Kathmandu School of Law Review

P-ISSN : 2091-2110, E-ISSN : 2773-8159, DOI : 10.46985, Publisher : Kathmandu School of Law, Nepal
Annual flagship journal of Kathmandu School of Law, Nepal

Volume 6, Issue 1, April 2018
Articles

Making WTO Dispute Settlement System Useful for LDCs

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  • Kumar Ingnam
Kumar Ingnam
Professor of Law, Kathmandu School of Law

Published 2018-04-30

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How to Cite

Ingnam, K. . (2018). Making WTO Dispute Settlement System Useful for LDCs. Kathmandu School of Law Review, 6(1), 117–133. Retrieved from https://kslreview.org/index.php/kslr/article/view/953

Abstract

The World Trade Organization, a forum of multinational bargaining for trade under an international regulatory authority, has adhered compromising provisions for all member countries. The natural rule ‘stronger pie more and weaker are hanged up in the better dream of future' is indirectly refl ected in the WTO rules (the agreements, commitments and a few decisions of Ministerial Conferences) as well. While weaker countries (including independent economic territories) had shown strong reservation in opening up Agreement on Trade-Related Aspects of Intellectual Property Rights, General Agreement on Trade in Services and Agricultural market during negotiation, the richer had persuaded in inserting scattered, fl exible and concessional provisions in different Agreements of WTO; and Ministerial Conferences had made decisions and commitments to support and compensate them. The ultimate indication of trade performance is measured on their transactions and on the free movement of their goods and services. In case if the treatment is not fair or the regulatory compliance is not fulfi lled, remedy ought to be accessible. Since its commencement, just a single case was initiated by Least Developed Countries for settlement through the Dispute Settlement Body due to the doubt on the procedure and effectiveness of DSB. The article tries to analyze that why weaker (especially LDCs) countries are reluctant in joining DSB and framing way-out to resolve the problem by making convenient provisions for the weaker, LDCs as well.

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References

  1. See Sylvia Ostry, ‘The Uruguay Round North-South Grand Bargain: Implications for Future Negotiations’, in Daniel L.M. Kennedy & James D. Southwick (ed), The Political Economy ofInternational Trade Law, Cambridge University Press, Cambridge, 2002. Numbers of NGOs i.e. Third World Network (TWN), focus on the Global South, Indian Research Foundation for Science, Technology and Ecology, International South Group Network, Consumer Unity and Trust Society, World Economy, Ecology and Development, 92 Group, Oxford Committee for Famine Relief, The International Centre for Trade and Sustainable Development and United Nations Conference on Trade and Development had also facilitated the voices of the poor.
  2. Anyone can verify Tokyo and Uruguay Round discussion record.
  3. Different 160 SDT provisions are provided in different agreements basically 66.1/2/TRIPS, 20/AOA, 9& 10/SPS, 11.8/TBT, IV/GATS and 24/DSU. Trade Facilitation Agreement (WT/MIN (13)/36) contains unique SDT measures that link the requirement to implement with the capacity of developing and LDC. It also emphasizes donor members to enhance assistance and support for capacity building of poor LDCs.
  4. Exceptionally very few poor countries have improved their economic condition.
  5. See Global Exchange, ‘Top Ten Reasons to Oppose World Trade Organization’, 1999, Third World Traveller Official Website available at http://www.thirdworldtraveler.com/WTO_MAI/TopTenReasons_Oppose.html, accessed on 15 September 2018.
  6. See Aurelie Walker, ‘The WTO has failed developing nations’, 14 November 2011, The Guardian Offi cial Website available a thttps://www.theguardian.com/global-development/poverty-matters/2011/nov/14/wto-fails-developing-countries, accessed on 15 September 2018; Ruth Bergan, ‘WTO fails the poorest- again’, 29 July 2011, The Guardian Offi cial Website available at https://www.theguardian.com/global-development/poverty-matters/2011/jul/29/wto-doha-fails-poorest-countries, accessed on 15 September 2018.
  7. Appellate Body stated that ‘it is not the task of either Panels or the Appellate Body to amend the DSU or to adopt interpretations within the meaning of Article IX: 2 of the WTO Agreement. Only WTO members have the authority to amend the covered agreements or to adopt such interpretations. Determining what the rights and obligations under the covered agreements ought to be is not the responsibility of panels and the Appellate Body; it is clearly the responsibility solely of the Members of the WTO'. United States-Import Measures on Certain Products from the European Communities, Report of the Appellate Body, WT/DS165/AB/R, Dec. 11 2000.
  8. Understanding on Rules and Procedures Governing the Settlement of Disputes Annex 2 of the WTO Agreement, 1869. U.N.T.S. 401, 15 April 1994 (Dispute Settlement Understanding).
  9. Ibid arts 21, 22 & 25.
  10. Ibid arts 17, 18, 19 & 20.
  11. See Friedl Weiss, ‘Inherent Powers of National and International Courts’, in Federico Ortino & Ernst Ulrich Petersmann (eds), The WTO Dispute Settlement System 1995-2003, Kluwer Law International, 2004.
  12. See Gosego Rockfall Lekgowe, ‘The WTO Dispute Settlement System: Why it doesn’t Work for Developing Countries?’, 24 April 2012, SSRN Offi cial Website, p. 4 available at https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2045470, accessed on 15 September 2018.
  13. See Dispute Settlement Understanding (n 8) art 3.2.
  14. Ibid art 3.4.
  15. Ibid art 4.
  16. Ibid arts 6-20.
  17. Ibid arts 21.3 (c), 22.6 & 25.
  18. Ibid arts 5 & 24.2.
  19. Ibid art 23.
  20. As an experience of Ecuador in the EC–Bananas (1997) and Antigua and Barbuda in the US – Gambling (2005), the retaliation is not so effective even after given authorization to cross-retaliate and suspend obligation under TRIPS agreement against EU and US respectively. With regard to LDCs, under article 24.1 of DSU, developing countries should exercise due restraint in asking for compensation or seeking authorization to suspend the application of concessions or other obligations pursuant to these procedures if found nullification or impairment.
  21. See Amrita Narlikar, The World Trade Organization: A Very Short Introduction, Oxford University Press, 2005, p. 26.
  22. Henrik Horn, Petros C Mavroidis & Hakan Nordström, ‘Is the Use of the WTO Dispute Settlement System Biased? ’, discussion paper no. 2340, Centre for Economic Policy Research, 2009.
  23. Kara Leitner & Simon Lester, ‘WTO Dispute Settlement 1995-2014; A Statistical Analysis’, vol. 18, no. 1, Journal of International Economic Law p. 203, 2015, p.205.
  24. India–Anti-Dumping Measures on Batteries,India, WT/DS 306, 2004. This dispute was settled through bilateral negotiations under Article 4 of the DSU; See Peter Van den Bossche & James Gathii, ‘Use of the WTO Dispute Settlement System by LDCs and LICs’, 2013, Trade Policy Training Centre in Africa Offi cial Website, p. 6 available at http://new.trapca.org/wp-content/uploads/2016/04/TWP1304-Use-of-the-WTO-Dispute-Settlement-System-by-LDCs-and-LICs.pdf, accessed on 15 September 2018.
  25. Victor Mosoti, ‘Africa in the First Decade of WTO Dispute Settlement’, vol. 9, no. 2, Journal of International Economic Law p.427, 2006, p.432.
  26. M. A. Taslim, ‘Dispute Settlement in the WTO and the Least Developed Countries: the Case of India’s Anti-Dumping Duties on Lead Acid Battery Import from Bangladesh’, 26 January 2006, International Centre for Trade and Sustainable Development Offi cial Website, p. 11 Asia Dialogue on WTO Dispute Settlement and Sustainable Development Jakarta, 25-26 January 2006 available at https://www.ictsd.org/themes/trade-law/research/dispute-settlement-in-the-wto-and-the-least-developed-countries-the-case-0, accessed on 15 September 2018.
  27. See Bossche & Gathii (n 24), p. 7.
  28. See Navneet Sandhu, ‘Member Participation in the WTO Dispute Settlement System: Can Developing Countries Afford not to Participate?’, vol. 5, no. 1, UCL Journal of Law and Jurisprudence p. 153, 2015, pp.153-173.
  29. But in the case of developing member countries, the system is almost useful. Around half of the complaints brought before the WTO have been initiated by developing members; See, World Trade Organization, ‘Resolving Trade Disputes Between WTO Members’, 2015, World Trade Organization Offi cial Website available at https://www.wto.org/english/thewto_e/20y_e/dispute_brochure20y_e.pdf, accessed on 15 September 2018.
  30. DSU states that the Director-General can assist members in settling their disputes through his "good offices", mediation or conciliation.
  31. Generally "reasonable period of time" is given to implement the dispute settlement rulings, ranging from eight to fifteen months. Mostly, if the member's parliament or congress needs to change or abolish the measure in question to bring it into conformity with the relevant WTO agreement, take a longer time.
  32. Cross-Border Supply of Gambling and Betting Services, Antigua and Barbuda v. the United States, WT/DS285/ARB, 2007, para 3.
  33. See Ibid; European Communities-Regime for the Importation, Sale, and Distribution of Bananas, Ecuador; Guatemala; Honduras; Mexico & United States v European Communities, WT/DS27/ARB, 2000, para 95.
  34. See World Trade Organization, ‘World Trade Report - 2007’, July 2007, World Trade Organization Offi cial Website, pp. 283-284 available at https://www.wto.org/english/res_e/booksp_e/anrep_e/world_trade_report07_e.pdf, accessed on 15 September 2018.
  35. See Sandhu (n 28), p.154.
  36. See Bossche & Gathii (n 24) p. 23.
  37. See Gregory Shaffer, ‘How to Make the WTO Dispute Settlement System Work for Developing Countries: Some Proactive Developing Country Strategies’, Resource Paper No. 5, International Centre for Trade and Sustainable Development, 2003, p. 9.
  38. Negotiations on the Dispute Settlement Understanding: Proposal by the African Group, TN/DS/W/15, 25 September 2002, para, 3, cited at Bossche & Gathii (n 24).
  39. See Jan Bohanes & Fernanda Garza, ‘Going Beyond Stereotypes: Participation of Developing Countries in WTO Dispute Settlement’, vol. 4, no. 1, Trade, Law and Development p.45, 2012.
  40. See Bossche and Gathii (n 24), p. 50.
  41. See Ibid, p. 21.
  42. See M. Bronkers and N. Van den Brock, 'Financial Compensation in the WTO: Improving Remedies of WTO Dispute Settlement', vol. 8, no. 1, Journal of International Economic Law p. 101, 2006, pp.101-126, at 103; P. Mavroidis, ‘Remedies in the WTO Legal System: Between a Rock and a Hard Place’, vol. 11, no. 4, European Journal of International Law p. 763, 2000, pp. 763-813; B. Hoekman & P. Mavroidis, ‘WTO Dispute Settlement, Transparency and Surveillance’, vol. 23, no. 4, World Economy p. 527, 2000, pp. 527-542.
  43. See Robert E. Hudec, ‘The Adequacy of WTO Dispute Settlement Remedies: A Developing Country Perspective’ in Bernard Hoekman, Aaditya Mattoo & Philip English(eds), Development, Trade and the WTO, The World Bank,Washington D.C., 2002, p. 81.
  44. See World Trade Report 2007(n 34), p.284.
  45. See Bronkers & Brock (n 42), p. 106.
  46. However, Costa Rica had gained and increased trade and kept best foreign relation with the US afterfailing case in US-Underwear-1997 that Costa Rica was too hesitant to file complaints against the US because of Costa Rica-US foreign relation and trade benefit. See John Breckenridge, ‘Costa Rica’s Challenge to US Restrictions on the Import of Underwear’, in Peter Gallagher, Patrick Low & Andrew Stoler (eds), Managing the Challenges of WTO Participation: 45 Case Studies, Cambridge University Press, Cambridge, 2005.
  47. But in practice, for poor and LDCs it is 'semi-hard'. So they are still far from its real use.
  48. See Narlikar (n 21), pp. 45-46.
  49. See Bossche & Gathii (n 24), p. 29.
  50. See India-Anti Dumping Measure on Batteries from Bangladesh (n 24).
  51. See Andrew Guzman and Beth Simmons, ‘Power Plays and Capacity Constraints: The Selection of Defendants in World Trade Organization Disputes’, vol. 34, no. 2, Journal of Legal Studies p. 557, 2005, pp. 557-598.
  52. See India - Quantitative Restrictions on Imports of Agricultural, Textile, and Industrial Products, United States v India, WT/DS90/R, 6 April 1999, pp. 132-133. Request by India for sufficient time to prepare and present its argumentation, pursuant to Article 12.10 of the DSU. However, the jurisprudence for the application of the decision made by Dispute Settlement Body is alike to regular court. The Appellate Body reports are not binding, except with respect to resolving the particular dispute between the parties. This, however, does not mean that subsequent panels are free to disregard the legal interpretations and the ratio decidendi contained in previous Appellate Body reports that have been adopted by the DSB. That is the reason why the legal interpretation embodied in adopted Panel and AB reports became a part and parcel of the dispute settlement system. See the United States- Final Anti-Dumping Measures on Stainless Steel from Mexico, Mexico v the United States, DS344, 30 April 2008, paras 158 & 160.
  53. Nepal government has accused India of imposing an undeclared blockade. India has denied the allegations, stating the supply shortages have been imposed by Madheshi protesters within Nepal, and that India has no role in it. Despite Indian denials, some border entries points have witnessed no agitation but in the name of agitation India had enforced border blockade, choking imports of essential goods i.e. petroleum, medicines, earthquake relief material and Nepalese goods and trucks at the Kolkata harbor. The blockade was an open sanction against Nepal for not accepting Indian pressure to insert suitable changes in the Constitution so their hegemony can be established very soon after the commencement of the New Constitution that was passed by the 90 % vote of existing CA Members on 20 Sep. 2015. India strongly instigates Madheshi leaders alleging the Constitution is discriminatory to Madhesi, however, there is no such provision.
  54. See Dispute Settlement Understanding (n 8), art 3.8.
  55. Dennis Browne, ‘Dispute Settlement in the WTO: How Friendly is it for the LDCs’, CPD working paper 45, Centre for Policy Dialogue, 20 July 2005, p.37.
  56. Magda Shahin, ‘WTO Dispute Settlement for a Middle-Income Developing Country: The Situation of Egypt’, in Gregory Shaffer & Ricardo Melendez-Ortiz (eds), Dispute settlement at the WTO: The Developing Country Experience, Cambridge University Press, Cambridge, 2011, preface and p. 280.
  57. Otherwise, the concept, trade generates investment and investment do fosters higher productivity of domestic industries as a result of competition, exploitation of economies resources and access toknowledge, looks fade, however, trade practice, harmonized, uniformed rules and principles has slashed down trade barriers, the biggest achievement of the 21st century, has no meaning.
  58. See Bossche and Gathii (n 24), p. 27.
  59. "A number of individual measures, which cannot be traced down to any general provision but signal nonetheless a consistent trend, have targeted, starting from beginning-2015, several imported products, notably cosmetics, foodstuff, feedstuff, detergents. A large number of consignments of these products have been routinely blocked at ports and subject to new checks (phytosanitary, fraud-related and other unspecified) which take several months without the importers being informed of the reasons and expected the duration of such checks. In certain cases, consignments are blocked at ports indefinitely and perishable goods are no longer marketable. Complaints lodged by the operators remain usually without any reply and no reasons are given to justify these measures. In certain instances (also reported by the press), importers have been informed of an unofficial list of 25 products (mainly falling within the above-mentioned categories) which would be subject to import bans or future import licenses", See European Commission, ‘Overview of Potentially Trade Restrictive Measures Identified Between 2008 and 2015’, May 2016, European Commission Offi cial Website p. 2, available at http://trade.ec.europa.eu/doclib/docs/2016/may/tradoc_154568.pdf, accessed on 15 September 2018; European Commission, ‘Report From the Commission of the Council and the European Parliament on Trade and Investment Barriers and Protectionist Trends, 1 July 2014 - 31 December 2015’, 20 June 2016, European Commission Offi cial Website available at http://trade.ec.europa.eu/doclib/docs/2016/june/tradoc_154665.pdf, accessed on 15 September 2018.
  60. See David M. Trubek & Lance Compa, ‘Trade Law, Labour, and Global Inequality’, University of Wisconsin Legal Studies research paper no. 1001, University of Wisconsin, 2006, p. 217-243; International Federation for Human Rights, ‘Understanding Global Trade and Human Rights’, 27 July 2005, International Federation for Human Rights Offi cial Website available at https://www.fidh.org/en/issues/globalisation-human-rights/trade-and-investment-agreements/Understanding-Global-Trade-Human, accessed on 15 September 2018.
  61. Nepal is also a beneficiary of WTO technical assistance. WTO has supported Nepal to enhance its human and institutional capacities. Some other important technical and financial assistance have been provided through EIF and STDF.
  62. It is defined i) technical assistance for trade policy and regulations, ii) economic infrastructure, iii) productive capacity building and trade development, iv) trade-related adjustment, and v) other trade-related needs.
  63. Trade facilitation, Public Stockholding for Food Security Purposes, Tariff Rate Quota Administration Provisions of Agricultural Products, as defined in Article 2 of the AoA, Export Competition, Preferential Rules of Origin for LDCs, Waiver Concerning Preferential Treatment to Services and Service Suppliersof LDCs, Duty Free and Quota-Free Market Access for LDCs and Monitoring Mechanism on SDT are highly focused but except for Trade Facilitation no other program of action discussed at Bali 2013 and its follow up in Nairobi MC are effectively implemented.
  64. However, poor countries lack such skilful human resources and visionary activities of government i.e. making new laws, rules, improving conditions, enhancing physical and non-physical infrastructures, promotion of products and services throughout the world, compliance of international standards making entrepreneurs and company more competitive in the open market.
  65. See Bossche & Gathii (n 24), p. 45.
  66. See Bronckers & Broek (n 42), p. 110.