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WTO - Organisation
Structure:
Ministerial Council
General Council
Trade Policy Review Body Dispute Settlement Body
Introduction
The WTOs procedure for resolving trade disagreements under the Dispute Settlement Understanding (an agreement) is vital for enforcing the rules and therefore for ensuring that trade flows smoothly.
A dispute arises when a member government believes another member government is violating an agreement or a commitment that it has made in the WTO. The authors of these agreements are the member governments themselves the agreements are the outcome of negotiations among members. Ultimate responsibility for settling disputes also lies with member governments, through the Dispute Settlement Body.
The Legal Basis The Dispute Settlement Understanding (DSU) the main WTO agreement on settling disputes. Was one of the outcomes of the Uruguay Round negotiations.
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Introduction
The Dispute Settlement Body Made up of all member governments, usually represented by ambassadors or equivalent. The current chairperson is H.E. Mr. Yonov Frederick AGAH (Nigeria). The Appellate Body The permanent seven-member Appellate Body is set up by the Dispute Settlement Body and broadly represents the range of WTO membership. Members of the Appellate Body have four-year terms. They have to be individuals with recognized standing in the field of law and international trade, not affiliated with any government.
Dispute Settlement
Dispute settlement is the central pillar of the multilateral trading system. It helps to increase the effectiveness of the rules-based system and helps in the enforcement of rules. The WTOs procedure for dispute settlement, makes the trading system more secure and predictable. Dispute settlement is based on clearly-defined rules, with timetables for completing a case. First rulings are made by a panel are endorsed i.e. accepted or rejected by the WTOs full membership. Appeals based on points of law are possible. The priority is to settle disputes, through consultations (between nations) if possible. Majority of cases get settled out of court.
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Dispute Settlement
Disputes in the WTO are about broken promises/ agreements. WTO members have agreed that if they believe fellowmembers are violating trade rules, they will use the multilateral system of settling disputes instead of taking action unilaterally. That means abiding by the agreed procedures, and respecting judgements.
A dispute arises when one country adopts a trade policy measure or takes some action that one or more fellowWTO members consider to be breaking the WTO agreements, or to be a failure to live up to obligations. A third group of countries (apart from the 2 parties involved) can declare that they have an interest in the case and enjoy some rights.
Dispute Settlement
Under GATT, there was a procedure to settle disputes but it had no fixed timetables, rulings were easier to block, and many cases dragged on for a long time inconclusively. Uruguay Round introduced a more structured process Clearly defined stages in the procedure (Details about the procedures and the timetable to be followed in resolving disputes.) 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 prompt settlement for effective functioning of the WTO If a case runs its full course to a first ruling, it should not normally take more than about 12 15 months if the case is appealed. The agreed time limits are flexible - if the case is considered urgent, it is accelerated as much as possible.
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Dispute Settlement
The Uruguay Round agreement made it almost impossible for the country losing a case to block the adoption of the ruling. Earlier, under the 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, to share its view. The procedure resembles a court/ tribunal, but the preferred solution is for the countries concerned to discuss their problems and settle the dispute by themselves. The first stage is consultations between the governments concerned, and even when the case has progressed to other stages, consultation and mediation are still always possible.
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Panel members
Panels are like tribunals. The panelists are usually chosen in consultation with the countries in dispute. Only if the 2 sides cannot agree does the WTO director-general appoint them. Panels consist of 3 (to five) experts from different countries who examine the evidence and decide who is right and who is wrong.
The panels report is passed to the Dispute Settlement Body, which can only reject the report by consensus. Panelists for each case can be chosen from a permanent list of well-qualified candidates. They serve in their individual capacities. They cannot receive instructions from any government.
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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.
60 days 45 days
6 months 3 weeks 60 days Total = 1 year 60-90 days 30 days Total = 1y 3m
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Appeals
They have to be individuals with recognized standing in the field of law and international trade, not affiliated with any government. 18
Appeals
The appeal can uphold, modify or reverse the panels legal findings and conclusions.
Normally appeals should not last more than 60 days, with an absolute maximum of 90 days. The Dispute Settlement Body has to accept or reject the appeals report within 30 days and rejection is only possible by consensus. One of the central provisions of the DSU reaffirms that Members shall not themselves make determinations of violations or suspend concessions, but shall make use of the dispute settlement rules and procedures of the DSU.
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Corrective Action
If a country has done something wrong, it should swiftly correct its fault.
If it continues to break an agreement, it should offer compensation or suffer a suitable penalty that has some bite. Once the case has been decided, there is more to do before trade sanctions (the conventional form of penalty) are imposed. The priority at this stage is for the losing defendant to bring its policy into line with the ruling or recommendations. The dispute settlement agreement stresses that prompt compliance with recommendations or rulings of the DSB is essential in order to ensure effective resolution of disputes to the benefit of all Members. 20
Corrective Action
If the country that is the target of the complaint loses, it must follow the recommendations of the panel report or the appeals report.
It must state its intention to do so at a Dispute Settlement Body meeting held within 30 days of the reports adoption. If complying with the recommendation immediately proves impractical, the member will be given a reasonable period of time to do so. If it fails to act within this period, it has to enter into negotiations with the complaining country (or countries) in order to determine mutuallyacceptable compensation for instance, tariff reductions in areas of particular interest to the complaining side.
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Corrective Action
If after 20 days, no satisfactory compensation is agreed, the complaining side may ask the DSB for permission to impose limited trade sanctions (suspend concessions or obligations) against the other side.
The Dispute Settlement Body must grant this authorization within 30 days of the expiry of the reasonable period of time unless there is a consensus against the request.
In principle, the sanctions should be imposed in the same sector as the dispute. If this is not practical or if it would not be effective, the sanctions can be imposed in a different sector of the same agreement.
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Corrective Action
In turn, if this is not effective or practicable and if the circumstances are serious enough, the action can be taken under another agreement.
The objective is to minimize the chances of actions spilling over into unrelated sectors while at the same time allowing the actions to be effective. In any case, the Dispute Settlement Body monitors how adopted rulings are implemented. Any outstanding case remains on its agenda until the issue is resolved.
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Appellate Procedures
Appeals are conducted according to the procedures established under: Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU) Working Procedures for Appellate Review (Working Procedures).
The Working Procedures are drawn up by the Appellate Body in consultation with the Director-General of the WTO and Chairman of the Dispute Settlement Body (DSB) They have been amended six times since 1995. The most recent amendments were announced on 26 July 2010. The most recent amendments modify the deadlines for written submissions during an appeal and provide for the filing and service of written submissions in electronic form. These amendments take effect for appeals initiated on/ after 15 September 2010
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Appellate Procedures
The appellate stage follows the issuance of a report by a panel established pursuant to the DSU.
Panel reports must be adopted by the DSB within 60 days of their circulation to WTO Members, unless a party decides to appeal. Parties to a dispute may appeal a panel report at any time before the panel report is adopted by the DSB. Third parties are not entitled to appeal a panel report. Appeals are limited to issues of law covered in the panel report and legal interpretations developed by the panel.
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Appellate Procedures
An appeal is commenced upon written notification to the DSB and the simultaneous filing of a Notice of Appeal with the Appellate Body Secretariat. A party that files a Notice of Appeal is known as the appellant.
A party to the dispute that wishes to respond to the allegations raised by the appellant may file its own written submission within 18 days of the date on which the Notice of Appeal and the appellant's submission were filed. A party that files a written submission is known as an appellee.
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Appellate Procedures
The Working Procedures recognize that some disputes may involve multiple appeals.
A party to the dispute other than the original appellant may also appeal on the same grounds or on other alleged errors by filing a Notice of Other Appeal and a written submission within 5 days of the filing of the Notice of Appeal. This party is known as an other appellant. Parties wishing to respond to the allegations raised by the other appellant may file a written submission within 18 days of the filing of the Notice of Appeal. Members that are third parties during the panel process may also file written submissions within 21 days of the date of filing of the Notice of Appeal. Third parties that file written submissions or appear at the oral hearing (after taking written or discretionary permission from Appellate Body Secretariat and Appellate Body Division) are known as third participants. 27
Appellate Procedures
Oral Hearing: At the oral hearing, appellants, other appellants, appellees and third participants are given an opportunity to present oral arguments and to respond to questions put to them by the Appellate Body Division hearing the appeal.
The hearing generally takes place within 30 to 45 days of the filing of the Notice of Appeal. Proceedings before the Appellate Body are confidential. Only WTO Members that are appellants, other appellants, appellees or third participants are entitled to attend oral hearings. In a few instances, at the request of the parties, Appellate Body oral hearings have been opened to the public. After the oral hearing and before finalizing the Appellate Body Report, the Appellate Body Division hearing the appeal exchanges views with the other four Appellate Body Members
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Appellate Procedures
The Appellate Body Report is circulated to WTO Members in the 3 official languages of the WTO (English, French, and Spanish) within 90 days of the date when the Notice of Appeal was filed, and it becomes public immediately upon circulation to Members.
In its Report, the Appellate Body may uphold, modify or reverse the legal findings and conclusions of the panel. Within 30 days of the circulation of an Appellate Body Report, the Report, together with the panel report will be put on the agenda of a DSB meeting for adoption. The DSB will adopt the reports and an adopted Appellate Body Report, together with the adopted Panel Report, must be unconditionally accepted by the parties to the dispute.
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Thanks
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