CHAPTER 1 : EVOLUTION OF THE TREATMENT GRANTED TO DEVELOPING COUNTRIES UNDER THE GATT DISPUTE SETTLEMENT SYSTEM.

This chapter aims at demonstrating 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.

Section 1 : Treatment of developing countries under the GATT dispute settlement system.

The General Agreement on Tariffs and Trade had been conceived as an international Treaty and not an institution. For this reason, no specific body designed to settle disputes between members had been provided for : dispute settlement rested on conciliation. The aim of the GATT was not to sanction against violations but rather to seek a consensus on the need to comply with the rules[8]. This left an important role for negotiation and thus the economic weight of the parties to the dispute had a problematic bearing upon the dispute settlement.

Paragraph 1 : 1947- 1966: Emergence of a differential treatment in favour of developing countries.

System resting upon Article XXII and XXIII, favouring negotiation and the finding of a consensus.

The “consultation” (Article XXII) and the “nullification or impairment” (Article XXIII) provisions were originally the only GATT provisions addressing the question of dispute settlement [9].

It must be primarily noted that Article XXII and XXIII[10] did not provide for a “Dispute settlement system” as such but for a system whereby the protection of concessions could be assured [11]. Accordingly, the GATT DSM was not of judicial nature. The procedure was invokable irrespective of whether there was a breach of legal obligation. The aim of the system was to reach a consensus on the dispute through negotiation. To do so, articles XXII and XXIII provide for a two-stage procedure. The first “bilateral” stage of the procedure (Article 22) gives the parties to the dispute the opportunity to consult each other and with other contracting parties. The second stage of the procedure was multilateral. It was triggered mainly where “no satisfactory adjustment [had been] effected between the contracting parties concerned within a reasonable time […] [emphasis added].” at the first stage. The matter may then be “referred to the CONTRACTING PARTIES”. [12].

As B. Taxil notes[13], these articles are rather laconic, no precise procedural conditions are provided for. This procedure had been designed to be pragmatic and above all not to impose on contracting parties any legally binding obligations stricto sensu. Therefore, the GATT DSM, as conceived in 1947, left room for practical improvements [14]. The main shortcoming of the system which undermined its apparent simplicity was the necessity to gather all Contracting Parties to settle the dispute.

Regarding the specific situation of developing countries, it is self evident that the GATT 1947 procedure did not serve their interests : the economic weight of the parties to the disputes had a significant bearing on the negotiation process. This emphasis on negotiation was likely to lead economically strong members of the GATT to use – or abuse of – their political and economic strength to take advantage of developing countries [15]. This resulted in a lack of trust of developing members in the GATT DSM and, as K. O. Kufuor notes [16], they filed only ten out of fifty-eight complaints from 1948 to 1966.

System similar to conciliation [17] to the detriment of developing countries.

As K.R. Gupta [18] points out, the procedure laid down in Article XXII and XXIII was “very similar to conciliation” : parties to the dispute tried to reach “an agreed statement  of the facts and – if possible – an agreed statement of the application of the relevant GATT provisions to those facts [emphasis added].””, this statement was further submitted to the contracting parties whose role was described earlier.

This early approach of the settlement of dispute reflected the most powerful contracting parties’ will to put in place a system the aim of which was merely “to facilitate the settlement by government contracting parties to the GATT, of dispute between them regarding GATT matters [emphasis added].” [19]. Intergovernmental conciliation prevailed over the GATT settlement of dispute system.

Following E. Canal-Forges, we must insist on the fact that conciliation does not normally lead to a legally binding solution [20]. To this extent, conciliation can be opposed to judicial process in the sense that the latter binds the parties and favours the application of the rule-of-law and not the finding of a consensus the legal significance of which is dubious. Article XXII and XXIII connoted a power of negotiation, based on the economic weight of the parties to the disputes : genuine fair conciliation can only take place between parties of comparable economic power [21].

B.Taxil [22] insists on the fact that the conciliation approach of the GATT 1947 was not adapted to disputes between countries of unequal economic might [23]. Judicial remedy appears to be the only way to ensure a due process of law. At this early stage of the GATT’s history, the need for a “judicialisation” of the procedure was felt by developing countries. As P.E. Kuruvila [24] notes, smaller countries tend to support a legalistic system that places the emphasis on rules and under which they feel being treated more fairly. Judicialisation also allows for the development of a more consistent “jurisprudence” and provides “greater precision, predictability and stability of the GATT rules [emphasis added].”[25].

Seventh session of 1953: recourse to panels of experts.

The necessity to gather all contracting parties in order to investigate and settle disputes raised evident practical difficulties. Accordingly, it was decided at the Seventh session in 1953 that the settlement of disputes should be entrusted to panels of experts.

The latter were to be composed of three to five GATT delegates, according to their individual competence and merits [26]. As Gupta notes [27], the selected delegates were indeed representatives of contracting parties but they acted “in their own right and [did] not simply carry out a function assigned to their delegation [emphasis added].”[28].

The panel was established ad hoc for each case and was first appointed by contracting parties to investigate the case.

The two parties to the complaints [29] were then heard by the panel. In the event the dispute was not settled during the deliberations, the panel deliberated in camera and ruled in the form of a draft report. The parties had the opportunity to submit comments on this report. Having considered theses comments, the panel could modify its report or simply take note of them. Although the GATT provided for a simple majority system, in practice all decisions were taken by consensus [30].

The report merely consisted in recommendations which encouraged the disputant parties to settle the dispute without resorting to retaliation. “One form of the recommendation calls, in a polite way, the guilty party to withdraw the measure in question [emphasis added].”[31]. However, when the circumstances were serious enough, the contracting parties could authorise the aggrieved party to have recourse to retaliation.

From the perspective of developing countries, the panel system was, at least prima facie, a major improvement. The composition of panels seemed to better reflect smallest countries’ interests. In addition, this system appeared to allow for a quicker settlement of disputes.

However, in practice, panel proceedings could take a long time [32]. More importantly, the conclusion reached did not provide developing countries with the legal certainty they had been expecting [33]. Finally, as we will observe further, recourse to retaliation is not an affordable option for developing countries, above all when the economy of the developing country in question mainly depends on the trade of a single product with a developed country. R. E. Hudec notes [34] that developing countries lawsuits had no real force behind them because they simply do not have the market power to injure a developed country by retaliation.

K.R.Gupta [35] noted in 1976 that the GATT DSM must be distinguished from a judicial apparatus on several grounds : the disputants were allowed to see and comment on the report while in process and a great deal of informal consultations were held with the disputants in order to “find out common grounds which may be acceptable by both parties [emphasis added].”. This important feature, coupled with the fact that panel reports did not bind the parties to the dispute, confirms that the GATT DSM was still comparable to a conciliation process after the panel system had been created.

At this stage, developing countries had indeed little recourse to the DSM, the lack of trust in the system may be regarded as the main reason for this [36].

Paragraph 2 : Special treatment under the pre-Tokyo Round.

The outbreak of the Uruguay complaint (1961).

In 1961, Uruguay launched a massive complaint [37] on the ground of article XXIII against fifteen developed countries, listing five hundred seventy six restrictive measures [38]. However, the complainant refused to take position on the legality of the measures at issue under the GATT [39], though requesting a ruling on this question.

This passive attitude can be analysed in the retrospect as an effort “to dramatize the GATT’s ineffectiveness in protecting the legal rights of developing countries [emphasis added].”[40]. This can also be explained by the Uruguay’s fear of individually provoking a developed country [41].

Although the overall outcome of the complaint was positive - some restrictive measures were removed following the complaint – Uruguay eventually took the view that GATT law was unable to protect developing countries [42], since other restrictive measures had been taken by the defendant countries during the pendency of the dispute of after it had been settled.

As we observed earlier, before the Uruguay claim in 1961, developing countries had made little use of the GATT DSM. The Uruguay case aimed at drawing developed countries’ attention on the overall imbalance of benefits under the GATT [43]. Uruguay hardly obtained satisfaction from its broad-based attack [44] and this led this country, along with Brazil, to propose in 1965 a major reform of the GATT DSM.

1965 : Brazil and Uruguay proposals.

In 1965, Brazil and Uruguay proposed a reform of Article XXIII of the GATT. The contemplated amendment mainly touched upon four major developing countries’ concerns.

(i) Article XXII should provide developing countries with the option of employing additional measures (including greater technical assistance and that third party be permitted to prosecute GATT related complaints on their behalf [45]).

(ii) A financial compensation on mutually acceptable terms should be paid in case of violations of the GATT by developed countries [46], where it is established that the measure at issue has an adverse effect on the trade of the developing country.

(iii) The possibility for developing countries to be released from their obligations under the GATT towards a developed country whose restrictive measures have impaired their import capacity.

(iv) Where a developed country has not complied with a panel recommendation within a certain time limit, the possibility of a collective action in order to obtain compliance should be provided for.

What must first be pointed out is that the brazil and Uruguay proposed reform did not aim at improving the overall GATT DSM but at establishing a preferential treatment within this system in favour of developing countries. The need for a realistic distinction [47], considering developing countries’ specific needs and possible use of the DSS had been definitely established, although, as we will see, the Brazil and Uruguay proposal led to a modest change.

The proposed reform indeed aspired to alleviate the unequal economic relationship between North and South which was felt to be reflected in the GATT DSM’ functioning. One major concern was to imagine new remedies in favour of developing countries in order to compensate their inability to retaliate against a developed country. Financial compensation was seen to be the best option [48]. This proposal was rejected on the ground that granting the aggrieved party a right to financial compensation would undermine the defendant state’s sovereignty [49]. The report of the Ad Hoc Committee on legal amendments also shows that the possibility of a financial compensation was rejected on the ground that ”it would be impossible to evaluate the loss occurred by a contracting party in its export opportunities in money term [..] [emphasis added].” [50].

Likewise, the right for developing countries to be released from their obligations under certain circumstances was considered as excessive [51]. However the Brazil and Uruguay plan did have a certain legislative impact in the form of the inclusion of part IV in the GATT and the adoption of the 1966 Procedures.

Inclusion of part IV in the GATT and 1966 Procedures : consideration of developing countries specific needs.

When the Brazil and Uruguay proposals were put forward, the GATT DSM merely consisted in the “consultation” and the “nullification or impairment” provisions described above which were indeed common to all contracting parties. The first attempt to take in consideration developing countries’ particular position as to the GATT DSM was the inclusion of Part IV [52] (TRADE AND DEVELOPMENT) which added to the GATT agreement Article XXXVI, XXXVII and XXXVIII [53].

The latter laid down general commitments [54] made by developed countries towards their underdeveloped counterparts. Although it does not regard the settlement of disputes it is worthy noting that, as P. E. Kuruvila notes [55], the inclusion of Part IV constituted a first step, though rather timid, towards the recognition of a special status for developing countries in the GATT DSM.

The next major improvement ensued from the 1966 procedures [56] which are considered as the political and legal response to the Brazil and Uruguay proposals [57]. The 1966 procedures [58] mainly consists in four provisions which only apply to complaints by underdeveloped countries against developed countries.

First of all, as a result of the 1966 procedures, it must be noted that the panel shall “take due account of all the circumstances and considerations relating to the application of the measures complained of and their impact on the trade and economic development of affected contracting parties [emphasis added]. ”[59]. This provision was designed to call upon panels to take account of the economic dimension of the case besides its purely legal implications [60]. The fact that the economic - and not simply legal - implications of the measure at issue was to be taken into account as a major element in the panel ruling was a real improvement [61].

Another important improvement contained in the 1966 procedures was the possibility for developing countries involved in a dispute with their developed counterparts to have recourse to the good offices of the Director-General of the GATT [62]. This can be done in the case that bilateral negotiations fail. In order to assist the Director-General in his task, he is granted access to all information related to the dispute. This is necessary since he is to be closely involved in the negotiations [63]. To do so, he can consult with the contracting parties concerned or with any other sources he finds appropriate (other contracting parties, intergovernmental organisations).

In order to highlight the GATT DSM’ deficiencies and to take account of developing countries concerns, the Director-General was to “bring the matter to the attention of the contracting parties [emphasis added].” at the request of any of the countries involved, in the case that no satisfactory solution is reached after two months [64].

Two further provisions contained in the 1966 procedures dealt with the question of delays in the dispute settlement process.

(i) A panel of experts is to be appointed forthwith upon receipt of the report of the Directorate-General [65]. This panel is to reach its decision and submit its recommendation to the GATT Council for review and appropriate action within sixty days [66].

(ii) The question of the implementation of panels rulings was also tackled by the 1966 Decisions. Precise time frames were established in this purpose, regarding both the information on the action taken by the respondent and the practical implementation of the recommendation itself.

The GATT Council or the contracting parties is to be informed by the country to which the recommendation was made of its action following the panel’s ruling within ninety days from the decision of the relevant authority (contracting parties or Council)[67]. If this report shows that the respondent did not fully complied with the recommendation within the ninety days time frame and if “the circumstances are serious enough to justify such action”, the affected contracting party may be authorised to suspend any concession [68] “in regard of the contracting party causing the damage [emphasis added].” [69].

1967 Self standing panel procedure.

The 1966 Procedures were followed by further efforts to improve the developing countries’ position. In 1967, the Contracting Parties agreed to create a “self-starting” [70] or “self standing” panel procedure the aim of which was to “examine problems relating to the quantitative restrictions maintained by developed contracting parties on industrial products of particular interest to developing countries with a view to an early removal of these restrictions [emphasis added].” [71].  However, this procedure, as the wording of the decision suggests [72], was not automatic and no legal obligations bound the contracting parties in this regard. As a consequence, developing countries considered that bilateral negotiations were preferable and resisted the creation of these panels [73]. An important concern for them already expressed on the occasion of the Brazil-Uruguay proposals - was that panels be automatically set up, without the need to request so. Such “panels would either be instantly seized of any issue that fell under their jurisdiction, or could probe to find out if the developed contracting parties were in breach of their GATT obligations [emphasis added]. ”[74]. The idea behind automatic panels was that the GATT would assume the role of an Attorney General and in so doing, relieving developing countries from a certain burden in the prosecution and conferring more strength to the complaint.

1970 Conditional automatic panel.

This idea was revived in 1970, as regards developed countries’ obligations pursuant to Part IV. According to the proposal, panels were to review developed countries’ compliance on that matter. The Contracting Parties adopted this project [75] but while the proposal aimed to render this procedure automatic, the decision made it conditional on the agreement of the affected government and thus undermined to a great extent the potential of the reform.

1971 : “Group of Three” proposal.

The idea of establishing automatic panels was temporally abandoned in 1971 in favour of the proposal of the Delegation of Trinidad and Tobago to create a “Group of Three” [76]. This Group of Three was to be composed of the respective chairmen of the GATT’s three main entities: the Contracting Parties, the Council and the Committee on Trade and Development. Its role was to identify specific cases of unfair trade restrictions and accordingly, “present proposals in regard to concrete action that might be taken to deal with trade problems of developing countries [emphasis added].”[77].

Before being suspended in 1974 [78], the Group of Three issued three reports in which it highlighted several unjustified trade barriers of some developed countries and recommended their elimination [79]. Following these reports, five developed countries withdrew some of the restrictions at issue. As A.Yusuf [80] notes, the last report of the Group of Three contained expressions of disappointment as to the success of their job.

As we have observed, the period from 1966 and 1978 (end of the Tokyo Round) did see important improvements of the GATT DSM as regards developing countries. However we noted that their practical success was questionable, as these improvements, mainly because of a certain resistance on the part of developed Contracting Parties, did not tackle developing countries' underlying concerns as to the GATT DSM. As a consequence, as K. O. Kufuor points out, in the period between the adoption of the 1966 Procedures and 1978, there was only a slight percentage increase in the use of the DSM by developing countries compared to the 1948-1966 period  [81].

Paragraph 3 : Special treatment afforded to developing countries from the Tokyo Round to 1994.

The decade of the 1970s saw an overhaul and rebuilding of the GATT legal system [82] The Tokyo Round negotiations led to a codified, better structured DSS in the form of the 1979 Understanding Regarding Notification, Consultation, Dispute Settlement and Surveillance [83]. In addition a legal office was finally created at this occasion, addressing to some extent the developing countries’ calls for an institutional reform and for legal assistance [84].

Description of 1979 Understanding regarding Notification, Consultation, dispute settlement and Surveillance.

As regards the interests of developing countries, only a few genuine improvements can be found within the 1979 Understanding.

First of all, the latter reaffirmed the availability of the 1966 Procedures and stated in a rather vague manner that special attention should be given by contracting parties to the particular problems and interests of developing countries during the consultations [85]. The 1979 understanding also addresses the question of the risk of hostile retaliation by developed country members in the case their underdeveloped counterparts filed a case against them [86]. This was a developing countries’ major fear which was to some extent allayed by the reform [87].

One of the most significant concessions to developing countries, although not mentioned as such [88], was that any contracting party having a substantial interest in a panel [89], proceeding could have its interests heard by the panel.

In addition, paragraph 6(iii) of the Understanding gave a legal recognition to the practice of appointing a panellist from developing countries in the case the dispute was between an industrialised and an underdeveloped country [90].

The panel was given the right to consult with any individual or body it would deem appropriate to seek information and technical advice [91]. This constituted a step in the direction of a role for third parties, although it was dependant on the will of the panels and not on contracting parties as developing countries had wished [92].

The Contracting Parties also agreed to “conduct a regular and systematic review of the developments in the trading system with regard to matters affecting the interests of developing countries [emphasis added].” [93].

Finally, “[t]he technical assistance services of the GATT Secretariat [could], at the request of a less developed contracting party, assist it in connection with matters dealt with in [the 1979] understanding [emphasis added]. ” [94].

Compared with the 1966 Procedures and the subsequent developments of 1967, 1970 and 1971, one may take the view that the 1979 Understanding constituted a certain improvement. First, the latter gave a legal response to developing countries’ concerns as to the finding of the violation. The extensive investigation of trade flows [95] the finding of the violation implies cannot practically be afforded by developing countries because of an evident lack of resources. The systematic review, as well as the technical assistance granted to the less developed nations under the 1979 Understanding constituted important developments in this regard.

In addition, after the 1979 Understanding, developing countries were assured to get to be heard by a panel where at least one panellist from a developing country would be present.

However, with regard to the previous practice [96] and the fact that a retrograde approach was adopted by reiterating the 1966 procedures, we may consider, following P. E Kuruvila [97], that the 1979 Procedure did not add much to developing countries’ rights as to the GATT DSM and that it deprived them from the special and differential treatment they enjoyed by universalising the privileges they enjoyed under the 1966 procedures.

1982 Declaration.

The 1982 declaration on dispute settlement procedures adopted at the Thirty-Eighth Session [98] noted that room was left for general further improvements under the GATT DSM and Contracting Parties agreed upon several measures designed to facilitate and accelerate the DSM [99]. These developments did not directly address the particular situation of developing countries [100].

1989 Improvements.

The 1989 Improvements [101] were of certain significance for developing countries because they constituted an interesting step towards the judicialisation of the procedure : the Contracting Parties agreed to lay down the obligation to notify to the Council mutually agreed solutions to disputes raised under GATT 1947 Article XXII and XXIII [102] in order to ensure their GATT consistency. The significance of such provision was twofold. First, by reviewing the GATT consistency of agreed solutions (including though arbitration settlement), the 1989 Improvements brought about a security for developing country, ensuring that the solution reached did not merely rest on the agreement itself and thus “lessening the impact of any power disparities between developed and developing country parties to a dispute [emphasis added].”[103].

In addition, the 1989 Improvements contained provisions regarding the technical assistance to be provided to contracting parties to the dispute and particularly to developing countries [104].

Finally, the question of time frames in the dispute resolution procedure was clarified [105] as regards the period for negotiations and consultations prior to the establishment of a panel [106].

Section 2 : Critical analysis of the Treatment of developing countries under the GATT dispute settlement system.

Although the period between the adoption of the 1979 Understanding and the WTO DSU saw a significant increase in the number of complaints filed by developing countries, this cannot be explained solely by the series of alterations made to the GATT DSM [107]. As a matter of fact, despite several reforms, the GATT DSM basically remained a negotiation-based procedure favouring the most powerful countries.

Paragraph 1 : GATT dispute settlement system defects.

The GATT DSM’ s shortcomings we want to address here had obviously a bearing on any disputes. However, they were likely to constitute a more serious impediment for developing countries as they suffer from a more fragile position in the negotiation process the GATT DSM amounted to.

The panels procedure in question.

The main deficiency to be noted in the GATT DSM was that it remained a consensus-based system implying a negotiation process [108] despite numerous reforms. The Council took decisions on the basis of consensus of all the Contracting Parties at every stage of the procedure (establishment of the panel and terms of reference, selection of panellists and eventually adoption of panel rulings). Consequently, any contracting party could hinder the DSM process [109].

The establishment of the panel was left to the discretionary competence of the GATT Council. Despite the developing countries’ attempt to obtain a right to be automatically heard by a panel, such right was not granted under the GATT 1947. Furthermore no time frame was provided for the establishment of the panel and the Council was virtually able to postpone the procedure indefinitely [110].

Finally, the neutrality of the panellist had also been questioned. The 1979 Understanding addressed this concern by specifying that panellist shall sit as private persons and shall not be under the influence of their own government. However, this is a very subjective notion that can hardly be defined or delimited with precision [111].

Legal significance of panels reports and issue of implementation.

In the case the panel report was adopted, the question of its legal significance remained. As we previously observed, the aim of the DSM was not to uphold the GATT law but to reach a consensus on its application [112]. It follows that, self evidently, panels recommendations were not mandatory for the losing party : the entire procedure rested upon the disputants' good faith [113]. If the disagreement between the parties lasted, the intervention of the panel was actually pointless, as a contracting party could block the implementation of the panel ruling [114].

A good example of the issue arising from the lack of binding obligation of panel rulings is the 1983 Nicaragua/united States case[115]. Nicaragua initiated a complaint against the United States, alleging that the US decision to reduce the amount of Nicaraguan sugar allowed to be imported violated the GATT rules on the administration of quotas [116]. Although the panel did rule in favour of Nicaragua, the US indicated that they were not willing to change its practice. The only way for Nicaragua to obtain some sort of compensation would have been to retaliate against the United States, that is to impose restrictions on imports from this country. However, as J.H. Jackson and W.J. Davey note [117], this would have been contrary to Nicaragua’s best interests and this measure would not have had any noticeable impact on the US economy. The economic threat that is implied in retaliation cannot be seriously employed by developing countries against major industrialised countries as an effective substitute for compensation [118].

Lack of compensation and sanctions.

Neither the GATT nor the various side-agreements signed during the Tokyo Round contained any specific provisions dealing with remedies in cases of violations [119]. The relevant passage in the 1979 procedures demonstrates a clear unwillingness on the part of the Contracting Parties to resort to compensation to the detriment of an agreed solution [120]. Remedies, under GATT Practice had a mere prospective function : “GATT panels would either recommend the losing party to bring its measures into compliance with its obligations under the GATT or to withdraw the illegal act […] [emphasis added]. .”[121].

Likewise, no sanctions were provided for apart from the possible recourse to retaliation. The latter is not an option for developing countries because of their limited economic weight (see above). In addition, despite the fact that this measure would favour the smallest countries, no collective sanctions were available under the GATT [122].

It is self-evident that this state of the law did not suit developing countries’ interests. As we previously noted, developing countries cannot afford to seek compensation though a mere negotiation process lacking genuine legal remedies. The lack of compensation [123] and the absence of sanctions under the GATT 1947 demonstrate if necessary that the DSM was not of judicial nature [124].

Problem of the cost of the procedure and technical and legal knowledge.

The cost and the legal and technical knowledge the GATT DSM procedure implied had always been a major concern for developing countries [125]. To some extent this question had been addressed throughout the GATT history through the provision of the good offices of the Director-General (1966 procedures), the technical assistance brought about by the 1979 Understanding (and reiterated by the 1989 Improvements) or the systematic review of the developments in the trading system which could help developing countries in the investigation of GATT violations at their detriment. However, as we observed, these developments did not significantly change the developing countries’ practice as to the GATT DSM [126].

Paragraph 2 : Developing countries' expectations and criticisms as to the dispute settlement system before the Uruguay Round.

This paragraph is based on the USITC report [127], “Review of the effectiveness of Trade Dispute Settlement under the GATT and the Tokyo Round Agreements” as studied by K.O. Kufuor [128].This report provides a clear insight into the developing Countries’ concerns and expectations before the Uruguay Round was launched in 1986 following the Punta del Este Ministerial meeting.

First, developing countries expressed their concerns about the legal and technical knowledge the GATT DSM procedure implied, insisting on the fact that they lacked competent and experienced personnel able to deal with GATT 1947 matters or conduct disputes. Developing “in house” expertise or buying competence in foreign countries is self evidently difficult because of their shortage of resources.

Second, developing countries argued that they suffered from delays in the GATT DSM procedures (in appointing a panel, in the panel’s consideration of the case and caused by the failure of the GATT Council to adopt the report [129]). In particular they highlighted the fact that, since the procedure did not have any suspensory effect, the harmful practice would keep damaging their economy during a long time period.

The third concern expressed related to the unequal economic relationship between developing and developed members that could have a bearing on the dispute’s outcome. It was notably argued by developing countries that a claim against an industrialised member would lead to reduction of their benefits under the generalised system of preferences or through other retaliatory measures. They also highlighted the fact that developed countries could afford to hinder or even frustrate the procedure at any stage.

A fourth criticism put forward by developing members was that “[...] instead of developed countries compliance with the terms of a panel decision, the developing countries may be forced to agree to, or readily accept, voluntary export restraints, or other non GATT measures sought by larger members [emphasis added] [130]”. As result, developing members could hardly obtain real satisfaction through the GATT DSM, whatever its outcome was.

A fifth opinion expressed by developing members regarded the fundamental maladjustment of the DSM which placed great emphasis on retaliation. This question will be the subject of a complete analysis in Chapter III.

The sixth concern put forward by developing countries was that the lack of unity among them was a major hindrance in their use of the GATT DSM. Although developing countries face in general the same impediments in their use of the DSM, divisions must be drawn among them according to their political and economic interests that make them more or less willing (or simply able) to use the DSM. The idea was that collective action beyond their division could overcome the underlying unequal economic relationship between them and industrialised members.

Finally, it was argued that terms of reference for the panels was not useful or necessary because of the difficulty to reach an agreement notably on the substantive provisions to be considered. It was felt that standard terms of reference would be more preferable.

In light of these arguments, we see that developing countries expectations as to the Uruguay Round were great. The improvement of the DSM was a major concern for negotiators and we will observe that although the WTO DSM did give a response to some of the developing countries’ concerns, certain major questions have not been properly addressed.

FOOTNOTES