To What Extent Are the WTO Panel and Appellate Body Process Judicial in Nature - Term Paper Example

The WTO can be described to be a body that acts as a buffer or negotiating medium between different nations on an international or Global basis in order to settle, clarify and to some extent manage all of their Trade related problems. The WTO performs the following major functions It acts as a buffer between various nations in order to discuss trade related issues. It acts as a negotiating medium for International Governments to settle trade related disputes It acts as a mediator sometimes to help nations to reach on mutually acceptable solutions on Trade related issues or differences or arguments. The Appellate Body, a unit of seven people, was set up in the year 1995 under article 17 of the Understanding on Rules and Procedures Governing the Settlement of Disputes. This unit acknowledges the appeals from reports that are issued by the panels, which address the disputes pertaining to the members. The Appellate Body is empowered to influence and alter the inference and findings drawn by the panel. Once the Dispute Settlement Body adopts these reports, the members concerned with the dispute must accept this. This body was initially not perceived as a central entity to the dispute settlement system of WTO. With time, it grew to become a powerful and crucial component of the WTO dispute settlement body. It is also referred as the World Trade Court1. DSB stands for Dispute Settlement Body. A very important and integral part of the WTO organizational structure, the DSB acts as a mediator between nations to sort out their trade related issues. The Dispute Panel is a panel formed of WTO members at an ambassadorial level, which recommends a problem to the DSB. The Appellate Body sends a report on the problem to DSB for further and proper solution of the grievance concerned2. (Bartels, 2001, 499) The judicial function of the WTO is limited essentially to solve the ‘state-to-state’ disputes. If we look at the judicial independence of the Appellate Body we need to consider what makes an international legal body independent in its powers. There are two categories of this concept. First, it indicates judicial independence of a world in general or a regional court, which is not interfered by the states. Another context refers to the independence of a judicial unit or body within an international organization. The Appellate Body’s power is limited – “Thus, the WTO Agreement provides no right of action by a Member against an administrative action by the Organization, one of its subsidiary bodies, or the Director-General”3. (Charnovitz, n.d., 223) According to one commentator, “the Appellate Body would not be empowered to strike down an “unconstitutional” pronouncement” of a WTO”. (Charnovitz, n.d., 223) The institution works on the principle of ‘Reverse Consensus’. It accepts a problem unless and usually it is objected upon. After acceptance, the arguing parties are brought together, voted upon on their problem and the defeated party instructed to take requisite steps or action to solve the problem or act in accordance to the solutions suggested by WTO. There are no penalties as such or punishments for the loosing parties in the redressal system of WTO. Prominent cases and the role of DSB in solving them: Case I US Steel tariffs: It became a political issue in the United States. It took place when President George W Bush placed a tariff on imported steel on March 5, 2002, which became effective from the 20th of March, same year. However President Bush himself lifted the tariffs on December 4, 20034. (CNN, 2003) Why it was done? It was done in order to protect the US steel majors against bankruptcy as more than double a dozen declared bankruptcy in the adjacent years. The government fell that foreign steel makers were eating into the profits of the domestic steel makers and hence it was done. Who were exempted? Canada and Mexico got spared due to a prevailing free trade agreement between them and the United States. The US was however generous enough to exempt developing nations like Turkey, Thailand and Argentina5. (Lennard, 2002) Criticism: The step attracted widespread criticism from the political opponents of the President as they said: That would harm the US economy in general that depended heavily on imported steel. It was against the Free Trade Policy of President Bush. It would benefit the politically important states of West Virginia and Pennsylvania and hence was politically motivated. Reactions: The European Union announced retaliatory steps on the US and decided to impose similar tariffs on them too. Thus a Trade War was ignited and WTO and DSB stepped in. Role of DSB: The WTO and DSB brought the fighting parties to one table. It opined against the tariffs as it said that they would be an opposition to Free Trade. President Bush remained adamant but ultimately climbed down after European Union’s threat to ban everything from cars of Michigan to Oranges of Florida. How effective was the DSB in solving the problem? Demerits: Bush’s political opponents opposed the step steeply. So sooner or later he had to back down. The European Union and its threat to ban European products proved to be the major catalyst in the backing down of the President. Bush’s credibility itself was in question as the deal was said to be politically motivated. Merits: The DSB did provide a platform for the parties to sit and discuss. Was the DSB powerful enough? It cannot be answered properly as it did not exercise any of it’s discretionary powers in general apart from raising a formal opposition. Are the WTO and DSB needed? Yes they are. They provided a Grievance Redressal System, although it did not use any of its special powers6. Case II: GM Food restrictions in Europe: Genetically Modified Food refers to food products that got their genes modified by scientific research and hence gives more nutrition and productivity. But a large section of the World’s population was opposed to it as they said tampering with nature may be unsafe and hence GM foods should be banned. A similar crisis broke out in Europe surrounding this7. Economic and Political Implications: Critics said it would take power from the agricultural sector to the biotechnological sector. In Aug 2003 Zambia banned GM food from its aid quota from UN so much so that it brought famine and acute food crisis to the nation. In April 2004, Venezuela banned GM foods. President Hugo Chavez announced it. In Jan 2005, Hungarian Government announced a similar ban. In Aug 2006, European Governments banned the inflow of genetically modified rice to Europe from the mighty US, although the US government announced the rice to be safe far human consumption. Role of WTO and DSB: The matter was brought to the WTO and DSB put they could not do much against the powerful Scientific and Biotechnical lobby. Today trade in GM foods is common although there the debate surrounding the safety on their consumption still remains. The DSB and WTO could not do anything apart from remaining as silent spectators. The Limitations to Copyrights issue: In the early 90s several US media giants proposed to pass a law limiting copyrights of singers, authors etc and proposed the free publication of their works through the then rising Internet and Ipods. Sharing of literary works or music was said to be unobjectionable. Several people from publishing and music Industry raise their voices. Even the Canadian Supreme Court acknowledged the problem. Role of WTO and DSB: The matter was referred but under influence of powerful corporate media giants like apple, google, the matter was buried then and there. Today Internet is as common as the air we breathe and I-pods and I-tunes are sold like children toys. Some other cases- Auto Part’s dispute: On 30th March 2006,several European countries, US, Canada approached the DSB on the restrictions imposed on the import of auto parts. The European countries argued that under the measures identified, imported automobile parts used in manufacture of vehicles sold in China are subject to equal tariffs for complete vehicles, if they are imported in excess of certain thresholds. The European communities said that the measures are inconsistent according to current trade laws8. (World Trade Organization, 2006, 50) DSB’s role: It thinks the matter to be too complicated and last heard on March 2008 is still thinking over it. Shrimp Disputes: On June 6th 2006, India requested consultations with the US on the Amended Bond Directive and the enhanced bond requirement imposed by the United States on imports of frozen warm water shrimps from India. India considered the Enhanced Bond requirement as unfair and hence appealed against it. DSB recommended the justification of EBR by the United States as unfair and recommended the US bring its measures into conformity with its obligations under the Anti Dumping Agreement and GATT 19949. (Mavroidis, 73-75) On May 1998 India complained against the European Union against import duties on rice. The steps taken by DSB were: No consultations were done. No panel was established. No steps taken. On December 30 1994, India requested consultations with the US concerning transitional safeguard measure imposed by the US affecting the import of woven shirts and blouses from India to the US. The US announced that the measure was withdrawn as at 22nd November 1996 before the panel and hence the matter ended there. Anti dumping duties were imposed on import of pharmaceutical products from India10. Respondent: South Africa: On April 1999, India requested consultations as they were up against the anti dumping duties imposed on their pharmaceutical products by the Board of Trade and Commerce, South Africa. (BTT). Role of DSB and Appellate panel included no consultations being heard and no measures taken. Anti dumping duties on rolled non alloy steel products from India: On 5th July 2004, India wanted consultations with the European Communities on the imposition of definitive anti dumping measures on imports of certain flat rolled products of iron or non alloy steel, of a width of 600 mm or more, not clad, plated or coated, in coils, not further worked than hot rolled or HR COILS, as they are known, from India11. Role of DSB and Appellate Panel: On 22nd Of October 2004, India and the European communities notified the DSB that they had reached an agreement with respect to the matter raised by the Indian government in its request for relevant consultations. According to the notification, the European Communities agreed to end up and roll up the measure at issue. Continued dumping and subsidy offset act of 2000: On 21st of December 2000 and May 21st 2001, the complainants requested consultations with the US concerning the amendment to the tariff act of 1930 that was signed on 28 October 2000 with the title of ‘ Continued Dumping and Subsidy Offset Act of 2000’ usually referred as the ‘Byrd Amendment’12. Solution: On 28th of April 2006, 19th of April 2007 and 3rd of April 2008, the European communities notified the DSB of the new list of products on which additional import duty would apply, prior to the entry into force of a level of suspension of concessions. On 22 August 2006, Japan notified the DSB of the new list of products, prior to the entry into force of a level of suspension13. (Danaher and Burbach). Thus in this few above-mentioned cases, it becomes somehow clear of the role, power, jurisdictions and problem solving capacities of WTO, DSB and its Appellate Body. Now let us see how the DSB works at the current level. There are few steps to be followed. And those are as follows: First Step: Consultation. Before taking any other actions the countries in dispute have to talk to each other to see if they can settle their differences by themselves. If that fails, they can also ask the WTO director-general to mediate or try to help in any other way. Second Step: If consultations fail, the complaining country can ask for a panel to be appointed. The country “in the dock” can block the creation of a panel once, but when the Dispute Settlement Body meets for a second time, the appointment can no longer be blocked (unless there is a consensus against appointing the panel). It can take 45 days for the panel to be appointed and the redressal can go up to 6 months if necessary. Officially, the panel is helping the Dispute Settlement Body make rulings or recommendations. But because the panel’s report can only be rejected by consensus in the Dispute Settlement Body, its conclusions are difficult to overturn. The panel’s findings have to be based on the agreements cited. The panel’s final report should normally be given to the parties to the dispute within six months. In cases of urgency, including those concerning perishable goods, the deadline is shortened to three months. The agreement describes in some detail how the panels are to work. The main stages are: First hearing: the case for the complaining country and defense: the complaining country (or countries), the responding country, and those that have announced they have an interest in the dispute, make their case at the panel’s first hearing. Rebuttals: the countries involved submit written rebuttals and present oral arguments at the panel’s second meeting. Experts: if one side raises scientific or other technical matters, the panel may consult experts or appoint an expert review group to prepare an advisory report. First draft: the panel submits the descriptive (factual and argument) sections of its report to the two sides, giving them two weeks to comment. This report does not include findings and conclusions. Interim report: The panel then submits an interim report, including its findings and conclusions, to the two sides, giving them one week to ask for a review. Review: The period of review must not exceed two weeks. During that time, the panel may hold additional meetings with the two sides. Final report: A final report is submitted to the two sides and three weeks later, it is circulated to all WTO members. If the panel decides that the disputed trade measure does break a WTO agreement or an obligation, it recommends that the measure be made to conform to WTO rules. The panel may suggest how this could be done. The report becomes a ruling: The report becomes the Dispute Settlement Body’s ruling or recommendation within 60 days unless a consensus rejects it. Both sides can appeal the report (and in some cases both sides do). Thus this is how the DSB works at present. The discussion on the role of WTO and its DSB and Appellate panel thus has huge and enormous legal relevance in this world of today as it can promote free trade in its truest term, abolish monopolies of super powers in the economic arena and promote uniform economic growth across the entire world. It should also address the environmental problems and issues the world is facing. Thus and hence the activities of WTO and its bodies should be monitored, appraised and rectified if necessary and hence lays its legal relevance. Concluding remarks The main support of the multilateral trading order is provided by the dispute settlement system. Unless there is a unit to settle the disputes, any system based on rules cannot be completely effective because in that case rules cannot be enforced. However the system provides rules, which are clearly defined with a timetable drawn for successful completion of any case. It is also possible to place an appeal based on the points of law. Instead of giving judgments the idea is to settle disputes via consultations where around 130 out of 332 cases have managed to undergo the process of the panel14. The Appellate Body being a part of the dispute settlement system has therefore has not really been able to exercise its power to the full potential. According to Joseph Weiler, the Appellate Body is not referred as a ‘court’ but it actually is one. This may be justified by the fact that the actions taken by the panels and the body are adjudicative in nature. By settling the disputes it has a great role of ensuring safe trading activities around the world and in creating a comfort zone encompassing the trading nations. Yet, the Body and the panel needs to be more active in realizing its optimum potential as a ‘court’ of the international trading order and a part of the World Trade Organization. The WTO and Appellate Body of the DSB is working in an almost Democratic world but we must not forget that this world has become Unipolar. Unipolar in terms of superior nations, their governments, social classification and concentration of financial might. We live in a real world and so imagining picture perfect solutions and situations are nearly impossible. Yes the WTO and its DSB has its faults, true but it also deserves a pat on its back for whatever little it has done. The proof lies that in spite of unipolarization of power and resources economies like India, China, Korea, and Pakistan are rising. References 1. Bartels, L. 2001, Applicable Law in WTO Dispute Settlement Proceedings, Journal of World Trade 35(3): 499–519 2. Charnovitz, S. n.d., ‘Judicial Independence In The World Trade Organization’, retrieved on December 24, 2008 from: http://www.worldtradelaw.net/articles/charnovitzjudicial.pdf 3. Crowley, L. n.d., Europe stalls again on ending GM restrictions, Food Production Daily, available at: http://www.foodproductiondaily.com/news/ng.asp?n=82519-wto-gm-crops-france-austria (accessed on July 24, 2008) 4. CNN. 2003, Bush administration lifts steel tariffs, December 4 available at: http://edition.cnn.com/2003/ALLPOLITICS/12/04/elec04.prez.bush.steel/index.html (accessed on July 24, 2008) 5. Danaher, K. and R. Burbach. 2000, Globalize This!: The Battle Against the World Trade Organization and Corporate Rule, Roger Burbach 6. Lennard, M. 2002 Navigating by the Stars: Interpreting the WTO agreements, Journal of International Economics Law, 17-89 7. Mavroidis, P. C. 2000, Trade and Environment after the Shrimps – Turtles Litigation, Journal of World Trade, 34(1), 73-88 8. World Trade Organization, 2008,‘Appellate Body’, 2008, available at: http://www.wto.org/english/tratop_e/dispu_e/appellate_body_e.htm (accessed on December 24, 2008) 9. World Trade Organization, 2006, WTO Dispute Settlement: One-Page Case Summaries, September, available at: http://www.wto.org/english/res_e/booksp_e/dispu_summary06_e.pdf (accessed on December 24, 2008) 10. World Trade Organisation (2008), ‘ UNDERSTANDING THE WTO: SETTLING DISPUTES’, available at: http://www.wto.org/english/thewto_e/whatis_e/tif_e/disp1_e.htm#appeals (accessed on December 24, 2008) Read More