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)

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.

Since its entry into the WTO, China placed a strong emphasis on not only increasing trade opportunities, but also on using the dispute settlement system (DSU) in the WTO to help establish more stable and predictable trade relations with its partners. Yet, developing countries—including major members such as China and Brazil—struggle to capitalise on DSU because of its complexity and intense resource-demands. In response, ICTSD and the China Society for WTO Development Studies have organised a dialogue event to examine the DSU structure, identify major challenges faced by developing country members, and draw on lessons from case studies. The dialogue will aim to use these shared experiences to identify new strategies for strengthening DSU and developing countries’ benefit from the system.

Since its entry into the WTO, China’s trade has grown rapidly, making it the world’s third largest trader today. Upon acquiring WTO membership, China placed a strong emphasis on the Dispute Settlement Understanding (DSU) system and hoped that this rules-based multilateral scheme could help the nation establish more stable and predictable trade relations with its partners as it grew. Given the enormity of China’s current trading, how the country participates in DSU will have important implications not only on its own trading partners, but the system itself.

Yet, unfortunately, the legalised mechanism of dispute settlement in the WTO is complex and resource-demanding, raising concerns about the capacity and ability of developing countries to effectively utilise the system to safeguard their trading rights and secure their development objectives. Developing country WTO Members thus need to make cost-effective adjustments if they are to gain from DSU.

In response, ICTSD and the China Society for WTO Development Studies have jointly organised a Beijing—based dialogue to focus on strengthening developing countries’ understanding of the options and potential strategies for advancing their trade objectives and defending their trade rights through the DSU system.

To identify strategies for improving developing countries’ ability to capitalise on DSU and global trading systems, the dialogue will focus on sharing dispute settlement experiences with specific attention on major developing countries like China, Brazil and India. Participants will examine the structure of DSU as it relates to these countries and draw on lessons from case studies. They will also undertake a thorough analysis of the major legal, financial, institutional and technical resource challenges faced by developing countries. Finally, the event will consider the reforms proposed as part of the review of the WTO Understanding on Rules and Procedures Governing the Settlement of Disputes and the larger Doha development round of trade negotiations.

Through these exercises, the dialogue will aim to identify and explore new strategies that promote inter-governmental and private-public coordination and cooperation. It is hoped that a list of recommendations and future strategies aimed at improving the multilateral trading system and strengthening developing countries’ capacities to capitalise on DSU will be established at the dialogue’s conclusion. This will then be distributed among policy makers, negotiators, governments and other key stakeholders.

Like many of ICTSD’s dialogues, the event will be held in an informal setting that encourages active and open participation from all attendees. To help support this, simultaneous translations in English and Chinese will be provided.

Along with ICTSD and the China Society for WTO Studies, the event is being organized in collaboration with the WTO Studies School of Wuhan University and the Shanghai WTO Affairs Consultation Centre. The organizers are expecting the attendance of around fifty participants made up of international and Chinese experts representing a broad range of stakeholders including negotiators, government representatives, international governmental organisations, academics, legal practitioners, think-tanks, civil society bodies, and private industry.

The event is scheduled for 9-10 July 2008 at the Holiday Inn Chang Ann West Beijing, China.

Chinese Version

Developing countries vary significantly in terms of the size of their economies and the role of law in their domestic systems. Nonetheless, they generally face three primary challenges if they are to participate effectively in the WTO dispute settlement system. These challenges are: (i) a relative lack of legal expertise in WTO law and the capacity to organize information concerning trade barriers and opportunities to challenge them; (ii) constrained financial resources, including for the hiring of outside legal counsel to effectively use the WTO legal system, which has become increasingly costly; and (iii) fear of political and economic pressure from members exercising market power, and in particular the United States and EC, undermining their ability to bring WTO claims. We can roughly categorize these challenges as constraints of legal knowledge, financial endowment, and political power, or, more simply, of law, money and politics.
This paper explores various strategies for responding to these three challenges, none of which involves a modification of the rules of the WTO’s Understanding on Rules and Procedures Governing the Settlement of Disputes (the DSU), or of WTO jurisprudence. WTO members have been discussing an amendment of the DSU through a special negotiating session since 1997, but without reaching any consensus.3 This paper does not address the challenges posed by WTOdispute settlement rules themselves, such as the system’s weak remedies which reduce the benefits of participation, nor does it address the impact of WTO jurisprudence on the costs of participation. These issues will be addressed in a separate study.4

In light of resource constraints, developing countries will obviously choose to dedicate more resources to other trade-related development initiatives than to WTO dispute settlement. Yet if the legal system is to work for them, they will need to examine cost-effective means to deploy it. While developing countries, and especially smaller ones, may not trade the volume or variety of products as large members, the trade barriers that they confront can often be of greater relative importance to their economies. That is, while they may have low absolute stakes in the trading system in relation to total world trade, they can have higher relative stakes in relation to their particular economies.5 There is thus a need to examine strategies for them to make better use of the current system

The WTO case EC-Conditions for the Granting of Tariff Preferences to Developing Countries involved a challenge by India of special tariff preferences granted by the European Community (EC) to twelve developing countries in order “to combat drug production and trafficking” (the Drug Arrangements), resulting in decisions of a judicial panel and the Appellate Body of the World Trade Organization (WTO).3 Underthe Drug Arrangements, the EC granted preferential tariff rates to Pakistan and eleven other countries over and above the EC’s normal preference system for developing countries, the “Generalized System of Preferences” (GSP). The case has significant implications for all conditional grants of trade preferences, including those conditioned on human rights and intellectual property and investment protection. The decision likewise informs multilateral negotiations over “special and differential” treatment in the Doha negotiating round regarding the definition of beneficiaries and the content of preferences.4 Much of the academic analysis of this case, however, remains rather a-historic and de-contextualized. This article highlights some of the historical, political, sociological, and institutional contexts in which India’s GSP claims have been interpreted.

After providing background to the dispute and examining key ambiguities in the legal texts, we focus on three aspects of the interpretive context that are of broader concern and which, in our view, have not previously been developed: first, the normative framing and how that frame may elide the larger historical and political contexts of colonialism and asymmetric power in international economic relations (sections II and III); second, the institutional choices faced by the WTO judicial decision-makers when deciding over conditions for preferences, and the implications of these choices for participation in political, judicial and market decision-making (sections IV and V); and third, the potential shaping of judicial interpretation in response to commentary from an interpretive legal community that comes predominately from North America and Europe (section VI). However hyper-technical and brilliantly legalistic our reasoning may be, our interpretation of the ambiguities of the relevant legal texts will inevitably be affected by our backgrounds and normative approaches. Our backgrounds and normative inclinations affect the framing and understanding of a case in which a WTO judicial body exercises significant power.

The GSP system is arguably not that important for overall imports into the United States and Europe. It is reported that “only 1.3 percent of U.S. imports in 1999 entered duty-free under the GSP,”5 and only 3.1 percent of EC imports entered duty-free under the GSP in 1997.6 However, the GSP system remains important for many developing country sectors and it has been politically important in US and European relations with developing countries, where it has been heavily used, in particular, by promoters of enhanced intellectual property and labor rights. Moreover, the GSP case illustrates the centrality of institutional choice in the WTO judiciary’s handling of the linkage between WTO trade provisions and other policies. Those wholly familiar with the legal texts, the US and European preference systems, and the WTO judicial decisions may wish to skip or skim the next section that we provide as background.