| University
of Manchester - School of Law LLM in International Business Law Year 2000-2001 | WTO
Dispute Settlement System and Implementation of Decisions: a Developing Country
Perspective | Thesis submitted by Alban FRENEAU | |||
TABLE
OF CONTENT
Section
2 : Critical analysis of the treatment of developing countries under the GATT
dispute settlement system
Chapter
2. General Differential Treatment Granted to Developing Countries Under the
WTO Dispute Settlement System
Section 1. Existence
and affirmation of a differential treatment
Section
2. Critical analysis of the WTO DSM from the perspective of developing countries
Section 1. General remarks
on the dispute settlement system of implementation from the viewpoint of developing
countries
Section
2. Shortcomings of the existing system of implementation
Chapter
4. Proposals for Reform of the WTO Dispute Settlement System
Section
1. Proposal regarding access to the dispute settlement mechanism
Section
2. Proposed procedural improvements
Section
3. Proposals regarding specifically the issue of the implementation of WTO
Annex
This
dissertation aims to analyse the involvement, use and special needs of Developing
Countries in the World Trade Organisation Dispute Settlement System with a particular
focus on the implementation of decisions. This subject will be tackled from a
historical, present and prospective point of view.
This
dissertation will first demonstrate the special needs of developing countries
as they historically appeared through the dispute settlement’ s practice and at
showing what were the state of the law and developing countries expectations before
the establishment of the WTO. Accordingly, a critical description and analysis
of the special treatment afforded to developing countries in the WTO dispute settlement
system will be provided.
We
will then specifically tackle the difficulties a developing country may experience
in the implementation of WTO dispute settlement findings. We will mainly observe
that the solutions as to the implementation ensuing from the DSU are discriminatory
in practice as they favour economically strong members.
At
last, this dissertation will echo and take part in the calls for reform and analyse
their potentials.
No
portion of the work referred to in this dissertation has been submitted in support
of an application for another degree or qualification of this or any other university
or other institute of learning.
Copyright
in text of this thesis rests with the Author. Copies (by any process) either in
full, or of extracts, may be made only in accordance with instructions given by
the Author and lodged in the John Rylands Library of Manchester. Details may be
obtained from the librarian. This page must be part of any such copies made. Further
copies (by any process) of copies made in accordance with such instructions may
not be made without the permission (in writing) of the Author.
The
ownership of any intellectual property rights which may be described in this dissertation
is vested in the University of Manchester, subject to any prior agreement to the
contrary, and may not be made available for use by third parties without the written
permission of the University, which will prescribe the terms and conditions of
any such agreement.
Further
information on the conditions under which disclosures and exploitation may take
place is available from the head of the Department of Law.
I
would like to thank Professor Stephen Young who kindly accepted to answer my questions
on the article he published with Professor Thomas L. Brewer on WTO disputes and
developing countries.
AB
: Appellate Body.
The
mere fact that the World Trade Organization (WTO) is the international organisation
dealing with the global rules of trade between nations seems, prima facie, to
contradict the idea of a DSM promoting justice and development beyond trade interests.
This is obviously not the primary goal of this organisation and the role of the
DSM reflects this fact.
However,
over three-quarters of WTO members are developing or least-developed countries
[2] (respectively DCs and
LDCs). This important weight in the WTO membership must be compared with the DCs’
limited share in the global trade. Failing to translate these essential features
of world trade and WTO membership in WTO agreements and DSM would be a mistake
given that rich and poor countries do have some common interests in world trade.
Accordingly, many WTO
agreements, including the DSM, reflect the fundamental differences that exist
between developed and developing countries and provide for differential treatments.
In the WTO, as in Public
International Law, there is no precise definition of the term “developing country”
[3]. Accordingly, following
Horn and Mavroidis, we will use this term in the conventional sense to denote
a relatively poor country [4]. However, since all WTO
Members can, invoking the self-election principle, declare a developing country
status [5], the term will also reflect
the legal sense used in the WTO Agreements, where a number of provisions refer
specifically to “developing countries” and “least-developed countries”. In these
cases, as stated above, no precise definitions can be found in WTO agreements
themselves. They refer explicitly or not to the UN classification in this regard
[6].
The
WTO dispute Settlement Mechanism aims to resolve trade quarrels between members.
Such mechanism has always been present throughout the GATT/WTO history, although
it only recently, as a result of the Uruguay Round, benefited from a genuine adjudicative
approach, breaking with the underlying diplomatic nature of the GATT DSM. Many
distinctive features relevant to the situation of DCs are significant for the
settlement of disputes: the necessity to promote development through trade, the
relative lack of legal expertise and financial resources, the need for settling
rapidly trade-related disputes or their dependence on developed countries for
example.
As part of
the more general question of the treatment of developing countries in the WTO
DSM, we will emphasise throughout this dissertation and specifically in chapter
III the difficult question of the implementation of WTO DSM decisions from the
viewpoint of developing countries. We will notably insist on the difficulties
these countries may face when involved in a dispute with a developed country in
the event the latter is not willing to comply with a panel or appellate body decision.
Our
– relatively – narrow subject has been rarely addressed as such. This explains
the heavy reliance of this dissertation on a few previous works, notably on outstanding
articles by M.E. Footer , B. M. Hoekman, P. C. Mavroidis, H. Horn and K.O. Kufuor
(see general bibliography [7]).
To
some extent, developing countries' special needs and specific weaknesses had been
taken into account throughout the GATT history (Chapter I) and were controversially
translated in the new WTO DSM (Chapter II).
One
highly contentious issue of the WTO DSM is the actual significance and subsequent
application of WTO DSM decisions. We will notably observe in this regard that
the emphasis placed on retaliation gives rise to practical difficulties for developing
countries (Chapter III).
In
a last chapter (Chapter IV) we will echo and take part in the calls for reform
of the WTO DSM that ensue from South countries.
Chapter
1. Evolution of the Treatment Granted to Developing Countries Under the
GATT Dispute Settlement System
Chapter
2. General Differential Treatment Granted to Developing Countries Under
the WTO Dispute Settlement System
Chapter
4. Proposals for Reform of the WTO Dispute Settlement System
"[...]
[I]t is unrealistic to expect that the DSU will generate outcomes that will be
balanced and equitable from the perspective of the South. Except with respect
to matters of process, the DSU itself can hardly become “development-friendly”.
[emphasis added]" [396]. Throughout this dissertation,
we have addressed many aspects of the involvement of DCs in the DSM following
a judgmental approach, with a view to assessing whether the adjudication process
of the WTO could act as an instrument of justice and development in favour of
DCs.
It appears that
the DSM cannot presently play such a role.
The
legal and practical significance of the special treatment granted to DCs, as well
as the political willingness to set up a truly preferential system can be questioned
on many grounds. The retrograde approach followed by the WTO DSM and the lack
of implementation procedures have contributed in its relative failure.
However,
judging by use made of the WTO DSM so far, it is clear that the DSU represents
a significant development : in the three years since the WTO began to function,
there were almost as many cases subject to dispute settlement as there were in
the fifty years of the GATT’s existence [397]. Similarly, DCs' participation
has increased of about thirty percent of the total complaints by DCs, as compared
with their overall participation in the GATT history [398].
This
involvement of DCs is likely to become more important in the next few years since
many DCs, notably sub-Saharan African, enjoy longer transitional periods to fully
implement the WTO Agreements [399].
Nevertheless,
as we previously observed, this cannot be fully explained by the treatment granted
to DCs by the WTO DSM. These countries have mainly benefited from general improvements,
such as the relative judicialisation of the procedure.
We
can thus conclude that, on the whole, the DSU represents a certain success but
that the special treatment itself failed to reach its goals.
The
DCs's situation as regards the implementation of decisions is particularly worrisome.
This specific issue reveals the underlying problem of the system, that is the
fragility of the adjudicative dimension that can be set aside in favour of diplomacy
whenever a member is not willing to abide by the decisions. This move is a developed
countries' privilege which exposes the profound ambivalence of the system. Beyond
its apparent adjudicative nature, the WTO DSM can dangerously be turned into a
"diplomatic club" [400] wherein DCs are in
a very fragile position.
This
specific feature which ensures flexibility and preserves the Member States' sovereignty
has been described as "the genius of the GATT/WTO system", where "
[...] there is no prospect of incarceration, injunctive relief, damages for harm
inflicted or police enforcement [...] no jailhouse, no bail bondsmen, no blue
helmets, no truncheon or tear gas [emphasis added] " [401].
Unfortunately, this is exactly what is, in essence, needed by DCs : a truly judicial
mechanism. The latter will never be fully set up at the international economic
level not to undermine Member States' sovereignty.
What
hopes are left to DCs ?
As
we observed earlier, it appears that the special treatment could constitute an
efficient system if it were duly applied, in a dynamic and effective way. This
prospect is not unrealistic.
At
last, many possible reforms that we evoked in this dissertation amount to "positive
action" or "positive discrimination". This idea, borrowed from
social law, could be of significance in the WTO as far as it could be applied
in the context of trade relationships between sovereign states. Beyond the differential
treatment controversially afforded to DCs, the legal recognition by WTO Agreements
of underlying weaknesses and practical difficulties faced by DCs in international
trade relationships should lead to a genuine positive preferential treatment under
the DSM.
[1] J.H
Jackson cited in Brewer, T. L., and Young S.
International trade WTO disputes and developing countries. Journal of World Trade.
ISSN 1011-6702. 1999, 33(5), 169-182, p.169.
[2]
“About 100 of the WTO’s over [sic] 14[2] members are developing countries. They are expected to play an increasingly
important role in the WTO because of their numbers and because they are becoming
more important in the global economy. The WTO agreements take account of these
countries’ interests in a number of ways [emphasis
added]”. This share is likely to increase since
most applicants to WTO membership are DCs. WTO Web site. http://www.wto.org/english/thewto_e/whatis_e/tif_e/dev0_e.htm.
[3] Horn, H., and Mavroidis P. C. Remedies in the WTO Dispute
Settlement System and Developing Countries.
www1.worldbank.org/wbiep/trade/papers_2000/BPdisput.PDF, 1999, p.1and 2.
[4] In addition to low GNP/capita, these countries share
features such as small GNP relative to the major players in the trade arena, limited
domestic legal resources, exports are concentrated in terms of products and trading
partners, high average trade barriers, economic and political dependence on industrialized
countries. Ibid. See also Duk Park, Y., and Umbricht G. C.
International trade WTO dispute settlement 1995-2000: a statistical analysis.
Journal of International Economic Law. ISSN1369-3034. 2001, 4(1), 213-230, p.214,
note 4.
[5] “All countries have chosen to do this at least once,
with the exception of the European Community (EC), the United States, Canada,
Japan, Switzerland, Norway, Australia and New Zealand.[emphasis added]”.
Ibid.
[6] Ibid., p.214, note 5.
[7] Bibliography p.97.
________________________________________________________________________________
[396] T.R.A.D.E., op.cit., supra, footnote 36, p.35.
[397] Ibid., p.33.
[398] Kuruvila, P. E., op.cit., supra, footnote 15, p.179.
[399] Footer, M. E, op.cit., supra, footnote 147, p.59. The least-developed
of them have until 1 January 2005.
[400] Wilson, S. B., op. cit., supra
footnote 210, p.779.
[401] Judith Bello, cited in Jackson, J.H., op. cit., supra footnote 295, p.61
BOOKS
ARTICLES
Rosas, A. Implementation
and Enforcement of WTO Dispute Settlement Findings: An EU Perspective. Journal
of International Economic Law. ISSN1369-3034. 2001, 4(1), 131-144.
Official
WTO documents