Agenda

The ability of countries to advance or protect their trade interests, particularly those which significantly promote their sustainable development objectives, through a rule-based, legally binding and commercially meaningful dispute settlement system is critical to the stability and success of any international trading arrangement.

With more rigorous disciplines and a growing body of jurisprudence, the WTO dispute settlement system has however become significantly more legalistic and consequently more arduous to navigate. WTO Member countries which are keen to avail of the system to protect or advance their trade rights and objectives face the daunting challenge of grasping and keeping pace with its increased complexity. Though developing countries’ participation in trade disputes has increased considerably, their engagement remains limited.

While DSU reform remains an outstanding issue given the continuing absence of negotiating outcomes under the Doha Round, developments outside the WTO have brought even greater focus to the importance of effective and accessible dispute settlement mechanisms.

From the increasingly fragmented international trading system, to the economic crisis which spurred the recent surge in protectionist measures, on to the trade-related measures being debated as a means to achieve objectives in other international fora (such as on climate change), the DSU seems ‘fit to be tested’. Many of the issues raised in this context affect developing countries and development concerns disproportionately.

By providing space for various stakeholders to discuss different legal and extra-legal mechanisms and approaches deemed particularly relevant for the successful use of the dispute settlement system, ICTSD hopes to enable a range of different actors to integrate sound practices and solutions in advancing or protecting their trade interests through dispute settlement.

Draft Agenda

The International Centre for Trade and Sustainable Development (ICTSD) and the Centre for Democratic Network Governance of Roskilde University are pleased to organize a dialogue on WTO Dispute Settlement, entitled “Global Networking to Increase Member-State Capacity”.  The dialogue will take place on September 29th 2009, from 9:00 - 11:00 at the World Trade Organisation (WTO), Room D.

Background:

Whilst the DSU is intergovernmental in nature, WTO Dispute Settlement would not be possible without the involvement of a wider network of stakeholders. Private firms, legal counsel, and non-governmental organizations all provide invaluable assistance to Member-states hoping to overcome disagreement. This panel will address the role of non-state actors in WTO disputes and how they might be further used to increase the capacity of Member-states to engage in the process.

Speakers:

· Professor Gregory Shaffer (University of Minnesota Law School)
· Mr Brendan McGivern (Executive Partner of the Geneva office of Whyte & Case LLP)
· H.E. Mr Virachai Plasai (Thai Ambassador to the Hague, formerly director-general of the Department of International Economic Affairs of the Ministry of Foreign Affairs of Thailand)
· Mr Johannes Bernabe (Senior Associate, International Centre for Trade and Sustainable Development

Chair:

Dr Michael Strange (Centre for Democratic Network Governance, Roskilde University)

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.

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.