World Trade Organisation Law - Essay Example

Issue relating to the World Trade Organization Dispute Settlement Procedure Burden of Proof Our essay will focus on the notion of Burden of Proof in the World Trade Organization Settlement Procedure. Before defining the different notions around evidence, we have to understand the notion of Burden of Proof and explain who has to bear it in a dispute settlement The burden of proof is as described in European Communities - Anti-Dumping Duties on Imports of Cotton-Type Bed Linen From India (2001) quoting Canada - Measures Affecting the Export of Civilian Aircraft (1999) "a procedural concept which speaks to the fair and orderly management and disposition of a dispute"1More commonly; it is the responsibility of producing sufficient evidence in support of a fact or an issue. Since 1947, many General Agreement on Tariffs and Trade (GATT) panel reports proposed that "the burden of establishing a violation under Article XXIII: 1(a) of the GATT 1947 was on the complaining party"2. "As early as 1952, in Treatment by Germany of Imports of Sardines, concerning a complaint by Norway, the panel clearly put the burden of establishing a violation of the GATT 1947 obligations at issue on the complaining party."3 Many other panel reports followed to confirm this proposition. In 1978, in EEC - Measures on Animal Feed Proteins, the 1992 report in Canada - Import, Distribution and Sale of Certain Alcoholic Drinks by Provincial Marketing Agencies and the 1994 report in United States - Measures Affecting the Importation, Internal Sale and Use of Tobacco. Nevertheless, it is the 1997 panel report United States - Measures Affecting Imports of Woven Wool Shirts and Blouses from India which under the GATT 1994 constitutes the reference in the Burden of Proof issue and confirmed that it is the complainant who should bring the proper pieces of evidence in order to prove his complaint. We will try in the following essay to explain the different rules that guide the admission, submitting and admissibility of evidence, and we will focus on the current system of Burden of Proof by analyzing its weaknesses and questioning any possible needed reforms. According to Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU) Appendix 3: Working procedures: "At its first substantive meeting with the parties, the panel shall ask the party which has brought the complaint to present its case. Subsequently, and still at the same meeting, the party against which the complaint has been brought shall be asked to present its point of view."4 In the idea of the complainant having to show Burden of Proof, it is his duty to present the necessary evidence to prove his case. The complainant is the first party invited to do so and then the other party, the respondent, will have the possibility to present its own evidence. The evidences are usually presented at the first substantive meeting in order to build the case. This is the usual conduct of the dispute settlement procedure. Nevertheless, in Understanding on Rules and Procedures Governing the Settlement of Disputes5, we are presented the Argentina - Textiles and Apparel dispute where Argentina has argued in his appeal that evidence should not have been accepted after this first substantive meeting and that it was inconsistent with Article 11 of the DSU. Argentina requested the evidence to be rejected but the Panel replied that it gave sufficient time to Argentina in order to prepare for this new submission. It finally stated: Article11 of the DSU does not establish time limits for the submission of evidence to a panel. Article12.1 of the DSU directs a panel to follow the Working Procedures set out in Appendix 3 of the DSU, but at the same time authorizes a panel to do otherwise after consulting the parties to the dispute. The Working Procedures in Appendix 3 also do not establish precise deadlines for the presentation of evidence by a party to the dispute. It is true that the Working Procedures 'do not prohibit' submission of additional evidence after the first substantive meeting of a panel with the parties. It is also true, however, that the Working Procedures in Appendix 3 do contemplate two distinguishable stages in a proceeding before a panel.Under the Working Procedures in Appendix 3, the complaining party should set out its case in chief, including a full presentation of the facts on the basis of submission of supporting evidence, during the first stage. The second stage is generally designed to permit 'rebuttals' by each party of the arguments and evidence submitted by the other parties.[T]he Working Procedures in their present form do not constrain panels with hard and fast rules on deadlines for submitting evidence. The Panel could have refused to admit the additional documentary evidence of the United States as unseasonably submitted. The Panel chose, instead, to admit that evidence, at the same time allowing Argentina two weeks to respond to it. As we have seen the parties have really no deadline as when to submit the evidence and it shall be the complainant that presents his evidence first. The question is therefore what kind of evidence is admissible in a WTO dispute settlement. According to the World Trade report 20056: "It should be noted that there are no evidentiary rules under the DSU constraining the type of admissible evidence. Parties to disputes are free as to the type of evidence they submit, as they are presumed to act in good faith. Panels are free to admit evidence and assign weights to it as they see fit. There are, of course, requirements to submit specific evidence." Nevertheless as it is pointed out in the report, the evidence presented must be relevant to the case but this relevance is under the consideration of both parties. The dispute settlement procedure as we described it, seems no to have very specific rules. The examples of the evidence admission, submitting and admissibility have proven so. In the following paragraph we are going to focus on the main weaknesses of this system. First of all, regarding the weaknesses of the WTO dispute settlement system (DSS), the most striking is that even the World Trade Organization admits that its system is not fully efficient. In "Evaluation of the WTO dispute settlement system: results to date"7 we can read that: "with respect to its weaknesses, despite the deadlines, a full dispute settlement procedure still takes a considerable amount of time, during which the complainant suffers continued economic harm if the challenged measure is indeed (WTO)-inconsistent. No provisional measures (interim relief) are available to protect the economic and trade interests of the successful complainant during the dispute settlement procedure. Moreover, even after prevailing in dispute settlement, a successful complainant will receive no compensation for the harm suffered during the time given to the respondent to implement the ruling. Nor does the "winning party" receive any reimbursement from the other side for its legal expenses. In the event of non-implementation, not all Members have the same practical ability to resort to the suspension of obligations. Lastly, in a few cases, a suspension of concessions has been ineffective in bringing about implementation." However, WTO is not the only one to react against the weakness of its dispute settlement system. Wilhelm Kohler (2004) in "The WTO Dispute Settlement Mechanism: Battlefield or Cooperation A Commentary on Fritz Breuss"8 gives a balanced idea of the system. Even though he considers that the WTO system is necessary and can be a helpful solution in regards of international trade, he also states that it can have drawbacks and cause harm to both f the parties: "Interpreting the DSM as a political cooperation device, the framework allows us to identify conditions under which the outcome is efficient in political economy terms, even though it might involve economic harm on both sides". The main concern in Kohler's opinion is not exactly the frame that the WTO provides for dispute settlement but more their outcomes - which according to him is never precisely in the benefit of one party and often harms both. Another well known weakness which can be seen as a direct accusation in a certain way is the inequality in the dispute settlement procedure. The legal action has a substantial cost and many believe that this can not be afforded by many of the 150 countries that are members of the WTO and that the wealthiest countries may take advantage of this impossibility. Georges Shaffer in "Weaknesses and proposed improvements to the WTO Dispute Settlement System: an economic and market-oriented view"9 takes the side of these countries: Greater legalization of international trade dispute settlement, of course, does not come without costs. The demands on human resources have multiplied if a member wishes to invoke its international trading rights. Although the legalization of WTO dispute settlement constitutes a significant achievement in international law, the system remains far from a neutral technocratic process in its operation. Larger and wealthier countries are much better-positioned to take advantage of the resource-demanding procedures of the legal system and have, not surprisingly, done so. In the past paragraphs we have given an example of the beliefs on what are the weaknesses of the WTO dispute settlement system. Even though these are not all the criticisms addressed to the DSS we will note that they are the strongest and the most represented. There is no provisional measure taken during the dispute which "allows" the denounced situation to continue. No reimbursement is offered once the dispute is settled meaning that even if the guilty state is forced to change its policy, it profited for the situation. And finally, a real gap exists between the North and the South regarding their possibility, timely and financially speaking, to enter such a dispute. We have pointed out the main weaknesses of the DSS, we will now try to present some of the reforms and changed that are suggested in that matter. Faryar Shirzad in The WTO Dispute Settlement System: Prospects for Reform10 especially insists on two main reforms in order to have a higher transparency and better outcomes. First, he believes that the non-confidential copies of briefs and of the panel reports should be presented to the public. Second, he addresses the issue of the filling of briefs: The issue of amicus briefs is one that must be considered carefully. Allowing the filing of briefs, with appropriate procedural limits so as not to strain the resources of parties and panelists, would clearly be helpful for addressing political pressures facing the developed countries. For the developing countries, however, there is a widespread perception that the filing of briefs will simply stack the deck further against them. Given the hostility voiced by numerous activist groups regarding the position of the United States in a number of high profile trade disputes, this concern might seem misplaced. Nevertheless, it is emblematic of how different the perspectives are among the WTO members on the issue of what constitutes reform. Not only individuals in their work have presented some reform proposal. Also many countries have offered their participation to a change of the system. In an International Centre for Trade and Sustainable Development (ICTSD) report11, "Mexico Presents Radical Proposal for DSU Reform", we were presented the point of view of Mexico in regards of the reforming of the DSS. It asked for the panels to have authority on the level of retaliation that could be imposed on a Member for non-compliance and also offered an interesting change regarding the effect of the procedure itself: The Mexican submission also suggested that WTO rulings be made retroactive to the date when the illegal measure in question was adopted or when dispute proceedings against the measure were initiated. Such a proposal would prevent measures from delaying proceedings through tactics such as blocking the establishment of panels on first request, Mexico said. Canada objected to this proposal as well, noting that the notion of retroactivity was widely condemned by Members when a panel applied it in the US-Australian dispute over Australian automotive leather subsidies In the same report, we were also given Japan's thoughts on retaliation which are nearly similar to Mexico's and on a need for an increase of the number of panelists and Appellate Body members. However, where most of the proposals for reforms are targeted to the core of the DSS i.e. the rules and working procedures that define it, it is interesting to note that there is some interest about the panel itself. James C. Hecht in "Operation of WTO dispute settlement panels: Assessing proposals for reform"12 suggests that there should be guidelines given to the panels to reach full efficiency. The panel should exercise restraint and refrain from moving into areas where negotiated rules are not clear, focus on compliance in cases where the rules are clear and there has been a violation, and finally ensure that the capabilities of the system are realistically portrayed and appreciated by members: Encouraging panelists to exercise restraint may be pursued simply through recognition of the dangers inherent in activism and law making, and in creating a culture among the community of practitioners, WTO officials, and potential panelists that reflects the importance of closely adhering to the terms of relevant agreements and applicable standards of review. More radical proposals, such as altering the negative consensus rule to allow some percentage of DSB Members to block a panel decision, would obviously be much more controversial. In terms of compliance, the parties to the DSB have already begun considering ways to streamline and clarify procedures after a panel has rendered an opinion. Finally, ensuring that the capabilities of the system are realistically assessed may suggest that we should go slowly in pursuing a more adjudicative structure for panels, a structure that could inappropriately downplay the continued need for negotiation and diplomatic interchange to achieve resolution of disputes. He also calls for a permanent body of panellists in the way it exists in the Appellate Body and insists on the need for greater transparency which can be reached by authorizing interested groups or individuals to better follow the system. When we look closer to the rules that define the World Trade Organization dispute settlement system, we may have the feeling that they are unclear. When we approached the Burden of Proof issue, we clearly understand that it the complainant has to present, first, the evidence in order to prove his case. But when we questioned what evidence were admissible and when should they be presented to the panel, we clearly pointed out that these points were not concretely defined in any GATT or WTO text. While describing the weaknesses of the DSS, we observed that from individuals to countries, many have risen to point out lacks of the system. Even if our essay only focused on some of these, we can nevertheless consider that there are major flaws in the DSS. The proposed reforms have allowed us to see that the DSS really needs a stronger framework to reach full efficiency. Our belief, in regards of all the problems presented in this essay, is that the World Trade Organization dispute settlement system is a necessary tool in today's trade world. The number of disputers - more than 300 in over 10 years - proves our point. However, in order to remain such a regarded institution it should strengthen its foundation and seek for increasing fairness within its working procedures. Resources European Communities - Anti-Dumping Duties on Imports of Cotton-Type Bed Linen From India, Appellate Body Report, WT/DS141/AB/R, AB-2000-13 (1 March 2001) Evaluation of the WTO dispute settlement system: results to date, World Trade Organization, 12.3 available on: http://www.wto.org/english/tratop_e/dispu_e/disp_settlement_cbt_e/c12s3p1_e.htm Hecht, James C, Operation of WTO dispute settlement panels: Assessing proposals for reform, Law and Policy in International Business, 2000. ICTSD Reporting; "Mexico Presents Radical Proposal for DSU Reform," WTO REPORTER, 14 November 2002. Kohler, W.The WTO Dispute Settlement Mechanism: Battlefield or Cooperation A Commentary on Fritz Breuss, Journal of Industry, Competition and Trade vol. 4. 2004. p. 317-336 Shaffer, G. Weaknesses and proposed improvements to the WTO Dispute Settlement System: an economic and market-oriented view, prepared for WTO at 10: A Look at the Appellate Body Sao Paulo, Brazil, May 16-17, 2005 Shirzad, F. The WTO Dispute Settlement System: Prospects for Reform, Presented at THE FIRST FIVE YEARS OF THE WTO American Bar Association Section of International Law and Practice, Georgetown University Law Center, January 20-21, 2000. Understanding on Rules and Procedures Governing the Settlement of Disputes, Uruguay Round Agreement, Appendix 3: Working procedures 5. 1994 Understanding on Rules and Procedures Governing the Settlement of Disputes, Dispute Settlement Understanding, World Trade Organization available at: http://www.wto.org/english/res_e/booksp_e/analytic_index_e/dsu_01_e.htm#articleI United States - Measures Affecting Imports of Woven Wool Shirts and Blouses from India - AB-1997-1 - Report of the Appellate Body [1997] WTOAB 3 (25 April 1997) World Trade Report 2005, World Trade Organization, 2005, p171. Read More