WTO Law 4

Dispute Settlement System

1

Historical Development

1947 • Art. XXII GATT • Art. XXIII GATT 1979 • Understanding of 28.11.

• With Annex: Agreed Description on the customary DS practice 1982 • MINISTERIAL DECLARATION ON DISPUTE SETTLEMENT 1984 • DECISION ON DISPUTE SETTLEMENT OF 30 NOVEMBER 1984 (31S/9) 1989 • DECISION OF 12 APRIL 1989 ON IMPROVEMENTS TO THE GATT DISPUTE SETTLEMENT RULES AND PROCEDURES 1995 • DSU 2

Special features of WTO DS

• Text drafted by diplomats (see e.g. Art. 3.7, 3.10 DSU) • Exclusive Jurisdiction (Art. 23.2 DSU) • Compulsory Jurisdiction (Art. 23.1, 6.1 DSU) – No unilateralism (Sec. 301 – WT/DS152 / TBR) • Speedy procedure (Art. 3.3 DSU) • Two levels of judiciary for standard decisions and Art. 21.5 DSU decisions (correct compliance) – Comprehensive jurisprudence 3

Special features of WTO DS - 2

• Quasi-judicial type of procedure (Art. 16, 17.4, 19 DSU) • Confidential nature • Looking for „nullification or impairment“ (Art. XXIII GATT, Art. 3.1) • Supervised implementation (Art. 21, 22 DSU) • Rules are superseding the general rules about state responsibility (lex specialis) – But may be complemented by those rules where there is no special regulation • Complementary rules in other WTO Agreements (Art. 1.2, annex 2 DSU) 4

Statistics of success • 1995 - 2009

– 328 DS matters brought by 442 claims – 265 Panel requests (after preliminary consultations, see Art. XXII GATT, 6.2 DSU) – 152 Panel reports adopted – 94 Appellate Body reports adopted 5

Legal Basis of a claim (Art. XXIII GATT)

• Either – A benefit • Or • accruing directly or indirectly • to the applicant • under the covered agreements – has been nullified or impaired – by a measure • if in violation of WTO LAW: always prima facie nullification or impairment (to be rebutted, see Art. 3.8 DSU) • other than by violation – or by omission (to act according to an obligation) – the attainment of any objective of the covered agreements is being impeded 6

Types of claims • Art.XXIII GATT –Violation complaint –Non-violation complaint –Situation complaint • See also the DSU (art. 26.1and .2) –26.1 for the non-violation coplaint –26.2 for the situation complaint

7

Kodak Fuji Case: Non-violation complaint

• Japan – Measures affecting consumer photographic film and paper (WT/DS44/R) of 1989 („Kodak/Fuji“) • US claims nullification or impairment of japanese concessions bound under Art. II GATT for the import of photographic film products by governmental measures (1960-1980) – By non-binding „distribution measures“: notifications, reports, recommendations, guidelines – By the „Large Stores Law“: duties to notify state and small retailers, requirement of permit, waiting periods for opening – By „promotion measures“: Enforcement of competition law, special „fair competition rules“ • Claim: violation of Art. III.4 GATT and non-violation nullification or impairment 8

DS Bodies

Dispute Settlement bodies

Dispute Settlement Body (DSB) Art. 2

DSU

, Art. 4.3 WTOA: General Council

WTO Secretariat Art. 27 DSU Arbitrators Art. 22.6 DSU single, ad hoc, mostly a panelist Panels Art. 6 DSU 3 panelists, ad hoc, roster Appellate Body Art. 17 DSU 7 members, 4 + 4 years

9

Panels - Institution 1

• Groups of 3 to 5 experts (Art. 8.5 DSU) – Three panelists unless parties agree within 10 days after establishment of panel to have a 5-member panel (DSU Art. 8.5) – Qualification and affiliation (Art. 8.1 DSU) • May be either government officials or non-government persons (DSU Art. 8.1) • Should be “well-qualified” (familiar with WTO dispute settlement) (DSU Art. 8.1) • Panelists who are government officials are directed to serve “in their personal capacities” and governments shall not give them instructions or seek to influence them (DSU Art. 8.9) • Independance (Art. 8.2,3 DSU). Also: State officials (Art. 8.8,9 DSU). Developing States Member (Art. 8.10 DSU) • Unless the parties agree otherwise, citizens of the two parties and “third parties” to the dispute will not be considered (DSU Art. 8.3) • A party that is a developing country may request that at least one panelists be from a developing country (DSU Art. 8.10) 10

Panels – Institution 2

– “Indicative” List (Art. 8.4 DSU, not exclusive), – Proposals (Art. 8.6 DSU) • WTO Secretariat proposes panelists to the parties (DSU Art. 8.6) • Parties directed not to oppose proposed panelists “except for compelling reasons” (DSU Art. 8.6) – Nomination (Art. 8.7 DSU) if no agreement between the panelists > no delay possible • If no agreement on panelists within 20 days after establishment of a Panel – either party may request that the Director-General select the panelists and Director-General shall do so within 10 days (DSU Art. 8.7) – Paid by the WTO 11

Panels - Function

• Assisting the DSB – In making an objective assessment of the matter before it (Art. 11 DSU) • Including an objective assessment of the facts of the case • And the applicability of and conformity with the relevant covered agreements – in making recommendations (Art. 16,19 DSU) by issuing a report, – that has to be adopted by the DSB • Each panel is assisted by the WTO Secretariat (article 27.1). The legal affairs division is always involved, but it is usually complemented either by the rules division or by other operative divisions of the Secretariat. They form an interdisciplinary team of economists and lawyers.

12

Appellate Body - Institution

• Standing Body of 7 persons (Art. 17.1 DSU) – Persons of “recognized authority” – “Demonstrated expertise” in law, international trade and the subject matter of the WTO agreements (Art. 17.3 DSU) – Independent from governments – nominated by the WTO members and then recommended by a selection committee to the General Council.

– Membership in the AB shall be broadly representative of the WTO membership (geographic diversity, Art. 17.3 DSU) – Staggered 4-year terms, only one reappointment possible (Art. 17.2 DSU) – The chair of the appellate body is elected yearly and may only be reelected once. In principle it is rotating. The appellate body has its own Secretariat providing legal and administrative support.

13

Appellate Body - Function

• Each appeal heard by a 3-person “division” (Art. 17.1 DSU) • elected at random and by rotation – deciding about the chairman of the division • Reviewing: on appeal by the parties (Art. 16.4 DSU) issues of law and legal interpretations in the panel report (Art. 17.6 DSU) • Before deciding: exchange of views with the other AB members • Decisions are taking either by consensus or, if necessary, by a majority vote. • Dissenting opinions may be added to the report, but they shall be anonymous (article 17.11). • Decisions are in fact reports (Art. 17.14 DSU) as recommendations (Art. 19 DSU) to the DSB, not binding per se • The Appellate Body follows its own working procedures.

14

Dispute Settlement Body (DSB)

• All WTO members (plenary body) • Administers the rules and procedures of the DSU • Supervises the implementation (Art. 21 DSU) • Decisions by consensus • Except that “reverse consensus” applies for decisions to: – Establish a dispute settlement Panel (Art. 6 DSU) – Adopt a Panel or Appellate Body report (Art. 16, 17, 19 DSU) – Authorize suspension of concessions or other obligations (Art. 22 DSU) 15

DSB Decisionmaking – Reverse / Negative Consensus

• Art. 2.4 DSU: consensus as a rule generally also in the DSU procedures,

– The losing party could block an adoption

• But in the DS decisionmaking the rule is different

– Negative / reverse consensus • Art. 6.1, 16.4. 17.14, 22.6 DSU – i.e. a consensus to stop the entry into force of a recommendation, that is otherwise automatic – The winning party will normally be opposed 16

Extent of jurisdiction

• Art. 3.2 DSU: – The system serves • to preserve rights and obligations of Members under the covered agreements • And to clarify the existing provisions of those agreements by interpreting them according to the “customary rules of interpretation of public international law” 17

Limits of Jurisdiction

• Art. 3.2 DSU: – “Recommendations and rulings of the DSB cannot add to or diminish the rights and obligations provided in the covered agreements.” – See also Art. 19.2 DSU for the AB • Discouraging “judicial activism” • What about extensive teleological interpretation?

18

MAIN PARTIES

• Complaining Member – Standing • If it claims, that its benefits are nullified or impaired (Art. XXIII GATT, 3.3 DSU) – Note the very broad interpretation in the

Bananas case

concerning the USA (WT/DS27) – If multiple Complainants (Art. 9 DSU) • Single panel or • Different panels with the same panelists • If requested: separate reports (Art. 9.2) • Defending Member – As named in the application – If multiple defendants • Different panels with the same panelists (practice) • Always separate reports 19

THIRD PARTIES • Art. 10 DSU: • Any Member having a substantial interest in a matter before a panel • Upon notification of the interest to the DSB • Different from the consultation stage (Art. 4. 11 DSU): no rejection by the parties possible • Opportunity to be heard by the panel and to make written submissions to the panel • Third parties shall receive the submissions of the parties to the dispute to the first meeting of the panel • Third party submissions shall also be given to the parties to the dispute and shall be reflected in the panel report • Alternative: different procedure of its own (10.4) before the original panel (if possible) • Third parties in the panel procedure may become “passive parties” in the AB procedure (Argentina - Safeguard Measures on Imports of Footwear (WT/DS121/AB/R) 20

Obligations of Parties

• The parties of the procedure have to comply with the requirements of the DSU in good faith. • The Appellate Body, in the US – FSC (WT/DS108/AB/RW) , made clear, that – "the procedural rules of WTO dispute settlement are designed to promote

not

the development of mitigation techniques, but simply the fair, prompt and effective resolution of trade disputes." 21

INCLUSION OF PRIVATE VIEWS • Parties may freely choose the members of their delegation, which may include: – Private attorneys (Bananas WT/DS27/AB/R , para. 4-12) – Representatives of NGOs • Parties may also include briefs of NGOs and private persons in their submissions to the panels and the AB (Shrimp WT/DS58/AB/R , para. 99-110) 22

AMICUS CURIAE BRIEFS • Individuals or organization (governmental or non governmental) • Presenting their views on questions arising in the case • By amicus briefs (with or without invitation) or by testimony • Power of the panels?

– Art. 13.1 DSU: „Each panel shall have the right to seek information and technical advice from any individual or body which it deems appropriate.” – See Shrimp Case WT/DS58/AB/R, para. 99-110 • Power of the AB?

– Assumed in the Asbestos Case (WT/DS135/9), an „explanatory note“ under 16.1 of the AB Working procedures inviting and conditioning amicus briefs in the case (Shrimp Case WT/DS58/AB/R , para. 99-110) – Vigorously refuted by the General Council ( WT/GC/38, pointing to Art. V:2 WTOA 04/12/00) 23

Types of DS Procedures

• Standard procedures (P / AB) – Nullification or impairment? (Art. 3.8 DSU, XXIII GATT) • Violation (Art. 3.8) • Non-violation (Art. 26.1) • Situation (Art. 26.2) • Art. 21. 3 (c) DSU procedures (Arbitrator) – RPT • Art. 21.5 DSU procedures (P / AB) – Correct implementation?

• Art. 22. 6 DSU procedures (Original P or Arbitrator) – Limits of retaliation 24

Alternative Procedures

• Arbitration under Art. 25 DSU – It should be expeditious and has its own procedural law as agreed by the parties – It can be enforced under the rules (mutatis mutandis) of Art. 21 and 22 DSU • Art. 5 DSU (diplomatic methods): – good offices – conciliation – mediation 25

Outline of the Procedure

12.9 DSU 16.4 DSU 4.7 DSU 17.5. DSU 17.14 DSU

26

TIME LIMITS ARE NECESSARY FOR EFFICIENCY Art. 3.3 DSU: “The prompt settlement of situations in which a Member considers that any benefits accruing to it directly or indirectly under the covered agreements are being impaired by measures taken by another Member is essential to the effective functioning of the WTO and the maintenance of a proper balance between the rights and obligations of Members. “ 27

PANEL PROCEEDINGS – STAGES (ART. 3 DSU) • First Written Submission of Complainant (normally 3-6 weeks after Panel composed) • First Written Submission of Respondent (normally 2-3 weeks thereafter) • First Meeting of the Panel with the Parties (normally 1-2 weeks thereafter) • Second Meeting of the Panel with the Parties (normally 1-2 weeks after Written Rebuttal Submissions) • “Descriptive Part” of Panel Report (history of the dispute and recitation of the arguments of the parties) • “Interim Report” (draft of entire report including Panel’s legal findings and conclusions) • Final Report 28

CONSULTATIONS

• Art. 3.7 DSU • Art. XXII GATT • Art. XXIII GATT • Mandatory prerequisite of a DS procedure • Scope defines the admissibililty of a claim 29

APPLICATION

• Written request (Art. 6.2 DSU) • Stating the facts (the specific measures at issue) • and providing a brief summary of the legal basis • And the nullification or impairment • not extensively, but „sufficient to present the problem clearly“ • that were subject of the consultations that have been duly held • proposed text of the special terms of reference, if any

Whether standard or special, the terms of reference are decisive for the subject matter of the case to be decided (7)

30

Attacked Measure • What is the measure, which can be attacked?

–Executive acts –Mandatory legislation –Legislation leaving discretion • Sec. 301 decision (DS152): „chilling effect“ sufficient?

31

ESTABLISHMENT OF THE PANEL

• Only after due consultations – Exchange of information (sometimes counterproductive) • On application of the complaining WTO member • At the latest on the second DSB meeting after the application – Complainant can require a session within 15 days after the application – Respondent can block panel establishment at the first DSB meeting which has the request on its agenda • Unless there is negative consensus (i.e. “to refuse” 32

TERMS OF REFERENCE • Either on proposal of the applicant member • If agreed upon by the defendant party within 20 days after establishment • Else:

"To examine, in the light of the relevant provisions in (name of the covered agreement(s) cited by the parties to the dispute), the matter referred to the DSB by (name of party) in document ... and to make such findings as will assist the DSB in making the recommendations or in giving the rulings provided for in that/those agreement(s)."

• Or: drawn up by the chairman upon authorization of the DSB „in consultation with the parties“. • What is not in the terms of reference is not before the panel > Art. 7.2 DSU • Limits: Art. 3.2 DSU 33

WORKING PROCEDURES OF PANELS

• The working procedures for the panels are contained in appendix 3 to the DSU. • The panel has a certain discretion to deal with particular situations in the case, but it has to stay within the frame of due process (EC-Hormones – WT/DS26/DS48 ) and it must not disregard or modify explicit provisions of the DSU (India-Patents US – WT/DS50 ) appendix 3 also contains a proposed timetable.

• Furthermore the panel, after the first organizational meeting, will decide on detailed ad-hoc working procedures.

34

TASK OF THE PANEL

Art. 11 DSU: „ ... a panel should make an objective assessment of the matter before it,

•

including an objective assessment of the facts of the case and

•

the applicability of and conformity with the relevant covered agreements,

•

and make such other findings as will assist the DSB in making the recommendations or in giving the rulings provided for in the covered agreements.

35

OBJECTIVE ASSESSMENT OF THE MATTER

• A Panel is violating its duty to objectively assess the matter before him – if it makes a finding in a matter that was not before him (ne ultra petita) – too much – if it does not consider all the facts and the law cited by the parties within its terms of reference – too little – if it exceeds its margin of appreciation (as stated by the AB!) when assessing the law or – if it misinterprets evidence in „deliberate disregard“ or willful distortion“ 36

Standard of Review • How much deference is paid to the members?

– „de novo review“ or „total deference“ – AB: none of that > objective assessment of the matter (Art. 11 DSU) • Which argument can be drawn from Art. 17.6 Antidumping Agreement?

• In other parts of WTO law there is no comparable rule!

• Practice: – deference in the public health cases (Hormones, Asbestos) • in all cases where a party invokes an exception? Or only particular exceptions (outside trade concerns)?

– Closer scrutiny in trade remedy cases (Antidumping, Anti-Subsidies etc., cf. the Frozen Lamb case – WT/DS177/DS178 ) • a „critical examination“ of the members‘ explanation, „in depth“h 37

PANEL REPORT

• Descriptive Part (Art. 15.1 DSU) • Interim Report (Art. 15.2 DSU) • Final Report (Art. 19 DSU, Recommendations)

38

RECOMMENDATIONS OF A PANEL • Statement of consistency – no recommendation • Determination of inconsistency - recommendation, “that the Member bring the measure into conformity (Art.

19.1 DSU)” • No requirement of a particular action • But rarely the suggestion of implementation (Art 19.1 DSU) – Either admitting alternatives – Or recommending the reversal of a measure 39

APPELLATE PROCEDURE • Notice of Appeal (only by the main parties, Art. 17.4 DSU, no further standing necessary) • Appellant’s Written Submission • Appellee’s Written Submission • Third Participants’ (who may further participate) Written Submission • Oral Hearing before the Appellate Body Division • Appellate Body Decision 40

APPELLATE BODY DECISION • On appeal (Art. 17.4 DSU), the Appellate Body • May “uphold, modify or reverse” the legal findings and conclusions of law appealed in the Notice of Appeal and any Cross-Appeal (Art. 17.13 DSU) • No authority to remand the dispute to the Panel for further consideration 41

ADOPTION OF REPORTS BY THE DSB • Panel (Art. 16 DSU) or AB Report (Art. 17.14 DSU) • Adopted (becomes a binding international law obligation) –If final (no appeal or an AB Decision) –By reverse consensus (30 days time limit)

• i.e. consensus not to adopt 42

BINDING FORCE

• In the case among the parties • No “stare decisis” doctrine – Guidance clause Art. XVI WTOA????????????

– Existence of authoritative interpretation (Art. VIII WTOA) • But – Reference to former decisions (panels and AB) – AB decisions are observed by the panels – Result: certain stability and predictability of the judicial findings – See the Zeroing Case WT/DS344/AB/R

U.S. – Stainless Steel (Mexico)

43

• PREVIOUS PANEL AND AB DECISIONS

Art. 31(3)(b) VCLT

interpretation„ : "any subsequent practice in the application of the treaty which establishes the agreement of the parties regarding its •

Are previous Panel Decisions (under the old GATT) such practice?

– Japan Alcohol Panel: yes (Japan Alcoholic Beverages (WT/DS8,10,11R) – AB in the same case: no „We do not believe that the CONTRACTING PARTIES, in deciding to adopt a panel report, intended that their decision would constitute a definitive interpretation of the relevant provisions of GATT 1947. Nor do we believe that this is contemplated under GATT 1994. – .... they are not binding, except with respect to resolving the particular dispute between the parties to that dispute.

– ... we agree that "a panel could nevertheless find useful guidance in the reasoning of an unadopted panel report that it considered to be relevant".

• „This reasoning applies to adopted Appellate Body Reports as well.“ ( WT/DS58/AB/RW – US Shrimp Art. 21.5) 44

RESULT OF A LOST CASE

• Follow the recommendations ?

– Art. 19.1 DSU – Particular recommendations (e.g.: repeal of a statute) • Alternative: Compensation ?

– See Art. 21.1, 21.3, 21.6 DSU – But also Art. 3.7 and 22.1 DSU • Duty to comply and perform • Compensation only temporarily • Risk of non-compliance: retaliation by suspension (Art. 22 DSU) • Upper ceiling: scope of nullification or impairment (Art. 22.4 DSU) • No reparation for damages before the expiry of the „reasonable time“ for compliance (Art. 21.3 DSU) 45

IMPLEMENTATION • Obligation to implement – “Prompt compliance” is recognized as essential for the credibility of the system (Art. 21.1 DSU ) – “Immediate” compliance is expected wherever practicable (Art. 21.3 DSU ) – Where immediate compliance is impracticable, the Member must implement within a “reasonable period of time” (Art. 21.3 DSU ) • • Normally 12 – 15 months Progress report (21.6) necessary • In case of non-compliance – authorization for retaliation (suspension of obligations, Art. 22 DSU) – but only as a „last resort“ (Art. 3.7 DSU) • Specific rules for cases brought by Developing Countries, see Art. 21.7 and 21.8 DSU 46

RULES ABOUT IMPLEMENTATION - 1 • “ Prompt compliance ” is recognized as essential to the credibility of the system (Art. 21.1 DSU) • “Immediate” compliance is expected wherever practicable (21.3) • Where immediate compliance is impracticable, the Member must implement within a “reasonable period of time” (Art. 21.3 DSU) • The DSB shall keep under surveillance the implementation of adopted recommendations or rulings. The issue of implementation of the recommendations or rulings may be raised at the DSB by any Member at any time following their adoption. Unless the DSB decides otherwise, the issue of implementation of the recommendations or rulings shall be placed on the agenda of the DSB meeting after six months following the date of establishment of the reasonable period of time pursuant to paragraph 3 and shall remain on the DSB's agenda until the issue is resolved (Art. 21.6 DSU) 47

RULES ABOUT IMPLEMENTATION - 2 • Compensation and the suspension of concessions or other obligations are and (Art. 3.7 DSU) and temporary measures as a temporary measure available in the event that the recommendations and rulings are not implemented within a reasonable period of time. (Art. 22.1 DSU) • “The provision of compensation should be resorted to only if the immediate withdrawal of the measure is impracticable pending the withdrawal of the measure which is inconsistent with a covered agreement.” • “A solution mutually acceptable to the parties to a dispute consistent with the covered agreements is clearly to be preferred.” (Art. 3.7 DSU) • “Compensation is voluntary and, if granted, shall be consistent with the covered agreements .” (Art. 22.1 DSU) • See generally Art. 3.2 DSU: “rule of law”-argument • The historic argument: GATT practice and Art. XVI.1 WTOA 48

IMPLEMENTATION PROCESS

49

• • • • •

STEPS OF THE IMPLEMENTATION PHASE

DSB meeting within 30 days after adoption: – Statement of intent by the obligated party (Art. 21.3 DSU): immediate implementation or in „reasonable time“ „Reasonable time for implementation“ (Art. 21.3 DSU) – proposed by the MS and approved by the AB • positive consensus !

– mutually agreed by the parties within (w/i) 45 days after the adoption – decided by binding arbitation w/i 90 days after the adoption (15 months, shorter or longer) • single arbitrator • usually from the original panel Regular timeframe (Art. 21.4 DSU): From the establishment of a panel to the determination of a reasonable period – 15 months Surveillance by the DSB (Art. 21.6 DSU) – The implementation of the recommendation is monitored by the DSB. The matter remains on the agenda of each meeting until the issue is resolved.

At the end of the reasonable period: either implementation, temporary compensation or suspension in retaliation 50

CONTENTIOUS PROCEDURES IN THE STAGE OF IMPLEMENTATION Art. 21.3 DSU „reasonable time for implementation“ Arbitrator(s) Art. 21.5 DSU „full implementation“ Panel / AB Sequencing problem in relation to 22.6 authorization Art. 22.6,7 DSU „level of suspension“ Panel or Arbitrator 51

SUFFICIENT IMPLEMENTATION ?

• If parties disagree whether the recommendation has been carried out faithfully • Application of either party to the DSB for a panel decision (wherever possible by the original panel), see Art. 21.5 DSU • Decision circulated w/i 90 days from the referral (indicative). Appeal to the AB is possible!

• But the winning applicant can also apply w/i 30 days after the expiry of the „reasonable period“ for an authorization to suspend concessions (Art. 22.6 DSU) • This is the „ sequencing problem – Is there a possibility of abuse?

“ that is so far only resolved by practice, not theoretically 52

SEQUENCING

• Do parties have to wait before they are applying for authorization to suspension of concessions ? (Art. 22.3 ss. DSU) • Until a dispute about the sufficiency of compliance has been decided by panel and the AB (Art. 21.5 DSU) ?

• Could both procedures been finished at the 30 days limit of Art. 22.6 DSU ?

• Or are both procedures parallel ?

• What is the problem if suspension has to wait ?

53

SEQUENCING – THE PRACTICE

• In the Bananas case, the parallelism was accepted by the DSB • The Art. 21.5 and the 22.6 DSU case were handled by the same panel and decided at the same time (within the 90 days limit of 21.5, but exceeding the 30 days in 22.6) – the unilateral sanctions of the US (after 30 days) were declared unlawful • Subsequent party agreements: both procedures will be commenced at the same time, but the arbitration is suspended until the 21.5 decision is being final 54

COMPENSATION

• “Compensation” means increased market access for products or services other than those in dispute • Voluntary – requires mutual agreement • Must be consistent with WTO obligations (Art. 22.1, 3.5 DSU) • possibility of trade deflection !

• Meant to be temporary – Not a substitute for implementation (Art. 22.1 DSU) • See the case Japan-alcoholic beverages – WT/DS8/DS10/DS11 (longer period for the implementation for one product – Shochu – in return for compensation) 55

SUSPENSION

• Upon application of the winning party • Equivalent to the level of the nullification or impairment (Art. 22.4 DSU) – What does this mean? Is it really a repelling sanction?

– See Art. 4.10 SCMA footnote 9 • Within 30 days after the end of the expiry of the reasonable time – Is this limit for decision also excluding applications after that? See the 20 days period in Art. 22.2 DSU!

• If the defendent party objects: arbitration by the original panel or an arbitrator appointed by the DG (Art. 22.6, 7 DSU) w/i 60 days on the general admissibility (see e.g. Art. 8.3 Safeguards Agreement) and the level of suspension • authorized by the DSB (Art. 22.7 DSU) – Granted unless decision by consensus to reject the request – Authorized Level of suspension will be that which is proposed by the Complainant or the Arbitrator, as appropriate 56

SUSPENSION

• Suspension is one facet of an answer of a state to an unlawful behavior of an other state – Why not damages, retaliation etc?

• Contrary to general PIL, suspension in WTO law is only lawful if authorized by the DSB (see the premature US sanctions in the Banana Case – WT/DS27 ) • There are other cases of suspension without the necessity of authorization by the WTO: Art. VI, XIX and XXVIII GATT. Why are they being dealt with differently from the Art. 22 DSU case ?

57

SCOPE OF SUSPENSION

• Retaliation : same sector (Art. 22.3 DSU, e.g. goods or financial services) • Cross-Retaliation (Art. 22.3 DSU): other sectors, other covered agreements (goods/telecommunications, goods/government procurement). Example: Bananas/TRIPS (cf. Guatemala vs. EC) 58

OFFSETTING DAMAGES ?

• The DS system does not know retroactivity = no reparation for past damages (see Art. 19.1 DSU) • In GATT practice it was consented that general rules of state responsibility in PIL do not apply concerning the general duty to repair or compensate damages (= insofar a „self contained regime“) • What are the consequences of the combination „no damages for the past + only the amount of nullification or impairment“?

– Economic Analysis?

59

THE SYSTEMIC QUESTIONS

• Is retaliatory suspension economically acceptable or helpful? • Is suspension with the limits of Art. 22.4 DSU an efficient retaliation?

• Is it helpful to the rule of law? • Are the following alternatives better – payment of fines or redress of damages – suspension of membership rights – suspension of access to dispute settlement procedures • What about capacity problems of the DCs?

• Legitimacy of the DSB powers? (Democracy, sovereignty) • See: DS Review 60

MS CORRECTING DECISIONS?

• After a decision of the dispute settlement bodies, that is considered being „overreaching“, a large majority of the member states want to overturn it. Is there a possibility ?

• If not so, is there a possibility to prevent a similar decision in the future ?

• What about Authoritative Interpretation?

61

Specific Problems of Developing Countries • Power – Taking on a more developed state – Weight of possible retaliation • Capacity – Personnel – Money/ finance • Need for assistance – Secretariat – Private Institutions 62

Developing Countries • Art. 3.12 DSU – When complainant is a developing country and respondent is a developed country – It may invoke provisions of the Decision of the CONTRACTING PARTIES of 5 April 1966 • never happened so far. Its usefulness is questionable – Special consideration of the development needs – Special timetable yielding faster decisions • A number of further special rules for DC participation as a party to DS procedure • If a dispute involves a developing-country member, the panel has always to state in his report that it has taken account of any special or differential treatment provision of WTO law. 63