A third group of countries can declare that they have an interest in the case and enjoy some rights. A procedure for settling disputes existed under the old GATT, but it had no fixed timetables, rulings were easier to block, and many cases dragged on for a long time inconclusively.
The Uruguay Round agreement introduced a more structured process with more clearly defined stages in the procedure. It introduced greater discipline for the length of time a case should take to be settled, with flexible deadlines set in various stages of the procedure. The agreement emphasizes that prompt settlement is essential if the WTO is to function effectively.
It sets out in considerable detail the procedures and the timetable to be followed in resolving disputes. If a case runs its full course to a first ruling, it should not normally take more than about one year — 15 months if the case is appealed. The agreed time limits are flexible, and if the case is considered urgent e.
The Uruguay Round agreement also made it impossible for the country losing a case to block the adoption of the ruling. Under the previous GATT procedure, rulings could only be adopted by consensus, meaning that a single objection could block the ruling. Now, rulings are automatically adopted unless there is a consensus to reject a ruling — any country wanting to block a ruling has to persuade all other WTO members including its adversary in the case to share its view.
Although much of the procedure does resemble a court or tribunal, the preferred solution is for the countries concerned to discuss their problems and settle the dispute by themselves. The first stage is therefore consultations between the governments concerned, and even when the case has progressed to other stages, consultation and mediation are still always possible.
How long to settle a dispute? These approximate periods for each stage of a dispute settlement procedure are target figures — the agreement is flexible. In addition, the countries can settle their dispute themselves at any stage. Totals are also approximate. What is this agreement called? If the courts find themselves handling an increasing number of criminal cases, does that mean law and order is breaking down?
Not necessarily. Sometimes it means that people have more faith in the courts and the rule of law. They are turning to the courts instead of taking the law into their own hands. For the most part, that is what is happening in the WTO. No one likes to see countries quarrel. But if there are going to be trade disputes anyway, it is healthier that the cases are handled according to internationally agreed rules.
There are strong grounds for arguing that the increasing number of disputes is simply the result of expanding world trade and the stricter rules negotiated in the Uruguay Round; and that the fact that more are coming to the WTO reflects a growing faith in the system.
It monitors the implementation of the rulings and recommendations, and has the power to authorize retaliation when a country does not comply with a ruling.
First stage: consultation up to 60 days. Before taking any other actions the countries in dispute have to talk to each other to see if they can settle their differences by themselves. If that fails, they can also ask the WTO director-general to mediate or try to help in any other way. Both moves flout the WTO's trade dispute process. All members should bring their case to the WTO before imposing tariffs.
If both countries had ignored the WTO, it could have made the organization irrelevant. WTO supporters accuse Trump of doing more damage to the organization than almost any other government. It brings the organization back into the dispute. A typical dispute process takes a year if there's no appeal, and 15 months if the defendant appeals. That happens with about half the decisions. The WTO will shorten the resolution time if perishable goods are involved. Here are the steps and timetable in a typical dispute resolution case.
Steps and Length of Time. World Trade Organization. Office of the United States Trade Representative. National Bureau of Economic Research. Accessed Feb. European Commission. Department of Commerce. International Trade Administration, U. Actively scan device characteristics for identification.
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A central problem for an agreement such as the WTO, which for various reasons is phrased only in general terms, such as the requirement for national and most-favored nation treatment, is to determine whether any particular behavior amounts to an illegality. In order to maintain the agreement it is important for the Members to have a way to do this.
The Members have agreed to let the ruling of the DS provide the answer in case of conflicts. Thus, there is one aspect of the DS which in principle could equally well be performed through any mutually agreed way of finding a solution, say, the flipping of a coin, provided that Members agreed beforehand to let their conflicts be resolved this way.
Of course, the DS does substantially more than only pilot the conflicting parties to a solution, since while the flipping of a coin yields a verdict which is independent of the underlying facts in a case, the DS actually creates a link between the behavior of Respondents and its rulings.
The importance of this aspect of its function, which is the one normally emphasized, hinges crucially on whether countries actually see lost cases in the DS as costly, however. If countries do not really care about rulings, since they are not enforced, the legal quality of the rulings is irrelevant.
Among the formal analyses of aspects of dispute settlements is the study by Maggi which highlights the multilateral character of the DS system. The benchmark is hence not the absence of a system of dispute settlement, but a situation in which countries have to enforce their agreements unilaterally. A basic idea is that DS system provides for third country participation in punishment of illegalities. Hence, certain countries can be seen as having particular "advantages" in the punishment of certain other countries.
Intuitively, if the agreement permits countries to redistribute the responsibility for punishments so that they are delivered by those who can undertake them particularly "cheaply", then the system can muster harsher punishments against defectors, and consequently liberalization can go further. While Maggi provides what is possibly the closest formal analysis of the views expressed here, we are still somewhat skeptical concerning the extent to which it is descriptive of the current DS system.
As pointed out, a weakness of the current DSU is exactly that it does not explicitly allow for third parties to participate in the enforcement. Of course, there are other means through which third parties can participate, by taking measures in other areas than in the trade field. However, we are not convinced that this would be done on a systematic fashion, should the situation arise.
A second study of particular relevance to the issues at stake here, is that by Ludema , even though it is somewhat difficult to explain without recourse to some basic game-theoretic concepts. Since both parties are aware of the fact that such negotiations may last indefinitely unless they both are willing to make certain sacrifices, they will quickly reach a solution should a conflict threaten to arise.
On the other hand, absent the DSU, the parties are more "distant" when formulating their strategies for the interaction, and this makes threats of more severe punishments for illegalities more credible.
The role of the DSU is thus to make conflicts less dangerous, since it provides for a way of resolving conflicts in a "civilized manner. A third study of particular interest to our concern, is that by Hungerford , who applies a "Green and Porter model" to the trade context. In this model two countries choose both tariffs and non-tariff barriers NTBs during an indefinite sequence of periods. The level of tariffs are readily observable by both countries, and they can also enforce an agreement on tariffs through some exogenous force.
However, the countries can not observe the level of non-tariff barriers imposed by their respective partner. Hungerford assumes that countries can observe their terms-of-trade t-of-t , but that these are not only influenced by the NTBs, but also by unobservable temporary external random events, such as changes in preferences, and technologies.
Hence, if faced with bad t-of-t in some period, a country could not tell whether this is the result of a beggar-thy-neighbor policy by the partner, or just an unfortunate random event. Due to the unobservable nature of the NTBs, countries can not form an explicit agreement to reduce these barriers, since it can not be directly monitored.
However, when the parties interact repeatedly, they can nevertheless reach a better outcome than a Prisoners' Dilemma situation, along similar lines to those discussed above. The complicating factor here, however, is the fact that they can not observe directly whether the partner fulfils its part of the agreement. Instead, countries have to rely on some other indicator of the partner's actions -- the terms of trade. The equilibrium, absent a DS system, will then be such that when one country suffers a particularly bad t-of-t, it will have to punish the partner by increasing its observable tariff temporarily.
Because if it did not do so systematically, there would be incentives for the partner to pursue a beggar-thy-neighbor policy. Over time one would thus witness periods where countries trade "peacefully", but now and then there would be occasional outbursts of temporary "trade wars" after which the situation would return to "normal" again.
These outbursts are costly to the countries, but are necessary in order to keep them from cheating on the agreement. Then, what might be the role of a DS system? Suppose the agreement on tariffs required countries to undertake a costly investigation to look into the reasons for the shift in t-of-t, before withdrawing concessions. If such an investigation fully revealed the reason for the t-of-t change, all "unnecessary" punishments could be avoided.
The gains would have to be set against the cost of the system. At the other extreme, if nothing more is learnt through such investigations, the DS system would make the enforcement of the cooperative implicit agreement on NTBs more costly, and would thus weaken the system. The conclusion is hence that a non-informative DS system is not only directly costly in terms of administration, widely interpreted, but may also have indirect costs through the weakening of the disciplining forces in trade agreements.
While the literature referred to above highlights what seems to be important aspects of the DSU, it is not as readily applicable to the question of developing country interests with the DSU. However, the above-mentioned limitations on countermeasures in the DS are likely to have important consequences for developing countries. First, the limited availability of countermeasures limits the effective scope of liberalization , since the further it would go, the more tempting for members to cheat, and thus the stronger the countermeasures that are needed to enforce the agreement.
Therefore, the fact that third parties are restricted from participating in countermeasures, that the DS does not provide Complainants with financial or other support to deal with a recalcitrant Respondent, and that punitive damages can not be awarded, severely limits the extent of multilateral trade liberalization that can be achieved.
As a result, countries have to seek other means of integration. Two prominent forms, which presumably have been of more benefit to industrialized than to developing countries, are Regional Trading Agreements and Mutual Recognition Agreements.
Economic studies of the EC integration process often stress the importance of the contribution of the Commission. Secondly, when enforcement means provided through the DS are weak, countries have to rely on other means to enforce the agreement.
There is then a strong presumption that countries that are "strong" in the sense of being able to impose significant losses on trading partners at relatively low costs for themselves, are better off in such a system. Again, developing countries are at a disadvantage, when considering the trade arena.
These countries are often dependent on the countries to which they export for foreign aid, and are also politically and sometimes military dependent on them. An example can serve to illustrate this point: as a result of a conflict between the EC and Ivory Coast, the EC is authorized to impose countermeasures. Consequently, they impose a premium on exports of coffee from Ivory Coast which practically excludes Ivory Coast coffee from the EC market. Imagine however, that the result of the dispute went the other way and that Ivory Coast was authorized to impose countermeasures: The Ivory Coast imposes a premium against exports of cars from the EC practically making it impossible for EC cars to penetrate the Ivory Coast market.
Surely, the two countermeasures are not equally effective means to deter violations. For instance, it would intuitively appear as if it would be more difficult for the Ivory Coast to find other buyers of its coffee, than it would be for the EC to find other buyers of the cars that are hindered to enter the Ivory Coast market.
This could simply reflect the fact that it is likely to be easier to find markets in which demand is strong at the moment if selling in many different markets. It may also reflect different marketing skills in the EC than in the Ivory Coast. Finally, there is yet another common asymmetry between developed and developing countries, which is the fact that the latter often receive tariff preferences from developed countries, but not vice versa.
Since these preferences can be unilaterally withdrawn by the importing developed countries, it might appear as if they could be a source of leverage for the latter. However, while such withdrawal indeed can be used to punish an exporting developing country for e. However, to the extent that the exporter is in competition with other developing countries which receive preferences, it may still be a potent weapon.
The picture painted above, even if not entirely clear, suggests certain short-comings of the DS, short-comings that tend to be detrimental to the interests of developing countries. However, against this picture must be set the fact that the DSU contains a series of provisions directly referring to developing countries.
Although not remedies-specific, these provisions do have an impact on the way developing countries will behave in the context of the DSU, in that they allow for different treatment of developing countries in the DS process. A common feature of all these provisions is that they acknowledge the fact that developing countries are in one way or the other in a different position compared to their developed counterparts with regard to dispute settlement in the WTO.
But they lack provisions that would have any more significant effect of tilting the balance more in favour of developing countries. Two examples can help illustrate this point:. When it comes to implementation, Art.
How exactly this is to be done, is not specified, however. By the same token, panels can add a few paragraphs to their findings in this perspective without in practice modifying the situation in favour of developing countries;.
But, the technical assistance granted is both quantitatively and qualitatively inadequate. First, so far the WTO has put at the disposal of developing countries only two experts in the field working part time and two junior staff members to help these countries with their disputes. Taking into account the number of disputes where developing countries are implicated, the above mentioned resources are simply inadequate.
Instead, developing countries are often forced to rely on private lawyers, the costs of which should not be underestimated. The legal experts provided by the WTO under Art. Indeed, it is questionable how they could do this, since on the one hand they are requested to advice their clients but on the other they have to, according to their mandate, remain objective. Another weakness of the current system for technical assistance under Art.
This requires expertise at the level of the national administrations, and developing countries are clearly inadequately equipped to handle this. Consequently, as a result of the design of Art. The Art. There are several such insertions in other Agreements which are of particular interest to developing countries. All such provisions reflect so-called special and differential treatment.
Although not directly relevant to the regulation of remedies, they do have an impact on the issue. Among WTO Agreements, it is worth presenting in brief the relevant provisions of the Antidumping Agreement AD which is often used against developing countries. As a result, AD is one of the tools used most systematically for protectionist purposes, and often by industrialized countries toward developing countries. The GPA goes in the opposite direction. This is an area where the interests of the major players are not to protect, as in the case of AD, but to open up markets.
It contains two very notable innovations. First, it contains a provision Art. XX, "Challenge procedures" for quick relief, according to which private parties can require domestic courts to rule on whether procurements have been done according to the rules of the GPA. The intention is clearly to avoid repetitions of the Trondheim experiences see above , where a construction was already in place when it was ruled that the procurement had not been performed in a correct manner.
The second innovation is that parties to the GPA are explicitly enabled to request panels to allow them to negotiate remedies that go beyond the list of Art. And here is the trick: one could well expect that parties to a dispute could explicitly request a suggestion from the panel. This is not the case though. It is interesting to note though that in the context of this Agreement, developed countries implicitly agree that the current drafting of Art.
In the case of both these Agreements it is clear that the innovations referred to, which affect the scope of the DS, politically benefit the major players.
From the point of view of social welfare the restriction of the DS with regard to AD is often to the detriment of exporting countries, and most likely also the importing countries. The innovations in the case of the GPA clearly benefits exporters, and may or may not benefit the procuring country, even though there is a rather strong presumption that on average there are benefits also to the procurer.
In the above we have pointed to certain general weaknesses in the DS with regard to remedies. It is yet too early to judge whether they are serious enough to significantly affect the working of the DS system. There is perhaps no reason to assume that the WTO record will be any worse. One interpretation of the fact that no recourse has been made to countermeasures so far, with the exception of the US in the ongoing Banana case and a dispute in between the US and Japan concerning cars, is indeed that explicit and implicit remedies in the system are perceived as potent enough to prevent Respondents from obstructing rulings.
Needless to say, it could also be taken to indicate a complete lack of faith in the value or effectiveness of remedies. With regard to the extent to which the DS system takes care of developing country interests, there seems to be two different sets of features of the system to distinguish between.
First, there are a number of provisions in the DSU with the expressed purpose of strengthening developing country positions. Most of these are not very far-reaching, however. On the other hand, there are inherent features of the system, such as the fact that Complainants are unsupported in battles against recalcitrant Respondents, as well as DSU-related insertions into other Agreements, that seem to tilt the system in favor of economically and politically stronger countries.
It is obviously almost impossible to quantify these effects in anything like a rigorous manner. Our intuition is that the latter forces dominate the former.
Finally, an aspect of the WTO DS that has not been touched upon above, but that may have different implications for industrialized and developing countries, is the fact that the WTO is a contract between governments which directly affects private parties, but only governments have locus standi before WTO panels.
This raises in turn the difficult but central question of whether there are systematic differences between rich and poor countries in the extent to which governments represent broad national interests social welfare considerations.
To the extent that there is a difference between the rules and procedures of Articles 4, 5, 6 and 12 and the corresponding rules and procedures of the Decision, the latter shall prevail. If, after the relevant period has elapsed, the consulting parties cannot agree that the consultations have concluded, the Chairman of the DSB shall decide, after consultation with the parties, whether to extend the relevant period and, if so, for how long.
In addition, in examining a complaint against a developing country Member, the panel shall accord sufficient time for the developing country Member to prepare and present its argumentation. The provisions of Article and of Article are not affected by any action pursuant to this paragraph. In this regard, Members shall exercise due restraint in raising matters under these procedures involving a least-developed country Member.
If nullification or impairment is found to result from a measure taken by a least-developed country Member, complaining parties shall exercise due restraint in asking for compensation or seeking authorization to suspend the application of concessions or other obligations pursuant to these procedures.
The Director-General or the Chairman of the DSB, in providing the above assistance, may consult any source which either deems appropriate. To this end, the Secretariat shall make available a qualified legal expert from the WTO technical cooperation services to any developing country Member which so requests.
This expert shall assist the developing country Member in a manner ensuring the continued impartiality of the Secretariat. Apollis, Gilbert. Revue Generale du Droit International Public , Charpentier, Jean.
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