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SPECIAL AND DIFFERENTIAL TREATMENT OF DEVELOPING

COUNTRIES UNDER THE WTO DISPUTE SETTLEMENT SYSTEM

REMARKS BY
FRIEDER ROESSLER*

* Executive Director, Advisory Centre on WTO Law. The views expressed in this paper
are the personal views of the author.
Special and Differential Treatment of Developing Countries under the WTO Dispute Settlement System
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Developing countries have not been able to reap fully the benefits of the dispute
settlement procedures of the GATT and the WTO. Professor Hudec, who prepared a
detailed statistical analysis of all GATT dispute settlement cases between 1948 and 1989,
concluded:

The quantitative analysis of individual country performance


makes it pretty clear that the GATT dispute settlement
system is, at the margin, more responsive to the interests of
the strong than to the interests of the weak. The evidence
for this hypothesis occurs in all phases of performance – in
the rates of success as complainants, in the rates of
noncompliance as defendants, in the quality of the
outcomes achieved, and in the extent to which
complainants are able to carry complaints forward to a
decision. Perhaps the most important finding in this regard
is the very substantial difference in the rates of withdrawal
before a ruling is made, suggesting that the weaker
countries encounter significantly greater barriers at the
outset of the process.1

The rule-based dispute settlement system of the WTO promised more


even-handed results. However, some empirical studies of its operation suggest that the
developing countries face also difficulties in asserting their rights under the new system.
Thus, Busch and Reinhardt conclude from a statistical analysis of the operation of the
DSU during the first five years that developing countries encountered even greater
difficulties in bringing complaints under the WTO than under the GATT. Their
explanation for this phenomenon is:

By adding 26'000 pages of new treaty text, not to mention a


rapidly burgeoning case law; by imposing several new
stages of legal activity per dispute, such as appeals,
compliance reviews and compensation arbitration; by
judicialising proceedings and thus putting a premium on
sophisticated legal argumentation as opposed to informal

1
Robert E. Hudec, Enforcing International Trade Law: The Evolution of the Modern GATT Legal
System, Butterworth Legal Publishers, page 353.
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negotiation; and by adding a potential of two years to the
defendants’ legally permissible delays in complying with
adverse rulings, the WTO reforms have raised the hurdles
facing [developing countries] contemplating litigation.2

The various proposals that have been made to strengthen the provisions of the
DSU that accord special and differential treatment to developing countries are therefore
reactions to serious problems that developing countries have encountered. However, will
they contribute to the resolution of these problems or would other approaches be more
effective?

To answer this question, I would like to distinguish between two categories of


DSU provisions that deal with developing-country concerns.

The first category consists of the DSU provisions that state how generally-
applicable principles should be implemented in cases involving developing countries.
The right of developing countries to request that at least one panelist come from a
developing country (Article 8.10) can be seen as a specific application of the general
principle that panel members should be selected with a view to ensuring a "sufficiently
diverse background and a wide spectrum of experience" (Article 8.2). The duty of a
panel to indicate explicitly in its report how it took into account provisions on special and
differential treatment in a covered agreement invoked by a developing country
(Article 12.11) is nothing but a specific application of the general obligation of panels to
present in their reports an objective assessment of the matter before them (Article 11).

These provisions, though specifically addressing developing countries’ concerns,


can for this reason not be regarded as according any treatment to them that is different
than the treatment accorded to developed countries. On the contrary, they are designed to
ensure that developed and developing countries are treated equally. These provisions
have worked in practice: in almost all cases in which a developing country was involved,
at least one of the panelists has come from a developing country and panels have
consistently explained in their findings how they took into account the relevant special
and differential treatment provisions.

2
Marc L Busch and Eric Reinhardt, Testing International Trade Law: Empirical Studies of
GATT/WTO Dispute Settlement (Paper presented at the University of Minnesota Law School Conference on
the Political Economy of International Trade Law, 15 – 16 September 2000)
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The second category of DSU provisions concerning developing countries consists
of the provisions that set out criteria and procedures applicable exclusively to developing
countries. One such provision is Article 3.12, according to which developing countries
are given the right to request in disputes brought against developed countries the resort to
the good offices of the Director-General and the application of expedited panel
procedures in accordance with a decision adopted by the CONTRACTING PARTIES to
the GATT 1947 in 1966. Under the GATT 1947, developing countries resorted to the
good offices procedures six times;3 however, none resorted to the expedited panel
procedures. The developing countries nevertheless insisted that the right to resort to these
procedures be reaffirmed in the 1979 Understanding on Notification, Consultation,
Dispute Settlement and Surveillance,4 in the 1989 Improvements to the GATT Dispute
Settlement Rules and Procedures5 and in the DSU. No developing country has invoked
so far the 1966 procedures in a dispute under the DSU.

Another DSU provision applicable exclusively to developing countries is Article


21.2, according to which particular attention should be given to matters affecting the
interests of developing countries in the procedures designed to ensure the implementation
of recommendations and rulings. This provision was invoked by Argentina and Chile in
arbitration procedures on the length of the reasonable period time for the implementation
of DSB recommendations and rulings. The arbitrator recognised that this provision,
though cast in general terms, "is not simply to be disregarded" because "it is in the DSU".
However, in both cases he declined to apply it on the ground that Argentina and Chile
had not been very specific about how their interests as developing countries actually bear
upon the duration of the implementation period.6 In Indonesia – Automobile Industry, the
arbitrator used Article 21.2 as the legal basis for an extension of the implementation
period by six months.7 This appears to have been the only practical impact of this
provision so far. Other provisions according developing countries procedural

3
Good offices under the 1966 Decision were invoked in 6 instances and, at least in one (involving
India and Japan), led to a mutually agreed solution; see, WTO, Guide to GATT Law and Practice, Volume
2, page 765.
4
BISD 26S/210.
5
BISD 36S/61 and WTO, Guide to GATT Law and Practice, Volume 2, pages 764-765.
6
Arbitration under Article 21.3(c) of the DSU, Chile – Taxes on Alcoholic Beverages,
WT/DS887/15-WT/DS110/14, para. 45 and Arbitration under Article 21.3(c) of the DSU, Argentina –
Measures Affecting the Export of Bovine Hides and the Import of Finished Leather, WT/DS155/10, para.
51.
7
Arbitration under Article 21.3(c) of the DSU, Indonesia – Certain Measures Affecting the
Automobile Industry, WT/DS54/15- WT/DS55/14- WT/DS59/13- WT/DS64/12, para. 24.
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privileges are Articles 21.7 and 21.8, according to which the DSB shall take into account
the interests of developing countries in its task of surveying the implementation of
recommendations and rulings. The DSB has never applied these provisions and was
never requested to do so.

This brief review of the operation of the DSU provisions on special and
differential treatment permits the following conclusions: The provisions that are designed
to ensure that a generally applicable principle is also applied to developing countries have
been effective. However, there is a reluctance of developing countries to invoke the DSU
provisions according them special privileges and of the judicial organs to give effect to
those provisions. My personal experience is that developing countries wish to face in
legal proceedings developed countries as equals and are therefore hesitant to invoke
procedural privileges that their opponents do not enjoy. Moreover, they also fear that the
application of procedural provisions biased in their favour may detract from the
legitimacy of the result of the procedures and hence reduce the normative force of the
rulings they are seeking.

There is for these reasons a certain divergence between what developing countries
sought in negotiations on new dispute settlement rules and what they subsequently did
when they were engaged in a proceeding under those rules. In the negotiations, they
tended to seek procedural privileges; in dispute settlement practice, their aim was to
secure formal equality. There is therefore the distinct risk that, in the DSU review,
developing countries will use their diplomatic resources to obtain privileges that they will
subsequently not invoke.

An alternative way to achieve equality between developed and developing


countries in WTO dispute settlement is to accord developing countries the assistance they
need to defend their rights as effectively as developed countries. Pursuant to Article 27.2
of the DSU, the WTO Secretariat is to provide legal advice and assistance in respect of
dispute settlement to any developing country Member that so request. However, the
experts of the WTO Secretariat "shall assist the developing country Member in a manner
ensuring the continued impartiality of the Secretariat". This makes it impossible for the
experts of the Secretariat to act as an advocate for one Member in a legal proceeding
against another and they have in practice not done so.

Developing countries have therefore no option but to turn for legal assistance in
WTO proceedings to sources outside the WTO. There is an increasing number of law
firms able to give legal advice on WTO law, in particular in the field of trade remedies.
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However, the cost of such advice is prohibitive for many developing countries. In
July 2001 the Advisory Centre on WTO Law was therefore created as an
intergovernmental organisation independent from the WTO, to provide advice and
training on WTO law to developing countries and countries with economies in
transition.8 In an informal paper distributed recently by the Africa Group in the WTO, it
is recognised that the provisions on special and differential treatment in the DSU have
“not fully and coherently addressed the core difficulties developing country Members
face in seeking to use the WTO dispute settlement system”. In the view of the Africa
Group, “the difficulties relate to lack of shortage of human and financial resources”. It
therefore proposes that the activities of the Advisory Centre be supplemented by the
establishment of a permanent fund financed by the WTO membership to help developing
countries overcome the institutional and human constraint they face in using the complex
DSU procedures.9

To conclude: Developing countries have difficulties reaping the benefits of the


WTO dispute settlement system. Experience shows that these difficulties cannot be
overcome through the grant of procedural privileges. The application of procedural
provisions discriminating in favour of one party to a legal proceeding detracts from the
legitimacy of the results of that proceeding. The developing countries have therefore
rarely invoked such provisions in the DSU and the judicial organs have been reluctant to
apply them. The basic aim should therefore be to put developing countries in the position
to effectively defend their rights in a system in which essentially same procedures apply
to all parties. Special and differential treatment in the field of WTO dispute settlement
should for these reasons take primarily the form of privileged access to legal expertise.

8
For more information on the Advisory Centre on WTO Law se the website www.acwl.ch.
9
Paper entitled “Negotiations on the Dispute settlement Understanding: Proposal of the Africa
Group in the WTO”, distributed in September 2002.