                                         Full Litigation
6 months
Final panel report to parties
3 weeks
Final panel report to WTO members
60 days
Dispute Settlement Body adopts report (if no appeal)
Total = 1 year
(without appeal)
60-90 days
Appeals report
30 days
Dispute Settlement Body adopts appeals report
Total = 1y 3m
                                       (2011)                                         47
(with appeal)
(2011)   Source: WTO (2005).   48
                    Implementation / Sanctions.

•   Decisions to be implemented by bringing the offending “measure into conformity with that
    agreement.” Art. 19
      – Losing Party may “buy its way out.” (Maybe not)
•   Implementation of recommendation is preferred. Art. 21
•   WTO determines if there is an inconsistency between implementing measures and ruling
    (original panel). Art. 21
      – Arbitrator may decide “reasonable period of compliance.”
•   However, compensation or suspension of concessions may be authorized (“retaliation &
    cross-sector retaliation / cross-agreement”) by the DSB. Art. 22
      – Arbitrator may decide if “suspension” is equivalent to “nullification” (amount of
•   Sanctions are primarily tariff surcharges for winning party.
•   Enforcement -- as of 2005 only 7 (8) sanctions authorized (Beef, Bananas, FSC, Canadian
    Aircraft) (Against U.S. – FSC, Byrd).

                                       (2011)                                            49
IV. Practice: 1995 - 2005.

           (2011)            50
                              U.S. Litigation in WTO.
                                       [1995 – July 2004]
                                 (Malawer,VL 2003) – Earlier Study.

               WON / LOST for U.S. in Panel & AB Cases.

    20                18
    10                                                    6
      5                          2
            U.S. as Complainant U.S. as Respondent

For chart of cases Click here (1995 – 2004)                          • Total U.S. Cases – 51.
For the 2003 VL article Click here for VL                            • Complainant – 20.
                                               (2011)                 •    Respondent – 31.       51
                   Malawer, “U.S. & WTO Litigation.” (2003)
•   Five Lessons:
     – When U.S. sues it wins, and when sued it loses.
     – Decisions affect core economic and environmental laws.
     – Many countries (including LDC‟s) use the DSU.
          • Decision applies only to parties, but non-parties benefit from rule change.
          • Develops a clearer body of rules that third parties find more acceptable and thus they
            may change their own rules.
     – Both U.S. and EU have shown some hesitancy in implementation.
     – Clarifying rules bolster both global and domestic rule of law.
•   Other Observations:
     –   U.S. was the primary architect of the DSU & reliance on adjudicated rules.
     –   The DSU adjudicates the negotiated rules of trade.
     –   Most filed cases are resolved before going to litigation.
     –   Growing concern within the U.S. Congress and administration.
          • Growing number of defeats by the U.S. & growing numbers of cases as Respondent.
     –   Some concern over possible abuse of the system.
     –   Debate over globalization is really over the rules of trade.
     –   The DSU has emerged as a central aspect of the WTO and trading system.
     –   DSU provides political leverage against domestic opposition (interest groups).

                                              (2011)                                             52
                            U.S. WON / LOST in WTO Litigation .
                                    (Jan. 1,1995 - Jan. 1, 2005).

                    Source : "Snapshot of WTO Cases." USTR (Jan. 14, 2005).
                   25         22                                    26

Cases Won / Lost

                   15                                                          Won
                                                           10                  Lost

                          Complainant                       Respondent

                         For summary chart of cases Click here (1995-2005)
                         For NYLJ article (2004) on earlier data Click here
                                                (2011)                                53
                   U.S. as a WTO Litigant
                   (Litigated Decisions -- 62).
                    (Jan. 1, 1998 - Jan. 1, 2005)

    Source : "Snaps hot of WTO Cas e s ." USTR (Jan. 14, 2005).
  40                                               36
  30                26
             Complainant                      Re sponde nt

                                                    •Total Cases – 62
Malawer, “U.S. & WTO – 10 Yr. Review.”
     (Summer 2005). (Click here.)                   •Complainant – 26

                                 (2011)             •Respondent -- 36   54
      Total U.S. Won & Lost in WTO Litigation.
                        (Jan . 1, 1998 - Jan . 1, 2005)
     S ou rce : "S n apsh ot of W TO C ase s." US TR (Jan . 14, 2005).






         Total Won by U.S.                   Total Los t by U.S.

                               (2011)                                    55
     U.S. as Complainant: Litigation & Consultation.
                      (Jan. 1, 1995 - Jan.1, 2005)

     Source:"Snapshot of WTO Cases." USTR (Jan. 14, 2005).

80          75

60                                                             49
40                                  26

         Total U.S.              Litigation          Consultation, Panel,
        Complaints                                        Inactive

                                           •22 consultations resolved favorably.
                                  (2011)                                           56
       U.S. as Respondent: Litigation & Consultation.
                (January 1, 1995 - January. 1, 2005)
            Source:"Snapshot," USTR January 14, 2005.

120         102
 60                                                      66
      U.S. as Respondent       Litigation       Consultation, Panel,

                                               •14 consultations resolved.
                                (2011)                                   57
            U.S. as a Party in WTO Cases.
            (January 1, 1995 - January 1, 2005)

       Source:"Snapshot," USTR January14 2005.

100           75

      Total as Complainant            Total as Respondent

                             (2011)                         58
        Total U.S. Cases & Total WTO Cases.
                 (Jan. 1, 1995 - Jan. 1, 2005)

      Sources: USTR (1.14.2005) and WTO (10.14.2004) .
350                                              315
200             177

         Total U.S. Cases              Total WTO Cases

                              (2011)                     59
             Total WTO Case s: Litigation & Consultation
                                         (Jan. 1995 - Oct. 2004)

          Source: "Update of WTO Dispute Settlement Cases (WTO: Oct. 14, 2004).


250                                                                                                233



100                                                           82


                  Total WTO                    Litigation De cis ions                     Cons ultations
                  Com plaints

•Litigation does not include Art. 21.5   •Consultation includes mutually agreed solutions Art. 3.6, inactive & active panels.

                                                         (2011)                                                      60
                 2009 UPDATE OF WTO DISPUTE
               SETTLEMENT CASES (Secretariat 1.26.09).

                       Complaints         Appellate Body                          Other Settled
                                                              Mutually Agreed
                      notified to the    and Panel Reports                         or Inactive4
                          WTO1               Adopted3                               Disputes

     Reporting         since 1.1.1995      since 1.1.1995      since 1.1.1995     since 1.1.1995
    period/ date

      Number                  390               116                 61                 38

                       Active            Adopted Appellate      Arbitrations on
                                                                                       Authorizations of
                     Compliance           Body and Panel       Level of Suspension
                                                                                        Suspension of
                       Panels1          Compliance Reports2      of Concessions3

 Reporting         on reporting date       since 1.1.1995        since 1.1.1995          since 1.1.1995
period/ date

 Number                   2                     24                       17                   15

                                                 (2011)                                                    61
         Complinace Panels, Arbitration & DSB Sanctions.
     Source: "Update of WTO Dispute Settlement Cases (WTO: Oct. 14, 2004).
18                                       16
14             12
8                                                                  7
         Compliance             Arbit. -- Sanctions         DSB Auth.
          (Art. 21.5)               (Art. 22.6)         Sanctions (Art. 22.6)

                                     (2011)                                     62
                           DSB Sanctions.

• Against the U.S.                              • Against Others.
   – FSC / ETI Case (tax                           – EU (bananas) (2).
     subsidy).                                     – EU (beef) (2).
   – Byrd Case (A/D &                              – Brazil (aircraft).
     CVD payments).                                – Canada (aircraft).

            •Source: DSB Annual Report (2004) except as to Byrd Case (2005).
       •Sanctions set in 2 cases against U.S. but not authorized by DSB: 1916 A / D
                            Case and §1001(5) Copyright Case.

                                       (2011)                                         63
               WTO Cases Filed -- By Developed & Developing Countries.
                         [January 1, 1999 - October 1, 2004]

                 Source: "Update of Cases." (Secretariat) (Oct. 14, 2004).

  150                                                            114



                   Developed Countries                  Developing Countries

   Some cases jointly filed:

Total 315 complaints, 309 cases.           (2011)                              64
            Developed Country Actions Against DC & LDC.
                             (Jan. 1995 - Oct. 2004).

        Source: "Update of WTO Dispute Settlem ent Cases (WTO: Oct. 14, 2004).




 80                                                             75




               Developed Countries                      Developing Countries

      •Total 195.                        (2011)                                  65
            Developing Country Actions against DC & LDC.
                               (Jan. 1995 - Oct. 2004).

           Source: "Update of WTO Dispute Settlement Cases (WTO: Oct. 14, 2004).

  70                    66





            Developed Countries                      Developing Countries.

* Joint DC/LDC against DC – 6 cases.                               •Total 114.
                                          (2011)                                   66
     Director-General Lamy – 2006 WTO Annual Report.

  “The growing role of developing countries     in the WTO dispute
resolution process is another indication of how developing countries are
participating in the global system. In 2005, developing countries brought
64% of complaints to the WTO‟s Dispute Settlement Body, which
compares with only 20% in 1997 and just 12% in 1988. Many of the cases
brought have been high profile and there is increasing recognition among
developing country officials that use of the dispute settlement system can be
highly effective way to enforce rights.”

                                  (2011)                                        67
                Number of Panel Reports Appealed.
                               [January 1, 1995 – Jan. 1, 2005]

Source: 2004.AB Annual Rep. (2005)
                                           (2011)                 68
              Percentage of panel reports appealed 1996–2008







                       2008 WTO / AB Annual Report (2009)

       * For 2009 – 75%. Total average 68%. AB Report for 2009 (2.17.10).

                                    (2011)                                  69
                  Participation in AB Appeals.
                          [Jan. 1995 - Jan. 2005].
            S o urc e : " A B 2 0 0 4 A nnua l R e po rt " ( 2 0 0 5 ) .

90   84
80              71
40                                33
30                                                  22
20                                                                           11
     U.S.        EU             Japan             India           Mexico    New

                                       (2011)                                     70
                 Agreements in AB Cases.
                        [Jan.1995 - Jan. 2005]

             Source : "AB 2004 Annual Report " (2005).






                   14            14
10                                                           7

     GATT 1994   Subsidies   Antidum ping Agriculture    Safeguards

                                  (2011)                              71
                                                 WTO Agreement
80                                               GATT 1994
     GATT                                        ATC
40                                               Anti-Dumping
30                                               Import Licensing
             Dumping Subsidies
20                                               SCM
                               Safeguards        Safeguards

            2006 WTO / AB Annual Report (2007)

                      (2011)                                        72
Agreements in AB Cases -- Type of Cases (1995-2005).

     • Trade Remedy Cases --- 35.
           • Dumping, subsidies & safeguards.
     • Non-Trade Remedy Cases --- 48 +.
           • Gatt 1994 & Agriculture (and others).

                         (2011)                        73
            Areas Challenged by the U.S. as Complainant
                               (1995 - 2000).
                 Source: GAO, Dispute Settlement, (2000).

     9       8
     6               5           5
     4                                                                               3
     3                                        2
     2                                                    1                 1


















                                     (2011)                                              74
         Areas Challenged by When the U.S. was Respondent.
                        Source : "Dispute Resolution," (GAO 2000).

                 4               4
                                                              2              2
                                                                                            1           1

















                                                   (2011)                                                   75
V. Observations & Research Note.

              (2011)               76
             Observations Concerning the Panel / AB System

•   Complainants win in the panels & Respondents lose in the DSU.
•   Major areas of conflict have included traditional restrictions regarding agriculture,
    textile and goods involving trade remedy issues (A/D, subsidies and escape clause) as
    well as newer ones involving scientific testing and scientific evidence relating to trade
    measures taken for non-trade reasons.
•   Diverse countries have participated in these cases (India, Japan, EC, Venezuela,
    Mexico, Brazil) including developing countries.
•   U.S. has won many cases, has increasingly become a Respondent, but has
    increasingly won cases.
      – U.S. continues to rely upon it and threaten newer actions, e.g. China in its 2005
          accession review.
      – Formally requested in, in 2006, concerning import of auto parts into China.
•   Countries have been satisfied (they continue to file other cases).
•   Wide range of trade issues raised.
•   Many more cases are filed than go through the full litigation process –more are
    settled than litigated.
•   The U.S. has filed many new cases against China 2007-2009 and China has become
    active as a complainant.[Bush Administration filed another case -- Chinese Famous
    Brands -- in its last days in December 2008.]
      – Counterbalance to lack of currency valuation action.
•   Obama‟s approach to future China litigation? (Failed to appeal recent split decision
    in March 2009 on IPR case.)
                                            (2011)                                         77
                                Observations ………….

•   The U.S. and the EC are the biggest respondents. Also the leading appellants. Japan,
    Korea, Brazil and India often respondents.
•   Subject (agreements) of many disputes involve goods, dumping, subsidies and
    safeguards. (Newer issues of public health as a trade issue and necessary scientific
    standards also raised.)
•   Parties have implemented most decisions including sanction decisions. Sanction
    issues still exist – as to when there is compliance and when and how they are to be
•   Sanctions authorized but states have complied (FSC Case for the U.S.) (Byrd
    Amendment repealed December 2005, but new compliance action 2006.)
      – EU complied with the Banana Case. (Newer 2005 decision against EU).
      – Brazil and Canada have not imposed authorized sanctions concerning their
          regional aircraft disputes.
      – Canada had threatened U.S. sanctions in Lumber cases.
      – Sanctions imposed in Byrd Case & FSC..
•   Developing countries continue to be aggressive in the use of the DSU (for example,
    Brazil in the recent cotton case against the U.S. and sugar case against the EU, and E-
    Gambling case by Antigua) --- largest to smallest LDC.

                                           (2011)                                        78
                          Observations ………

•   Numerous countries have won and lost cases.
•   Arbitration used to help decide amount of sanctions & reasonable period for
    compliance (as to compliance conformity to the original panel).
•   Countries continue to use the system broadly.
      – General satisfaction, many more issues than the old Gatt system, much
          strengthened dispute system.
      – System restricts unilateral actions.
•   It‟s beginning to look like a real court system. Cases are won and lost.
    Countries complain, decisions are appealed, however, more cases are filed
    and decisions are implemented.
•   Countries decide as a matter of policy to bring or not to bring matters to the
    DSU – China currency. May decide to request sanctions or not implement
    when authorized. (Litigation discretion).
•   A particular case (a trade dispute) is only a part of trade policy generally
    and trade policy is still only a part of a broader foreign policy.

                                     (2011)                                          79
                               Observations ………

•   But clearer rules concerning implementation are required (to confront unilateral
    actions) and additional consideration of procedural matters also required. Some
    discussion of “over-reaching.”(Now in Doha Round.)
•   This is the situation even though countries to the DSU have vastly different national
    cultures and different legal systems.
•   There is the recognition that in order to facilitate global trade, global trade rules
    that also apply within states, need to be adjudicated by a third-party.
•   While a decision only applies to the actual parties, all states benefit when the
    decision is implemented. (Technically not precedent.)
     – This clarifies rules & leads to greater acceptance of them & other states may
         further change their own rules.

                                         (2011)                                        80
                              Observations …………...

•   Trade rules are being adjudicated by the major trading countries as well as newer
    ones as to major trading issues.
•   What is emerging is a rule-based & multilateral system with rules being enforced.
    Precisely what was envisioned by the U.S. at Uruguay – as the architecture for the
    trading system.
•   In the post-war era trade relations has become a critical aspect of foreign policy and
    international relations – “the transformational power of trade.”
•   The American vision is that a rule-based system governing trade will provide a
    linkage to domestic civil society and global peace.
•   The WTO is central to trade relations today and the DSU is at its core. The DSU is
    expanding as is the definition of trade to include newer areas.
•   The WTO and its DSU are central to trade relations, the essence of international
    relations today. They provide the principal global institutions for governance in the
    21st Century. The first time having a compulsory and binding multilateral trade
    dispute mechanism.

                                         (2011)                                        81
                  U.S. & WTO Litigation 1995 – 2005
  “The U.S. has lost about half of its litigated cases and has been a
   party to about half of all cases filed in the WTO. Now even the
          smallest nations are suing the U.S. and winning.”
                           …. Stuart S. Malawer

“With its global Membership, comprehensive rules, and „world trade court‟, the WTO
            is more central than ever to international economic relations.”

                             …. Pascal Lamy (2010)

                                 (2011)                                          82
Growing Area of Transnational Importance – Global
      Trade Advocacy & WTO Litigation:
 The opportunity for corporate groups & coalitions
  (domestic & international) to help manage their
global transactions by interacting with the growing
 global regulatory network coming from Geneva --
   the World Trade Organization and its dispute
  resolution system – to assist in opening markets.
     …….. Gallagher, Global Trade Advocate (2005).

                         (2011)                       83
                         Future Research Note.

•   “Consultations” is a fruitful area for investigation. (Most cases are settled
    at this stage.)
•   The WTO periodically compiles studies concerning total cases brought
    (not just decided) including consultations in term of complainants and
•   This raises the issue of “settlements” and not rule adjudication as the
    principal objective of the DSU.

                                      (2011)                                    84
                             Research Sources.

•   It can been observed that it isn‟t only the number of decisions that are
    rendered by the panels, but the number of cases settled during the
    consultation & panel stages, which is important in order to fully evaluate
    this new dispute resolution system.
•   Future research topic: To assess the cases settled by the parties during
    consultation and / or panel proceedings.
•   Basic websites (USTR & WTO):
          • USTR – Monitoring & Enforcement.
          • WTO – Dispute Resolution.
•   Good research sources:
          • Snapshot of WTO Cases Involving the United States (updated by USTR).
          • Annual overview of the state of play of WTO disputes
             (addendum to DSB Report).
          • Update of WTO Dispute Cases (summary of all cases) (updated by WTO
•   Secondary:
          • World Trade Law.net

                                       (2011)                                      85
VI. Closing Quotes.

        (2011)        86
“The Future of the WTO.” (2005) (by Consultative Board to D-G).

         “It is self-evident that the better informed are diplomats,
      government officials and legislators on the fundamentals of
      international dispute settlement the better.”

                            (2011)                                     87
       Economic Globalization & Rule of Law.

“[E]conomic globalization is feeding the rule-of-law imperative by
  putting pressure on governments to offer the stability … that
  international investors demand … [The] aim [is] the deeper
  goal of increasing government‟s compliance with law ….”

          …. Thomas Carothers, “The Rule of Law Revival,”
              Foreign Affairs 97, 98 (March - April 1998)

                         (2011)                                  88
  Note on International Law & International Relations.

– “The emergence of the WTO and other international institutions
  in the 1990s, along with the dramatic developments concerning
  globalization, and the obviously     dire need for better
  multilateral governance, has greatly      influenced the
  convergence of international law and international relations
  scholarship, and in particular its recent new focus on these
  critical topics .”

        – Slaughter, Tulumello & Wood, “International Law and
          International Relations Theory: A New Generation of
          Interdisciplinary Scholarship,” 92 American Journal of
          International Law 367, 370 (July 1998).

                           (2011)                                  89
                Law, Litigation & Global Trade Diplomacy.

     “Less often considered is whether this ascendant legalism is good or bad for global
 prosperity. Nowhere else has international conflict resolution by judges emerged
 more forcefully or developed more rapidly …. An accurate assessment of the WTO‟s
 judicial record finds that the system has indeed reduced the role of international
 diplomacy, while strengthening the rule of law … As a result, disputes at the WTO are
 now settled largely on the basis of the rule of law rather than simple power politics.”

             … Esserman & Howe, “The WTO on Trial – Global Law,
              Global Politics,” 82 Foreign Affairs (Jan. - Feb. 2004)

“[T]he WTO system has so far done a good job of holding protectionist sentiment in
 check …. Governments are acting more cautiously in light of the litigation.”
            … Beattie & Alden, “Tight Rules Keeping Lid on Trade Wars,”
             Financial Times (June 7, 2005).

                                      (2011)                                       90
         WTO, U.S. Trade Policy & Globalization.

“[T]he United States (has) to remove its remaining barriers and
induce other nations to do likewise. And the primary vehicle for
achieving this objective remains global trade negotiations under
                           the WTO.”

     ………. Destler, American Trade Politics (2005).

                              (2011)                               91
“When you have to make things with your hands and then trade … it
inevitably broadens imagination and increases tolerance and trust.”
                          CENTURY 462 (2005).

                            (2011)                                      92

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