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Dispute settlement mechanism wto developing countries



This brief examines the WTO dispute settlement mechanism and developing countries. The brief starts by examining the WTO dispute settlement mechanism in general and the extent to which developing countries have participated in the system. Statistical comparisons will be between the participation of developed and developed countries in the WTO dispute settlement mechanism will be analysed. This will help to understand the level of participation by developing countries in the WTO dispute settlement mechanism. The brief will argue that developing countries do not participate fully in the WTO dispute settlement mechanism. Having identified the level of participation, the brief examines why developing countries not participate in the WTO dispute settlement mechanism. This examination is important because it will help to under the reasons which affect the participation of the developing countries in the WTO dispute settlement mechanism. Also, it will help to formulate solutions for the problems indentified.

Having identified the reasons, the brief examines the United States – Cotton Yarn [1] as a case study. Being a developing country, Pakistan participated in the mechanism and ultimately won the case. The brief will look at the Pakistan’s experience in the WTO dispute settlement mechanism. The objective of this case study is not only to describe the events which happened in this case but to highlight the various obstacles which Pakistan, as a developing country, faced in pursuing the case through the WTO dispute resolution regime. This case study will shed some lights why developing countries hold back in participating in the WTO dispute settlement mechanism. Finally, the brief looks at how can the WTO dispute settlement mechanism be improved to provide a mutually effective legal framework for developing and developed countries alike.

WTO dispute settlement mechanism and developing countries

The WTO was established in 1995 as new international organisation to replace the less structured system of GATT. [2] The WTO is vested with powers and functions designed to promote and regulate international trade at global level. One of the strengths of the WTO is its dispute settlement mechanism. The WTO dispute settlement mechanism is built on the pre-existing GATT regime, and came into operation on 1 January 1995. The mechanism is the result of 40 years of experience and the evolution of dispute settlement under the GATT 1947 regime. The mechanism is established by the Uruguay Round Understanding on Rules and Procedures Governing the Settlement of Disputes (Dispute Settlement Understanding or DSU). [3] The WTO dispute settlement mechanism is intended to secure a positive solution to a dispute. [4] Through this mechanism, the WTO seeks to provide legal certainty to producers and exporters across the world that foreign markets remain open. This certainty has been provided by creating a rule-based, fully-fledged international organisation and an effective dispute settlement mechanism.

There are three institutions which administer the WTO dispute settlement mechanism, namely the Dispute Settlement Body (DSB), panels and the Appellate Body. The DSB is a political body which comprises representations from all WTO members. [5] The WTO General Council serves as the DSB, but the DSB has its own chairman and follow separate procedures from those of the General Council. [6] The DSB is charged with administering the dispute settlement mechanism. [7] In the event of a dispute between WTO members, one member may request the other to enter into consultations and should notify the DSB of this request. [8] If such consultations fail, the complaining party may request the DSB to establish a panel. [9] In addition, each party may propose to employ other dispute settlement procedures such as, good offices, conciliation or mediation. [10]

Generally, panel are composed of three “well qualified governmental and/or non-governmental individuals” selected from a roster of persons suggested by the WTO members. [11] Serving in their individual capacities, panels conduct hearing on the dispute referred to them, and issue a report and recommendations on the merit of the case. A panel’s recommendations do not bind on the parties until they are adopted by the DSB. However, since adoption is automatic, a panel report is adopted unless a party to the case notifies the DSB of its intention to appeal and the DSB decides, on consensus, not to adopt the report. [12]

A panel report may be appealed, on legal grounds, before the Appellate Body, [13] which comprise of members with extensive experience and expertise in law and international trade and who are not affiliated with any government. The Appellate Body may uphold, modify or reserve the panel’s legal findings. Like panel reports, the Appellate Body reports have no binding effects until they are adopted by the DSB. Again, the reverse consensus rule applies, so that the Appellate Body reports will be adopted unless the DSB decides otherwise by consensus. The DSU also contain provisions for surveillance of implementation of DSB recommendations and rulings. WTO members are required to report to the DSB their intentions with regard to implementation. Procedures also exist for resolution of implementing related disputes. [14] Further, [15] the DSU provides for arbitration in the event of a dispute as to the appropriate level in response to non-implementation of DSB recommendations and rulings.

The WTO has become one of the most international organisations within a relatively short period of time. [16] Its dispute settlement system has been busy since the organisation was established. [17] For example, by the end of July 2009, 397 requests for consultations had been initiated before the DSB, involving more than 300 distinct matters. [18] More than 150 panel reports have been adopted, including more than 20 reports on DSU Article 21.5 requests relating to compliance. [19] The Appellate Body has issued 97 reports, including 20 on appeals relating to panel reports under DSU Article 21.5. [20] Some of the cases decided by the DSB have had far reaching implications, involving billions of dollars, and received prominent treatment in the media. [21] Arbitral awards have also been issued in more than 20 under DSU Article 21.3(c) arbitrations and 17 under DSU Article 22.6 arbitrations. [22] Whilst the panel and Appellate Body’s caseload remain high, large numbers of trade disputes are settled through consultations under the DSU or other means. [23]

However, the WTO dispute settlement mechanism is not a perfect system by any means because it has its own problems. [24] Some commentators argue that the DSB is ineffective, particularly when it comes to enforcing its recommendations and rulings against developed countries. [25] In 2005, the WTO issued a document showing that there had been 335 requests for consultations. [26] Developing countries had requested 125 consultations in which more than 50 of the requests were made against other developing countries. [27] By the end of 2005, developing countries had participated in 68 disputes out of the 96 heard by panels. [28] Developing initiated 40 cases and defended 28 cases. Of the total 99 members which appeared at the Appellate Body, 37 were developing countries and 62 developing countries. [29] Basing on this statistic, one could argue that developing countries have been participating fully in the WTO dispute settlement mechanism.

However, two things need examination, namely the meanings of “developing countries” and “participation”. Majority of WTO members consists of developing countries. However, the precise number of developing country members is unclear because there is no definition of a “developing country” in the WTO. [30] The term is used extensively, but is neither defined in the WTO Agreements nor was it defined under the GATT regime. Normally, such definition is made on ad hoc basis and members can announce, case-by-case, whether they consider themselves developed or developing countries. [31] However, other members can challenge the decision of a member to make use of provisions available to developing countries. Accordingly, status of certain members has been controversial especially in the recourse to BoP measures under Article XVII of the GATT and in accession of China which wanted a developing status. [32] Neither a panel nor the Appellate Body has to date ever found itself in a situation in which it was necessary to define the term and to apply it to a specific case. [33]

Basing on the World Bank classification system of differentiating between countries based in income, it could generally be argued that African countries are developing countries. Countries such as, Mexico, Turkey, Hong Kong, Singapore, Malaysia, South Korea, Brazil and OECD members are advanced and actively in international trade and it would not be right to categorise them as developing countries in the WTO. [34] Participation in the WTO dispute settlement can cover a lot of activities. Some of these activities such as, requested to be joined as a third party in a case are easier, whilst other activities such as, pursuing a case at the panel or Appellate Body are difficult especially when acting as a complainant. Most active participants in the WTO dispute mechanism have been the United States, European Union, Brazil, India, Mexico, South Korea, Japan, Thailand, Chile and Argentina. [35] Only five developing countries (Brazil, India, Thailand, Chile and Argentina) account for 60% of the disputes. [36] This shows that majority of developing countries especially the LDCs do not participate in the WTO dispute settlement mechanism. [37]

Since the majority of the WTO members are developing countries, one would have expected that in the majority of WTO disputes, the complainants to be a developing country member. However, so far the complainants and respondents have been developed country members in the majority of WTO disputes. [38] According to the WTO, in one third of all disputes initiated since 1995, complainants have been developing countries. [39] Also, around two fifths of all cases, the complainants have been developing countries. [40] Taking African countries, for example, out of 54 countries, more than 41 are WTO members. However, in the first decade of the WTO, only South Africa and Egypt had received requests for consultations at the DSU. The consultations were requested by India and Turkey against South Africa and United States against Egypt. During the same period, no consultations were requested at the DSB by an African country. Egypt was the only African country to have initiated and requested the establishment of a panel. [41] The request was in respect of Definitive Anti-dumping Measures on Steel Rebar from Turkey case. [42]

Within the same period, no African country had participated at the Appellate Body either as a complainant or a respondent, save for Nigeria and African Caribbean Pacific Countries Group (ACP) which participated as third parties in the United States’ Shrimp dispute and in EU Banana and Sugar disputes respectively. Other African countries such as Zimbabwe, Senegal, Cameroon and the Republic of Cote d’Ivoire have all participated in third party capacity. [43] Taking into consideration that developing countries form the majority of WTO members, one could argue that developing countries do not participate fully in the WTO dispute settlement mechanism.

Developing countries and non-participation in the WTO dispute settlement mechanism

There are a number of reasons why developing countries do not participate in the WTO dispute settlement mechanism. According to the WTO, developing countries wants to participate in its dispute settlement mechanism but they face considerable burdens. However, unlike developed countries, these developing countries do not have enough human resources with expertise in the WTO substantive and procedural law relating to dispute settlement. [44] The lack of persons with expertise in WTO law is compounded by the growing body of WTO law developed by the panels and the Appellate Body, which makes it difficult even for trade law experts across the world to have a firm understanding of the WTO law including latest developments in this area. [45] The WTO states that a single dispute could take up to two years to complete.

Also, the WTO argues that many developing countries have a small trade administration to assign their few officials a dispute. These may also create a burden for a developing country to undergo economic harm for the entire period of the dispute settlement proceedings due to a trade barrier taken by another WTO member. [46] If the trade barrier affects the developing country’s exports opportunities it cannot be withdrawn until after two or three years of filling a complaint. [47] Although the WTO acknowledges that developed countries are the majority of complainants and respondents in the WTO dispute settlement mechanism, the organisation argues that this is so because these developed countries account for the most of the world trade. [48] Their trade relationships also are broad and deep which increases the probability of disputes due to trade barriers.

In the academic literature, lack of capacity and power have been discussed and analysed as reasons causing developing countries not to participate fully in the WTO dispute settlement mechanism. Whilst the capacity constraints include shortage of people with expertise in the WTO law or lack of finance to employ foreign legal expertise, the power constraints cover the impact of retaliation action by WTO major players if their measures are challenged. [49] Linguistic constraint has also been added as reason due to the fact that English is the mostly used language in both panel and Appellate Body’s hearings. [50] In their empirical study, Guzman and Simmons [51] evaluated power and capacity as reasons holding back developing countries to participate in the WTO dispute settlement mechanism. Their study found a considerable support for the capacity constraint. No support was found for the power constraint.

However, there may be a problem with their findings because the data they used in their study comprised only consultations requested between 1995 to the 2004. Retaliation is likely to happen more at the stage where the panel and Appellate Body are involved than at the consultation stage. The DSU allow retaliation through suspension of trade concessions and countermeasures. [52] Several WTO members especially the United States, European Union, and Japan have adopted national laws permitting retaliation in response to foreign measures that nullify or impair their rights under international trade law. Retaliation is more readily suitable in an economic and political sense in developed countries. In those countries, there may be significant alternative domestic supplies, alternative international sources of supply and a greater range of traded products on which to consider selective targeting. The threat for sanctions is far more significant when it comes from a major trading country than from a small country. Retaliation as the ultimate sanction is less valuable in developing countries. A developing country with limited domestic market is unable to impose losses to a developed country to induce compliance. [53] Some are unwilling to do so for far that preferential market access and other development assistance may be curtailed. Imports to developing countries are often necessary for development purposes and are not simply undertaken to satisfy discretionary customer demand. Any retaliation would therefore have a negative multiplier effect. Accordingly, developing countries may hold back from filling complaints against developed countries for fear of retaliation or sanction.

There are other reasons within the WTO system which may hold back developing countries to participate fully in the WTO dispute settlement mechanism in one way or another. Firstly, the DSB’s biases on trade-liberalisation when considering cases referred to it. Because DSB is part and parcel of the WTO structure designed to promote trade liberalisation, it seem pretty natural for it to have this bias. In deed, the DSB is supposed to apply and interpret WTO law which is pro-trade liberalisation. This inherent limitation of the DSB is not conducive to making it a body capable of balancing trade concerns with other legitimate concerns required in the promotion of international justice. [54]

Secondly, at the end of the day, the effective of the DSB depends on the remedy actually received by the aggrieved party. There are doubts as to the effectiveness of the WTO rulings and recommendations because some of the powerful members have not internalised the WTO framework. [55] There are difficulties in implementing certain panel and Appellate Body’s rulings and recommendations and in bringing the law of such powerful members into conformity with WTO rules, especially if it involves enacting new legislation in order to comply with the a WTO ruling or recommendations. The risk here is that some of the powerful States use the WTO when it suits them and disregard it when their own interests are at stake. [56]

Thirdly, although there is some settled case law, the WTO adjudicating bodies are continuing to struggle with inconsistencies, some being more troublesome than the others. There is a continuing misunderstanding as to the content and relevance of the travaux preparatoires. [57] The WTO settlement bodies identify but rarely classify. Only few occasions WTO adjudicating bodies have explicitly stated the heading under which they have examined the various interpretive elements which they have used. The covered agreements have always been discussed under the ordinary sense of the term featuring in Article 31:1 VCLT; travaux preparatoires of the covered agreements have consistently discussed under Article 32 VCLT. [58] For example, in Korea – Diary, [59] the Appellate Body discussed a GATT adopted panel report to support its implementation of the term “unforeseen developments”. However, the Appellate Body did not classify the GATT panel report under the heading of the VCLT. Similarly, in Chile – Price Band, [60] the Appellate body referred to a series of its previous reports when discussing the term “so as to afford protection”, appearing in Article III:2 GATT. However, the Appellate Body did not mention what was the VCLT – relevance of the reports. Also, in US – Gasoline, [61] the Appellate Body called for no derivations from VCLT, but failed to commit itself as to which interpretative element came under which heading.

Fourthly, the DSB adopts the international law approach of persuasion designed to encourage WTO members to participate in the regime created rather than award huge amount of compensation to the members which are victims of violation of WTO law. This works well if the impact of the dispute is limited to the Member State as a collective entity. However, when individual interests are involved, the mere promise by a losing party that it will comply with the WTO obligations in the future may not be satisfactory for the individual business parties who may have suffered huge financial loss as a result of the non-compliance with the WTO law in the first place. [62]

Fifthly, the DSB has no power to go beyond the WTO law that already exists. This is despite the fact that the significant proportion of international trade in developing countries is conducted under rules not part of the WTO regime. [63] The WTO Agreement mentions in various places two different sources of law namely, the covered agreements [64] and international agreements reflected in the covered agreements. [65] The covered agreements constitute the prime impute for the work of the WTO adjudicating organs. [66] The Appellate Body has warned against the dangers of construing the WTO Agreement in clinical isolation of the rest of public international law. Instead of applying this view in practice, the adjudicating bodies have continued to resort to unclear statements on the status of public international law under the WTO system which may only provide further uncertainty and delay inevitable decisions. [67] In addition, the DSU Article 3.2 specifies that the purpose of dispute settlement is to clarify the WTO Agreement provisions “in accordance with customary rules of interpretation of public international law.” In Korea – Procurement, [68] the panel suggested that general customary international law is always relevant for the interpretation of the WTO law. However, such statements have never been repeated in subsequent case law. [69] Moreover, the panel report was not made with respect to an autonomous source of law, but with respect to a general principle which has attained the status of customary international law. However, general principles are not autonomous source of law. [70]

Pakistan experience: The United States – Cotton Yarn case

The United States – Cotton Yarn [71] involved a dispute between Pakistan and the United States over the former’s exports of Combed Cotton Yarn to the later. The dispute started in 1998 when Pakistan received a consultation request from the United States. The consultation related to the imposition of quota restrictions on Pakistan’s exports of Combed Cotton Yarn to the United States. According to the United States, Pakistan’s cotton Yarn exports were causing harm to the United States’ textile sector. The consultations failed and Pakistan decided to refer the dispute to the Textile Monitoring Board (TMB) and later to the DSB. Due to lack of local experts on trade law and particularly the WTO law, Pakistan had to hire foreign legal experts even during the bilateral negotiations and consultations stages. [72] Ironically, the foreign experts were hired from the International Development Systems (IDS), a consultancy firm based at Washington in the United States. However, when the dispute was referred to the DSB, Pakistan decided to hire legal experts based at Geneva in Switzerland to save money. [73]

After the failure of bilateral negotiations, the United States decided to impose quota restraints on Pakistan for three years. The dispute was taken to the Textile Monitoring Body (TMB) and became one of the TMB’s longest disputes, taking about 6 days to be completed. [74] Pakistan was worried about the nature and outcome of the dispute, bearing in mind that this was the first time the country had to appear before the TMB. Pakistan’s anxiety was compound by the presence of top American government officials, and textile and trade law experts, including the American Chief Textile Negotiator, who is normally non-attendee in such reviews. [75] Pakistan lacked relevant experience and effective institutional structures capable handling disputes of this nature. Neither was there a set of rules when it came to paying the high fees to the foreign experts it employed. [76] These resulted in five months delay in the payments of fee to its legal experts who were charging a premium of 1.5% per month for late payment. [77]

The dispute was heavily contested and Pakistan found some questions and discussions challenging. However, Pakistan’s arguments focused mainly on the United States’ definition of domestic industry and the viability of the data used by the United States to conclude that Pakistan’s exports of cotton yarn affected the United States’ textile sector. [78] The United States argued that domestic industry simply meant the producers of yarn for sale in the merchant market. [79] This definition effectively removed vertically-integrated producers producing yarn as intermediate goods from the data. Pakistan argued that that the United States’ definition of its domestic industry violated Article 6:2 of the Agreement on Textile and Clothing (ATC) because it did not consider the entire United States’ domestic industry. [80] The TMB accepted Pakistan’s argument and accordingly recommended the United States to rescind it quota restrictions. [81] However, the United States refused to implement the recommendations even after its appeal its appeal was rejected. It notified the TMB that it will not abide with recommendations to rescind the quota restriction as it believed that its action was justified under ATC Article 6. [82] Further bilateral consultations were held between the parties but not agreement was reached. [83]

In 2000, Pakistan decided to refer the dispute to the DSB. However, it took Pakistan a year to request DSB to establish a panel. [84] Among the reasons contributed to the delay included the decision of Pakistan to switch lawyers at the DSB stage from Washington to Geneva for financial reasons to avoid miscellaneous charges. Pakistan also believed that the United States was playing delaying tactics through holding further bilateral negotiations. [85] The delay meant that despite Pakistan wining the dispute at TMB stage, the most victims were its exporters and manufactures of combed cotton yarn. [86] The quota restrictions also affected Pakistan’s potential exports and earnings in foreign exchange because cotton yarn’s demand was escalating at the world market. [87] At the DSB stage, Pakistan also lacked institutional structure or guideline for the payment of its foreign legal experts. Similar to the TMB stage, the Pakistan Government had to come up with agreement with the stakeholders on financing the dispute. These included some large combed cotton yarn manufacturers and exporters who saw the value of pursuing the dispute at the DSB stage. [88]

At the panel hearing, Pakistan was represented by a three member team, while the United Stated was represented by a ten member team. [89] Unlike the TMB hearing, the hearing before the panel was paper based and questions were focused on written submissions made by the parties. Despite these obstacles, Pakistan won the case in Many 2001, but the United States appealed to the Appellate Body. The Appellate Body decided in favour of Pakistan and recommended United States to immediately lift of the quota restrictions. The United States complied and lifted the quota restriction in November 2001. The dispute took two years and nine months almost equal to the three year period of the United States’ transitional safeguard measure. [90] At the end of the case, Akbar Sheikh, one of the three member team who represented Pakistan commented that at the end of the day both parties won the cases because Pakistan got the decision it wanted and United States was able to maintain its quota restrictions for almost the entire three-year period, thanks to the time it took to revolve the dispute. [91]

This case shows how difficult it for a developing country to initiate a dispute against a powerful member using the WTO dispute settlement mechanism. The case illustrates the capacity constraints and lack of institutional structures faced by developing countries in bringing a dispute at the WTO. It also shows how a powerful member can just ignore a ruling or recommendations issued against it by a WTO adjudicating bodies to the detriment of the developing country. A dispute takes too long time to be resolved; thereby raising a question whether is worth for a developing country bringing a claim at the WTO system in the first place. The case also shows the contribution which can be made by non-state actors who are presently not allowed to bring a claim at the WTO. The most group affected by the United States’ quota measure in the case were the combed cotton yarn exporters and manufacturers in Pakistan. They played a positive and an effective role in resolving the trade dispute between two unequal partners. This highlights how non-state actors can play a crucial role in the WTO dispute settlement mechanism.

The need to improve the WTO dispute settlement mechanism

The WTO argues that tools such special and differential treatment rules and legal assistance can be used to address the problem of non-participation of developing countries. [92] A developing country may require for a faster procedure to be used in a dispute or a longer time to deal with a dispute. Members are also required to give special attention to particular issues and interests of developing countries during consultations. [93] At the panel stage, where a dispute involving a developing country and a developed country, the former may request at least one panellist to be from a developing country. [94] Where the developing country is a respondent, the panel must give such member sufficient time to prepare its defence. [95] There are also provisions with regard to particular attention to be taken on issues affecting the interest of the developing countries when implementing decisions. [96]

A Decision was adopted in 1966 in regard to the application of dispute settlement procedures to developing countries. [97] DSU Article 3.12 indicates that if developing countries have a complaint against a developed country, may use some of the provisions of the 1966 Decision instead of DSU provisions. The provisions of the 1966 Decision may be used in place of DSU Article 4 on consultations, Article 5 on good offices, conciliation and mediation, Article 6 on establishment of Panels and Article 12 on panel procedures. However, in practice there are rarely used. Unlike, good offices, conciliation and mediation, where consultations are concerned, there is little if any difference between the two set of provisions. The DSU provisions merely seem to be more elaborately expressed. A developing country may also request additional legal advice and assistance of qualified legal experts from the WTO Secretariat. [98] Further, the WTO Secretariat runs technical cooperation activities and conduct special training on dispute settlement mechanism. [99]

The above provisions seek to promote the ability of developing countries to utilise dispute settlement processes fairly and efficiently. However, as seen in United States – Combed Cotton Yarn, this might not flow readily in a practical sense, particularly when they are faced with a dispute against an experienced and wealthy country. [100] In other, words the WTO explanation does not address the fundamental causes for non-participation of developing countries in its dispute settlement mechanism.

After the conclusion of the Uruguay Round, an agreement was reached in a Ministerial Decision of 1994 to review the dispute settlement rules by 1 January 1999. The review was stated within the DSB in 1997 and the deadline was extended to 31 July 1999. However, there was no agreement on the subject matter. In the Doha Ministerial Conference held in November 1999, the trade ministers of the WTO members agreed on the negotiation for the improvement and clarification of the DSU no later than May 2003. [101] Since then negotiations have been taken place within the DSB and member States have participated actively in these negotiations. The negotiations have resulted over 80 WTO members to subscribe to more than 40 proposals containing several suggested changes covering all stages of the dispute settlement mechanism. [102]

Some of the suggested proposals relate to the housekeeping issues such as, dealing with dormant cases. [103] However, many proposals focus more on substantive issues pertaining to the WTO dispute settlement mechanism. These include sequencing, external transparency, third party rights, enhancing the system of compensation, strengthening the notification requirements for agreed solutions, strengthening special and differential treatment for developing countries in the dispute settlement process and panel composition. [104] All the proposals are still on the table, but so far no major breakthrough was achieved within the Doha Round which itself is suspended. [105] The Hong Kong Ministerial Declaration of 2005 [106] did nothing than simply noting the progress made in the DSU negotiations by the Special Session of the DSB to the Trade Negotiations Committee and directing the Special Session to continue working towards a rapid conclusion of the negotiations. [107]

Changes need to be made in the WTO law to enable the DSB to play the role of a real international trade court capable of promoting and ensuring fairness and justice for both developing and developed countries. Any changes will have to be made in line with the aim and objective of the Doha Declaration 2001. This means the Doha Trade Round which was initiated by the Declaration would have to be revived and find compromise among WTO members to make the WTO system itself fair and just for both developing and developed countries. [108] The revival of the Doha Round would enable the WTO members to move forward the multilateral negotiations on wider, complex and more fundamental issues such as, the liberalisation of trade and agriculture and acceleration in the liberalisation of the services sector. [109] Rather than making the DSB’s proceedings confidential, changes should also be made to the DSU to make its workings more transparent to the public general interested.

The current enforcement system is privileged in case of asymmetric bargaining power between the parties in dispute. The current system does not sufficiently address the interests of smaller and poor markets. Designing an appropriate remedy is not that simple, but the enforcement mechanism of the DSB’s decisions should be improved to achieve more certainty. Instead of focusing on the objective of the compliance by the WTO members with international trade rules, the DSU should include some robust punitive mechanisms such as, compensation to those directly affected by deliberate measures adopted by a WTO member to distort trade. [110] As things stands, there is uneasiness among WTO members with regard to the effectiveness of the current regime but at the same time no will to move forward fast. Eventually, WTO members will have reconsider the objective function of countermeasures and also agree on instructing the panels to take DSU Article 22:4 with a grain of salt rather than a mere guideline.

As seen in United States – Combo Cotton Yarn, Non-State actors are the actual victims of a trade-distorting measure adopted by a WTO member. However, the WTO dispute settlement mechanism does not allow any access to it. This does not look good especially in a world where the stated aim has been to achieve greater legitimacy, transparency and democracy in the conduct of international relations. [111] Therefore, there is also need to look at the possibility of giving non-state actors an opportunity to bring a claim to the WTO against a State under certain narrowly defined conditions. One may argue that opening the system to non-State actors could result in it being overloaded by private claims. As a result, there would be a need to enlarge the panel system, to have full time Appellate Body members and to strengthen the Secretariat, establishing in essence a court of international trade. [112] Of course, many of these and other improvements are feasible and may be desirable. However, the experience of the  International Centre for Settlement of Investment Disputes (ICSID) and other specialised dispute settlement systems that allow claims made by non-State actors show that, whilst there is a gradual growth of submissions, this does not create an unimaginable situation. [113]

The Appellate Body has warned several times against the dangers of construing the WTO Agreement in clinical isolation of the rest body of public international law. Perhaps it is time for the WTO adjudicating bodies to start applying this view in practice to create certainty and speed up decisions. [114] The WTO law should be considered as a part of the whole of public international law. [115] WTO adjudicating bodies should recourse to the relevance of factual and legal reasons whenever feasible and appropriate. At the end of the day, because reciprocity is a key feature in international negotiations, inter-dependent contractual promises between developed and developing countries about market access are being exchanged and WTO adjudicating bodies should strive to ensure that they get this part right. [116] To this effect, they should use instruments that reflect better what was exchanged rather than install their own judgments as to what might have been the case. [117] Encouragement on the use of historical context and of the supplementary means will help panels correctly understand the scope of contractual foundation. [118]


The WTO, as a multilateral trade body, has done well and the DSB, as a quasi-judicial mechanism, has also worked reasonably well and contributed to the strengthening of the WTO rule-based regime. However, the DSB do not have powers to go beyond the WTO law that already exists. Many developing countries believe that the existing law in itself is not fair and just as it should be. Therefore, its is debatable whether the WTO dispute settlement mechanism, particularly the DSB is capable of ensuring a level playing field and to deliver justice in the broader sense of the term, or to ensure justice on the narrow sense of applying and interpreting the existing body of law as objectively, independently and impartially as possible. Major changes in the WTO law, in line with the Doha Declaration, are desirable to enable the DSB to play as a real international trade court capable of promoting and ensuring fairness and justice for developing countries.

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