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Chapter 3 Dispute Settlement System and Trade Policy Review Mechanism

Chapter 3 Dispute Settlement System and Trade Policy Review Mechanism. 14/21-SEP-2006. Dispute Settlement System-1. Overview (New Features) Rules and Procedure of Dispute Settlement Case Study: The Timetable In Practice Types of complaints. I Overview. Based on clearly-defined rules.

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Chapter 3 Dispute Settlement System and Trade Policy Review Mechanism

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  1. Chapter 3 Dispute Settlement Systemand Trade Policy Review Mechanism 14/21-SEP-2006

  2. Dispute Settlement System-1 • Overview (New Features) • Rules and Procedure of Dispute Settlement • Case Study: The Timetable In Practice • Types of complaints

  3. I Overview • Based on clearly-defined rules. • Settle disputes through consultation if possible • Principles: equitable, fast, effective, mutually acceptable. • Legal framework: • GATT, Art 22-23 • DSU • Special rules and procedure of individual WTO agreement

  4. GATT, Art 22

  5. GATT,Art 23

  6. 争端解决谅解书（DSU）

  7. 1、Principle of Application (适用范围) II. Rules and Procedure of WTO DS Art 1.1-1.2, Appendix I of DSU, • Applied to disputes under WTO Agreement, Multilateral Agreements on Trade in Goods, GATS, TRIPS, DSU, TPRM and Plurilateral Trade Agreements • Conflict of Rules and procedure of DSU and special or additional rules procedure of individual agreements: latter one prevail • 适用于各成员根据世界贸易组织下列各协定、协议所提起的争端 • 当DSU规则和程序与有关协定所包括的争端解决的特别和附加程序发生冲突，则后者优先适用

  8. DSU Appendix I

  9. 2、Procedures for Dispute Settlement (争端解决程序) II. Rules and Procedure of DS Art 4-22, Appendix III of DSU, • Consultation（磋商） • Panel examination（专家组审理） • Appellate review（上诉机构审理） • Implementation (裁决的执行） • In case of non-implementation- Retaliation （授权报复） • Compensation(补偿) • Suspend Concession(中止减让) How long to settle a dispute

  10. Article 4 Consultations • 1. Members affirm their resolve to strengthen and improve the effectiveness of the consultation procedures employed by Members. • 2. Each Member undertakes to accord sympathetic consideration to and afford adequate opportunity for consultation regarding any representations made by another Member concerning measures affecting the operation of any covered agreement taken within the territory of the former. • 3. If a request for consultations is made pursuant to a covered agreement, the Member to which the request is made shall, unless otherwise mutually agreed, reply to the request within 10 days after the date of its receipt and shall enter into consultations in good faith within a period of no more than 30 days after the date of receipt of the request, with a view to reaching a mutually satisfactory solution. If the Member does not respond within 10 days after the date of receipt of the request, or does not enter into consultations within a period of no more than 30 days, or a period otherwise mutually agreed, after the date of receipt of the request, then the Member that requested the holding of consultations may proceed directly to request the establishment of a panel. • 4. All such requests for consultations shall be notified to the DSB and the relevant Councils and Committees by the Member which requests consultations. Any request for consultations shall be submitted in writing and shall give the reasons for the request, including identification of the measures at issue and an indication of the legal basis for the complaint. 通过DSB的磋商 • 第4条 磋商 • 1． 各成员确认决心加强和提高各成员使用的磋商程序的有效性。 • 2． 每一成员承诺对另一成员提出的有关在前者领土内采取的、影响任何适用协定运用的措施的交涉给予积极考虑，并提供充分的磋商机会。 • 3． 如磋商请求是按照一适用协定提出的，则请求所针对的成员应在收到请求之日起10天内对该请求作出答复，并应在收到请求之日起不超过30天的期限内真诚地进行磋商，以达成双方满意的解决办法，除非双方另有议定。如该成员未在收到请求之日起10天内作出答复，或未在收到请求之日起不超过30天的期限内或双方同意的其他时间内进行磋商，则请求进行磋商的成员可直接开始请求设立专家组。 • 4． 所有此类磋商请求应由请求磋商的成员通知DSB及有关理事会和委员会。任何磋商请求应以书面形式提交，并应说明提出请求的理由，包括确认所争论的措施，并指出起诉的法律根据。

  11. Consultation (Art. 4 of DSU) • Necessary step to solve dispute • Timetable: • One makes a requestthe other one reply within 10 days after the receiptenter into ~ within 30 days after the receiptreaching a mutually satisfactory solution within 60 days after the receipt • Requirements: • All such request for ~ shall be notified to the DSB, relevant Council and Committees • Submitted in writing, giving reasons for request, identification of measures at issue and indication of the legal basis for the complaint. • Third member(has substantial trade interest):may join If fail, the complaining party may request the establishment panel

  12. Process of Panel (Art 6-16) • 第6条 专家组的设立 • 1．如起诉方提出请求，则专家组应最迟在此项请求首次作为一项议题列入DSB议程的会议之后的DSB会议上设立，除非在此次会上DSB经协商一致决定不设立专家组。 • 2．设立专家组的请求应以书面形式提出。请求应指出是否已进行磋商。确认争论中的措施并提供一份足以明确陈述问题的起诉的法律根据概要。在申请方请求设立的专家组不具有标准职权范围的情况下，书面请求中应包括特殊职权范围的拟议案文。 • Article 6 • Establishment of Panels • 1. If the complaining party so requests, a panel shall be established at the latest at the DSB meeting following that at which the request first appears as an item on the DSB's agenda, unless at that meeting the DSB decides by consensus not to establish a panel.  • 2. The request for the establishment of a panel shall be made in writing. It shall indicate whether consultations were held, identify the specific measures at issue and provide a brief summary of the legal basis of the complaint sufficient to present the problem clearly. In case the applicant requests the establishment of a panel with other than standard terms of reference, the written request shall include the proposed text of special terms of reference.

  13. The panel（专家组审理） -to be continued • 1.Establishment of panel (Art 6) • Make a request in the first DSB meeting, and establish a panel in the next DSB meeting. • The request shall be in writing • 2.Power of panel (Art 7) • To examine the matter , make findings, and make the recommendation or rulings. • 3.Composition of panel (Art 8) • Be composed of Well-qualified and individuals • Be independent of members • Normally 3 panalists, or 5 if request • Developing country

  14. The panel（专家组审理） • 4.Procedures (Art 12 and Appendix 3) • Before the first hearing(第一次实质性会议前提交书面陈述，说明案件的事实和论据 ) • Each side presents its case in writing to the panel • First hearing(第一次实质性会议起诉方和被速方陈述案情和观点) • The complaining country,responding country and those have interest in the case make their case. • Rebuttals (正式辩驳在专家组第二次实质性会议上作出 ) • The country involved summit written rebuttals before the meeting and present oral arguments at second panel’s meeting (complained party first) • Experts (专家审议小组 ) • If scientific an d technical matters are raised • First Draft(向各方散发报告的描述部分) • The descriptive (factual and argument) section of its report to two sides(for 2 weeks comment). It does not include findings and conclusions. • Interim report(向各方散发中期报告，包括调查结果和结论) • A report including findings and conclusions to 2 sides. Then 1 week to ask for a review • Review(各方审议)–must not exceed 2 week. • Final report(向争端各方散发最终报告 ) • Submitted to 2 sides, and 3 weeks later, circulated to all WTO members. The report becomes a ruling

  15. The panel Process-1

  16. Appellate Review

  17. The Appellate Review(上诉机构审理） (Art 17) • 1.Establishment of Appellate Body • Standing body hearing appeals from panel cases.(by DSB) • Be composed of 7 persons (comprising of recognized authority with demonstrated expertise in law, international trade, and so on) • 2.Power of AB • Just concerned with issues of law covered in panel report and legal interpretation developed by the panel • 3.Points of the appeal • Only disputed parties may appeal, not third party. • Not exceed 60 days (from appeal to AB circulates its report)

  18. The Appellate Review(上诉机构审理） (Art 17) • 4. Procedures • Be confidential • The AB report shall be drafted based on the information provided and the statements made, without presence of parties (书面审理) • Adoption of AB report • Shall be adopted by DSB within 30 days following the circulation (unless the DSB decides by consensus not to adopt it)

  19. The process of Appellate Body-2

  20. DUS第21条 Implementation (裁决的执行）

  21. At a DSB meeting held within 30 days of the report’s adoption, the member must state its intention to implement panel or appeals report. Prompt implement or given a “reasonable period of time” If non-implementation, what’s the next? Implementation (Art 21.3) If a panel finds a complaint is justified, its report typically recommends that the offending member cease its violation of GATT rules, such as by withdrawing the offending measures. After a report is adopted, DSB will monitor whether or not its recommendations are implemented.

  22. Compensation and suspend concession (Art 22)

  23. Implementing Member does not achieve full compliance finally Enter into negotiation with the complaining party Not monetary payment, but offering a benefit (tariff reduction-equivalent to benefit nullified and impaired) Compensation (Art 22.2 of DSU) No mutually acceptable compensation agreed Countermeasure by the prevailing Member

  24. Suspend concessions (中止减让)Art 22.2 of DSU • If after 20 days, no satisfactory compensation is agreed Retaliation • Complaining side Asking DSB for permission to impose trade sanction (“suspend concessions”) • Authorization granted by DSB • ( within 30 days of the expiry of the “reasonable period of time” unless there is a reverse consensus) • Complaining party is allowed to impose countermeasures • (That would be inconsistent with the WTO agreement, in response to a violation or non-violation nullification or impairment.)

  25. Concessions or obligation • Commitments and obligation, such as tariff reduction or other obligations, which Member have made in multilateral trade negotiations and are bound under GATT 1994

  26. Resulting the complainant responding to a WTO-inconsistent trade barrier with another trade barrier, which is contrary to the liberalization philosophy underlying WTO. Measures erecting trade barriers come at price, which are always economically harmful for both disputed parties. To enforce recommendations and rulings Has the effect of rebalancing mutual trade benefits Inducing compliance Debate on Retaliation Temporary:must be revoked once compliance achieved last resort: prefer to constructive means

  27. Rules governing the suspend concession (Art22.4 of DSU) • The level of • suspend concession • The level nullification • or impairment • equivalent • Same sectorsame agreementother agreement • (Art 22.3 of DSU)

  28. Question1 • A panel has found Tramontana’s internal taxes on cigarettes to be inconsistent with Article III of GATT 1994. The panel report was adopted by the DSB in February 1996. In February 1997, Patria noted that Tramontana had still not adjusted its tax system to conform to Article III. What are Patria’s options? • Patria has no options, it must wait for Tramontana to implement the DSB’s recommendations and rulings. • Following the expiration of the reasonable period of time for implementation, Tramontana must enter into negotiations about compensation, and after 20 days, Patria may proceed to the suspension of obligations. • Having waited a whole year, Patria can now apply unilateral countermeasures against Tramontana by impeding imports from that origin.

  29. Question2 • WTO Member Y has just won a GATT dispute against WTO Member Z involving bananas. The reasonable period of time has expired without full implementation, and there is no agreement between the parties on compensation. What options for retaliation exist for Y? • Y must retaliate in the area of bananas only. • Y may retaliate in the area of other goods, but it can only resort to the suspension of GATT 1994 obligations. • Y can suspend obligations in any goods sector, and under any multilateral agreement on trade in goods. If Y considers that it is not practical or effective, and the circumstances are serious enough, it may seek retaliation under the GATS) or the TRIPS Agreement. • Y may suspend obligations in any goods sector, and under any multilateral agreement on trade in goods only.

  30. How long to Settle a dispute?

  31. III Case Study-- 以美国汽油规则案为例

  32. III Case Study-- 以美国汽油规则案为例

  33. 美国汽油规则案 • On 23 January 1995, Venezuela complained to the Dispute Settlement Body that the United States was applying rules that discriminated against gasoline imports, and formally requested consultations with the United States. Just over a year later (on 29 January 1996) the dispute panel completed its final report. (By then, Brazil had joined the case, lodging its own complaint in April 1996. The same panel considered both complaints.) The United States appealed. The Appellate Body completed its report, and the Dispute Settlement Body adopted the report on 20 May 1996, one year and four months after the complaint was first lodged. • The United States and Venezuela then took six and a half months to agree on what the United States should do. The agreed period for implementing the solution was 15 months from the date the appeal was concluded (20 May 1996 to 20 August 1997). • The case arose because the United States applied stricter rules on the chemical characteristics of imported gasoline than it did for domestically-refined gasoline. Venezuela (and later Brazil) said this was unfair because US gasoline did not have to meet the same standards — it violated the “national treatment” principle and could not be justified under exceptions to normal WTO rules for health and environmental conservation measures. The dispute panel agreed with Venezuela and Brazil. The appeal report upheld the panel’s conclusions (making some changes to the panel’s legal interpretation). The United States agreed with Venezuela that it would amend its regulations within 15 months and on 26 August 1997 it reported to the Dispute Settlement Body that a new regulation had been signed on 19 August. http://www.wto.org/english/res_e/webcas_e/webcas_e.htm

  34. Article XXIII:1 of GATT94 --- “Nullification or Impairment 利益的丧失或损害 1. If any contracting party should consider that any benefit accruing to it directly or indirectly under this Agreement is being nullified or impaired or that the attainment of any objective of the Agreement is being impeded as the result of a. the failure of another contracting party to carry out its obligations under this Agreement, or  b. the application by another contracting party of any measure, whether or not it conflicts with the provisions of this Agreement, or  c. the existence of any other situation,    the contracting party may, with a view to the satisfactory adjustment of the matter… Types of complaints 2 alternative options on which a complaint may reply Next page

  35. Types of complaints • Violation complaint-Article XXIII:1(a) 违反之诉 • The failure of another member to carry out its obligation • resulting in “nullification or impairment of a benefit • 一缔约方未履行协定的义务而致使其他缔约方利益受损或使总协定目标的达到受到防碍的情况 • Non-violation complaint- Article XXIII:1(b)(c)非违反之诉 • The application of a member by a Member • The existence of a benefit accruing under the applicable agreement • The nullification or impairment of a benefit as a result of the application of the measure. • 一缔约方的措施即使不与协定相冲突或存在其他情况，只要是对另一缔约方依协定享有的利益造成“丧失或减损”，也构成提起申诉的条件 As a result, the dispute settlement System can be invoked

  36. Dispute Settlement System-2 • Legal effect of panel and appellate body reports and DSB recommendations and rulings • Dispute Settlement without recourse to Panels and the Appellate Body-Good offices, Conciliation and Mediation, Arbitration • Legal issues arising in WTO dispute settlement proceedings • Developing countries in WTO dispute settlement • Evaluation of the WTO dispute settlement system: results to date

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