Experience to Date (1995-2006)

     Presentation by Bruce Wilson,
  Director, Legal Affairs Division, WTO

   WTO Appellate Body Conference
        Columbia University

              8 April 2006

• Focus of my presentation is on how WTO DS system has
  operated in practice with respect to remedies. These represent
  my own personal views and should in no way be construed as
  the views of the WTO or its Members.
• Current system embodied in DSU is more detailed and refined
  version of the compliance/compensation/retaliation remedy
  model of the GATT.
• Article 3.7 of DSU states that preferred remedy is withdrawal of
  WTO-inconsistent measure; if this is not possible on a timely
  basis, compensation should be provided on a transitional basis
  until compliance is achieved.
• Retaliation is to be used only as a last resort.
• By highlighting a few points on how the WTO system has
  operated in practice with respect to remedies, hope to give
  some real life context to the panel’s treatment of the subject.
  Key Statistics on WTO Dispute Settlement - I

• To date there have been panel or panel/AB reports adopted by
  the DSB in 101 dispute settlement litigation proceedings (not
  including 21.5 compliance panels, which I will not address due
  to time constraints).
• In nearly 90 per cent of these litigation proceedings, the panel
  and/or the AB found WTO violations.
• Only 17 WTO Members (counting EC as one Member) out of 150
  (42 out of 150 counting EC as 25 Members) have had adverse or
  partially adverse rulings by WTO panels and the AB for which
  compliance was required.
• Thus, less than 30 per cent of the WTO membership (again
  counting the EC as 25 Members) has been confronted with
  adverse WTO dispute settlement rulings.
    Key Statistics on WTO Dispute Settlement - II

•   Of the 17 Members who have been the object of adverse WTO rulings,
    seven have had only one adverse or partially adverse WTO ruling -
    Turkey, Thailand, Egypt, Dominican Republic, Indonesia, Guatemala, and

•   Only 10 WTO Members have had multiple adverse or partially adverse
    rulings in WTO dispute settlement proceedings

     –   United States - 30
     –   European Communities – 14
     –   Canada -8
     –   Argentina – 6
     –   Mexico – 4
     –   India – 4
     –   Korea - 4
     –   Japan -3
     –   Chile -2
     –   Australia -2
     Compliance Record of WTO Members –
            General Observations
• Compliance record of WTO Members with adverse dispute
  settlement rulings has generally been good.
• In virtually every case, WTO Member found in violation of WTO
  obligations has committed to bring itself in compliance and in
  most cases have already done so.
• Administrative versus Legislative Action – Record has shown
  that compliance is swifter when compliance could be achieved
  administratively. The U.S. experience is instructive.
• Compensation has never been granted (with one exception in
  the US-Copyright case) – thus, the WTO model has in practice
  been a compliance-retaliation model.
• Out of one hundred and one completed cases, retaliation has
  been requested in only seven cases (all of which have gone to
  22.6 arbitrations) and authorized in only six.
     Two Important Case Studies – US and EC

•   As the two Members who have brought the most cases and who have
    been sued the most in the WTO, it would be instructive înitially to
    review the experience to date of the US and the EC, since they have
    together been the object of about one-half of all adverse WTO rulings.
•   US has had adverse or partially adverse rulings in 30 cases where it
    was the responding party (it was fully exonerated in 4 cases).
•   Of these 30 cases, US has been able to comply or is in the process of
    complying administratively in 22 cases. Thirteen of these were AD or
    CVD cases, 3 were textile, 4 were safeguards (including Steel
    Safeguards), and 2 were other (US-Gasoline, US-Shrimp).
•   In 8 cases, legislative action was or is likely required (FSC, Byrd,
    Section 110 Copyright, Havana Club, Internet Gambling, Cotton
    Subsidies, 1916 Act, Hot-Rolled Steel from Japan).
•   In 4 out of 8 cases, U.S. Congress has already passed remedial
    legislation (1916 Act, FSC, Byrd, Cotton Step 2).
Two Important Case Studies–US and EC (cont.)

•   These actions to comply by U.S. Congress in 2004-2006 have been
    among the most noteworthy and positive developments for WTO
    dispute settlement system. Admittedly, there are transitional
    problems on FSC and Byrd, and final resolution of cotton subsidy
    case has not been reached, but recent Congressional actions have
    been significant and their importance to the system should not be
    understated. Prospects for early legislative action in the other 4 cases
    are currently uncertain.
•   As for the EC, it has been object of adverse or partially adverse rulings
    in 14 of 17 cases where it was responding party and litigation has
    concluded (although in 3 cases matter was settled prior to issuance of
    final report).
•   EC committed to compliance in all these cases and its actual
    compliance record has also been very good although the
    administrative/legislative processes it must go through to comply are
    quite different than those required in the United States.
•   Notable cases where compliance achieved (Bed linen, GSP, Sardines)
    or where compliance is in final stages (Trademarks/GIs, Sugar)
•   Residual EC compliance problems – Bananas, Beef Hormones
  Important Cases Involving Other Developed
    Countries Where Compliance Achieved

• While the US and the EC have been the developed
  Members with the most extensive compliance
  experience, other developed countries have also had
  to comply with adverse WTO rulings, namely:

• Canada (Periodicals, Dairy, Autos, Pharmaceutical
  Patents, Patent Term, Grain Imports)
• Japan (Alcoholic Beverages, Certain Ag Products,
• Australia (Salmon, Automotive Leather)
  Important Cases Involving Developing Countries as
     Respondents Where Compliance Achieved

• A number of developing countries have also had to comply
  with adverse WTO rulings and have successfully done so:

• Argentina (Textiles, Footwear, Hides/Leather, Peaches
  Safeguards, Poultry AD)
• India (Patents, BOP QRs, Autos)
• Mexico (HFCS AD, Telecom)
• Korea (Alcoholic Beverages, Dairy, Beef, Paper AD)
• Chile (Alcoholic Beverages, Price Bands)
• Turkey (Textiles)
• Indonesia (Autos)
• Thailand (H-Beams AD)
    Retaliation in WTO Dispute Settlement System

•    As a result of the generally good compliance record of Members, there
     have only been six WTO cases to date where retaliation has been
     requested and authorized by DSB and only four where retaliatory
     measures have actually been imposed. (Note: There have been 21.5
     compliance panels in about 1 out of every 6 cases)
•    EC-Bananas (Authorized for US and Ecuador, only US imposed
     measures which were later withdrawn)
•    EC-Beef Hormones (Authorized for both US and Canada, both
     imposed and continue to have in effect; matter in litigation)
•    Brazil- Regional Aircraft Subsidies (Authorized for Canada, but not
•    Canada – Regional Aircraft Subsidies (Authorized for Brazil, but not
•    US – FSC (Authorized for EC, imposed then suspended)
•    US – Byrd (Authorized for 8, imposed by EC, Canada, Japan)
Improving WTO Remedies – DSU Negotiations

• Notwithstanding the generally favourable
  compliance record of Members, some Members
  have suggested improvement of the current
  WTO system of remedies in the context of the
  ongoing DSU negotiations.

• Proposals on remedies made in the initial
  phases of the negotiations have been among
  the most far-reaching in the negotiations
      Improving WTO Remedies – DSU

• Proposals made in early phases of the negotiation have

   – making compensation a more viable alternative to retaliation
   – making retaliation more effective [(for example through
     cross-retaliation, or even, more radical, collective retaliation
     or “tradable remedies”)]

• In recent discussions, the main issue under consideration
  in relation to remedies has been “post-retaliation”, i.e.
  how to put an end to the authorization to retaliate, once
  compliance is achieved (an issue currently of concern in
  the Beef hormones II case).

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