Now in its second decade, member states have demonstrated that the structure and enforcement mechanisms provided by the DSU provide a legal recourse unparalleled by many similar intergovernmental bodies. Yet growing use has revealed problems within the institutional framework of the system itself, as well as in the jurisprudence thus far developed.

These shortcomings threaten the continued usefulness of the dispute settlement body, and by implication, the very legitimacy of the multilateral trading system itself. Truly, without effective adjudication under the DSU, a major advantage of multilateral trade coordination is lost as members will invariably seek unilateral recourse in trade disputes.

The burden of proof as currently applied is one such point of concern.

A legal principle not defined by the DSU, its meaning only emerges through amalgamation of Appellate Body decisions. Oft repeated yet inescapably uncertain, the rule has emerged that parties must forward sufficient evidence to make a ‘prima facie‘ case.

Illusive in both definition and application, this principle can create profound challenges to system participation and overall function. Appellate Body reasoning has been applied capriciously at the panel level, undermining predictability. Contradictions between rulings undermine consistency, and overall system transparency is eroded as how much and what kind of evidence is required to satisfy the burden is unknown, allowing decision makers to seemingly draw arbitrary distinctions amongst evidentiary submissions.

Since the adjudication of trade disputes would remain ambiguous without the transparent and consistent application of the burden of proof, the lack of clarity within the ‘prima facie‘ principle could be seen to detract from overall system legitimacy while further presenting an additional obstacle to entry for inexperienced members, especially the developing and least developed amongst them, wishing to engage in the dispute settlement system.

This study clarifies the standard through reference to WTO jurisprudence, scholarly analysis, as well as international and domestic legal traditions. Providing both general overview and focused guidance, this paper tracks case-by-case interpretations of the standard at all levels of WTO dispute settlement, providing key language while attempting to reconcile internal contradictions.

After comprehensive analysis, this study advocates modifying the burden of proof to a preponderance of the evidence standard, a principle which the authors argue is better suited to the inherent structural organization of the Dispute Settlement Mechanism.

It is the central conclusion of this paper that such an adoption would provide clarity within the system while easing the entry of new participants to the system - both ultimate goals of the DSU. Providing useful commentary on how this new standard may be implemented, this study cites evidence from recent decisions indicating that a shift to this standard may already be underway within the dispute settlement system.

This study aims to assist both experienced practitioners and newcomers in understanding the current nuances of the dispute settlement system, while also presenting a well-reasoned argument for reform. It is our hope that you find this paper a useful contribution within the field.

This paper is produced under ICTSD’s research and dialogue program on Dispute Settlement and Legal Aspects of International Trade which aims to explore realistic strategies to maximize developing countries’ capability to engage international dispute settlement systems to defend their trade interest and sustainable development objectives. The authors are James Headen Pfitzer, legal technical officer at the World Health Organization in Geneva, and Sheila Sabune, Trade in Services and Dispute Settlement Programme Officer at ICTSD.

Two studies commissioned by ICTSD and completed with the assistance of the Geneva International Academic Network will be presented and discussed.

Andrea Bianchi and Lorenzo Gradoni will present the findings of their study ‘Developing Countries, Countermeasures and WTO law: Reinterpreting the DSU against the Background of International Law.’

Additionally, authors Marc L. Busch, Eric Reinhardt and Gregory Shaffer will contribute to the discussions by presenting their study titled ‘Does Legal Capacity Matter? Explaining Dispute Initiation and Anti-Dumping Actions in the WTO.’  

BACKGROUND

It is estimated that use of the Dispute Settlement Mechanism by developing nations increased by 40% in the year 2008. In light of this general trend, observers have noted that as the multilateral trading system continues to be increasingly utilized, the extent to which emerging nations can engage as active participants will help determine the ongoing legitimacy of the WTO system and its applicability for all nations.

Undoubtedly, one of the most frequently identified complaints with the WTO Dispute Settlement Mechanism is difficulty in compelling Members to comply with adverse DSU rulings. This barrier is often felt most strongly by the developing world, which continues to cite the ineffectiveness of countermeasures in ensuring compliance as a major hurdle to effective recourse under the multilateral system. For a number of reasons ranging from trade value to dependence on foreign aid, developing nations are often unable or unwilling to meaningfully realize their rights under the WTO dispute settlement system, calling into question the overall usefulness of the system.

Even more basic, however, are the conditions leading to dispute initiation.  Until now, there has been virtually no in depth analysis regarding the correlation between a nation’s legal capacity and their susceptibility to WTO violative practices. As direct evidence has emerged demonstrating that legal capacity plays a critical role in dispute initiation and anti-dumping protection, discussion of these issues is essential to providing benefit for all WTO Members. 

These studies present innovative responses aimed to assist developing nations attempting to participate within the WTO framework through systematic analysis of the issues of compelling compliance and legal capacity - two issues with which developing countries are inescapably connected. It is our hope that presentation of these studies will initiate discussion and thought on these issues, both as a foundation for future reform and as a resource for those confronting present realities.

The interventions by key experts will be followed by a discussion with participants - see programme below.

Given that there is limited seating, we would highly appreciate if you could kindly confirm your intention to participate by email to Sheila Sabune (ssabune@ictsd.ch) or William Kraus (wkraus@ictsd.ch)  or by fax (at 41 22 917 80 93).

We hope you will find the presentations lively and contribute with your experience and expertise during the open discussion that ensues.

Please, visit the Website of the UNFCCC for more Informations!

World Meteorological Organisation

Room C1

*Avenue de la Paix 7 bis, 1202 Geneva 

The objective of the roundtable was to examine options and challenges in the use of cross-retaliation in TRIPS and GATS with a view to enable developing countries to make effective use of it under the WTO Dispute Settlement system.
 
Professor Frederick M. Abbott and Dr. Arthur E. Appleton presented the findings of two studies, commissioned by ICTSD, in which they respectively investigate the legal, technical and economic problems raised in the use of cross-retaliation under TRIPS and GATS, and present possible solutions to these problems.
 
Background
Cross-retaliation refers to the suspension of concessions in a sector of trade different than the sector in which the trade injury is suffered, including under a different WTO agreement. The incorporation of the “new area” agreements of TRIPS and GATS, as a consequence of the Uruguay Round negotiations, introduced a more complex era in dispute settlement and retaliation. For many developing countries, suspension of concessions in TRIPS or GATS may represent a valuable alternative option when it is not practical or effective for them to rely on standard retaliation. This is often the case due to the unbalanced nature of trading relations and the asymmetry in economic power.
 
However, this option has rarely been used by developing countries. Thus, the complex legal and technical problems, as well as the economic consequences, of resorting to cross-retaliation under the TRIPS Agreement and the GATS need to be examined comprehensively, in order for developing countries to make effective use of this option.
 
Professor Abbott has investigated cross-retaliation under the TRIPS Agreement. He presents the range of legal options available to governments considering the suspension of concessions under the TRIPS Agreement particularly in terms of identifying the level of suspension and avoiding legal conflicts.
Dr. Appleton has identified and outlined options on how to implement cross- retaliation within the GATS. In this connection, he has examined Modes and sectors of service supply where cross retaliation would be legally and technically feasible while creating an incentive for the violating member to comply without causing harm to the economy of the retaliating member.
 
After the presentations, comments were made by a number of distinguished experts and delegates. An open discussion with the audience followed. (Programme attached). The two studies by Professor Abbott and Dr.  Appleton were made available at the meeting.

The International Centre for Trade and Sustainable Development will organize a panel during SIEL’s inaugural conference that will examine developing country participation in the WTO Dispute Settlement System. Through the presentation of country studies on Brazil, Chile and Egypt the panel will share developing country dispute settlement experiences and facilitate active discussions on this issue amongst participants.

ICTSD’s panel emerges from part of a greater project undertaken by the DSU programme. The three panel presentations presented at the conference come from a case study book compiled by the Centre that closely examines the DSU experience of nine developing countries in different regions throughout the world. More details on this field guide and its publishing date will be available in late 2008.

”We will. The only decision is when,” Roberto Azevedo, Brazil’s chief trade official, told journalists, according to Reuters.

The announcement comes three weeks after the WTO’s Appellate Body upheld Brasilia’s challenge to the support that the US offers its upland cotton producers. The panel ruled that the US subsidies, which include marketing loans, counter-cyclical payments and export credit guarantees, were inconsistent with the country’s WTO obligations.

Brazil had complained that the payments artificially depress global cotton prices, pushing Brazilian producers out of the market (See BRIDGES Weekly, 11 June 2008, http://www.ictsd.org/weekly/08-06-11/wtoinbrief.htm#2).

But before it can take any retaliatory measures, Brazil must re-activate its request, first submitted in 2005, for permission to take countermeasures against the US. Usually, complainant countries apply sanctions to goods from the same sector in which the dispute occurred. In this case, however, Brasilia plans to renew its request for authorisation to ‘cross-retaliate’ in other sectors. Specifically, it will ask permission to suspend intellectual property protection obligations (in copyrights, trademarks, industrial designs, patents and the protection of undisclosed information), and to suspend concessions in several services sectors.

If and when Brasilia re-commences arbitration, the WTO panel will need to rule on both the type of countermeasures that can be taken as well as the level of sanctions that can be applied. Brazil is considering making two requests, one for US$1 billion and one for US$3 billion.

However, Brazilian officials have said that it would be at least a few months before any request is submitted. The issue of retaliation is especially complex and will be considered with great care, especially as Brazil must consider the risk of US retaliation in another sector.

Meanwhile, the US has again declared its disagreement with the recent ruling of the WTO Appellate Body, saying that the decision was based on outdated evidence. Washington claims that the land devoted to cotton in the US has fallen by 38.5 percent in the last two years, that subsidies have been reduced and that marketing loans were eliminated in September 2007. Furthermore, Washington has suggested that it will not take additional measures to remove its cotton subsidies. That sentiment, coupled with the farm bill passed by the US Congress last month - which generally maintains payments to cotton producers - has led many in Brazil to denounce the Washington’s lack of goodwill on the issue.

ICTSD reporting. “Brazil to seek U.S. trade sanctions over cotton” REUTERS, 20 June 2008; “Brazil Ponders on How to Retaliate Against US Cotton,” BRAZZILMAG.COM, 22 June 2008; “Brazil to Pursue $4 Billion in Sanctions Against U.S. on Cotton” Bloomberg, 17 June 2008; “EUA não devem rever política do algodão” AGENCIA ESTADO, 20 June 2008.