Developing Countries and Dispute Resolutions - Research Paper Example

THE ROLE OF DEVELOPING COUNTRIES IN RELATION TO WORLD TRADE ORGANIZATION’S DISPUTE SETTLEMENT MECHANISM Introduction As a matter of fact, in carryingout trade between countries, there arise disputes that must be settled. There has to be an internationally recognized body responsible for solving of these international disputes. Currently, the power to settle international trade disputes lies with the World Trade Organization which has a binding authority, therefore, distinguishing it from other intergovernmental institutions. The understanding on rules and procedures governing the settlement of disputes gives the World Trade Organization unprecedented powers to resolve trade related conflicts between the countries and assign penalties and compensation to the partakers of the dispute. This research paper seeks to find ways in which the developing countries can play a major role in the realization of the WTO aims and objectives. It aims at finding ways in which the roles of the developing countries in the WTO can be seen as major roles rather than a minor role. Objectives The specific objectives of this research are: i) To explore the responsibilities of the World Trade Organization in international dispute settlement ii) To find out the roles the developing countries can play in international dispute settlement LITERATURE REVIEW Background Information: World Trade Organization At the centre of the multilateral trading system are a group of economic actors and agents who include investors and financiers, importers, exporters, producers, consumers and workers, facilitators who are the service providers like the banks, insurance agents, transport and telecommunication services, and rules of engagement. This has to be in tandem with each therefore the rise of the World Trade Organization An overview of the dispute settlement body of the World Trade Organization is helpful to set the context of the comments, research and analysis that follow. With the rise of globalization and liberalization, international trade policy has become a very complex phenomenon. Of the key texts that emerged from the Uruguay round of trade talks, ‘understanding on rules and procedures governing settlement of disputes’ is most vocal (Iwasawa, 291). The disputes settlement body (DSB) is one of the integral parts of the agreement establishing the WTO. The World Trade Organization is based on the principle of single undertaking as opposed to the old system of dispute settlement under the generalized system of Tariff and trade (GATT) which advocated for positive consensus before any decision by the panel of adjudicators was adopted (Iwasawa, 295). The GATT system has in the past led to blockage of the settlement procedure by the member countries either at establishment of the panel stage or the adoption of the panel report stage. Such a case was in1988 when the United States of America imposed sanctions against Brazil imports under the Super 301 trade Act of 1974 on the ground that Brazil failed to give patent protection to pharmaceutical products manufactured by the USA companies (Lacarte-Muró, and Gappah 398). Brazil argued that US action was GATT illegal and requested for a dispute settlement panel. However the US blocked the panel’s constitution using its influence and dragged the matter for a number of months while at the same time trying to get a bilateral solution with Brazil. The rising of the World Trade Organization rose due to the following shortcomings of GATT: it was little more than a code of conduct for overseeing trade negotiations; the majority of the provisions were not enforceable; did not take into consideration the proliferation of non tariff barriers; and did not factor in the growth of high technology products and services. There are three broad objectives of the World Trade Organization; the promotion of free flow of trade, to act as a permanent forum for trade negotiations and to enforce a dispute settlement procedure (Iwasawa, 288). The World Trade Organization is a permanent negotiating forum whose provisions are legally binding and enforceable with members who join accepting the majority of its provisions. The World Trade Organization covers several agreements among them being the multilateral agreement on trade in manufactured, agricultural, textiles and clothing commodities, the general agreement on trade in services, the agreement on trade related aspects of intellectual property rights among others (Kirman & Calika, 57). The agreement covers several areas among them being financial services, maritime transportation, telecommunications, movement of natural pensions, trade and competition policy, trade and the environment, trade and labour rights, trade n civil aircrafts and government procurement. WTO works on a set of principles which includes non discrimination principle, rules to promote free trade and fair competition across all markets principle, clearly guaranteed access to foreign markets for producers and exporters principle, and assistance to developing countries principle by providing technical assistance and training programmes to assist development and reform. Dispute Resolution through the World Trade Organization The administration of international dispute settlement is done by the dispute settlement body that consists of the World Trade Organization’s general council (Bossche, 454). The council has the authority to establish panels, adopt panel and appellate body reports, authorize suspension of concessions, and maintain surveillance in the implementation of rulings and recommendations and other obligations. The dispute settlement system aims to resolve disputes by clarification of rules of the multilateral trading system. It has no obligation in legislation or promulgation of new rules. When another party takes actions that impairs or the member state believes that the action impairs the benefits accruing to it either directly or indirectly under the Uruguay Round Agreements, the member state may request consultations to resolve the conflict through informal negotiations. If the negotiations fail to resolve or yield mutually acceptable outcomes within a period of sixty days, the parties may request for the establishment of a panel to resolve the conflict (Bossche, 453). The panels typically consist of three individuals with expertise in international trade law and policy. The panellists hear the evidence from the parties in dispute and present a report to the DSB recommending a course of action to be undertaken within six months. The panellists can solicit information and technical advice from any reliable source although it is not required to do so. The submissions from the members are the only ones guaranteed to be heard though in rare cases panellists have consulted submissions from interested non governmental organizations. In the realization of the World Trade Organization’s objectives, all the member countries should put the necessary effort not as a single country but also the combined effort. In the recent past the developing countries have not been vocal enough in regard to this either because they feel segregated by the big eight or the fact that they do not have a considerable number of citizens sitting in the panel. Developing Countries and Dispute Resolutions The WTO recognizes that developing countries need special and differential treatment in certain circumstances like: longer time duration for implementing agreements and commitments, assistance in increasing trade opportunities, provision to safeguard trade interests, infrastructural support and capacity building, and technical cooperation. There are suggested benefits of World Trade Organization to developing countries among them being reduction in living costs and improved living standards (Raghavan, 7). The developing countries will also benefit through economic growth stimulation, higher national and global incomes as well as promotion of peace, prosperity and good governance. The very existence of a compulsory multilateral dispute settlement system is a particular benefit for developing countries and the minority members. A system where all the members have equal access and decisions are made on the basis of the rule of law rather than on the basis of economic power, is a way to empower the developing countries and the minority members by placing the weak on more equal footing with the strong (Das, 21). In regard to this, any judicial law enforcement system highly benefits the weak more than the strong as the strong would always have other means to defend and impose their interests in absence of a law enforcement system. Though this argument is viewed as being overly formal and theoretical, in practice developing countries have always prevailed in dispute settlement over large trading nations. However it should be noted that, developing countries that wish to avail themselves of the dispute settlement system have in the past faced considerable burdens. Developing countries often do not have a sufficient number of specialized human capital resources who are experts in the intricacies of the substance of the World Trade Organization law or the dispute settlement procedure. The growing jurisprudence body developed by panels and the appellate body makes it extremely difficult for trade officials around the globe to master the substance and procedural aspects of World Trade Organization law including the latest developments and adjustments (Chimni, 266). It is also difficult for a small trade administration to already assign its few officials facing the challenge of keeping up with the World Trade Organization matters to a dispute. It is the role of the minority member countries and the developing countries to raise alarm whenever a developed country instills a trade barrier that is inconsistent with the World Trade Organizations objectives and principles. The developing countries have the obligation of ensuring that the barrier is withdrawn (Iwasawa, 294) although such cases have taken unnecessarily long durations after the filling of a WTO dispute settlement complaint. In the past eight years, developing countries have been the complainants in over a third of all the disputes and respondents in roughly two fifths of all case. Developing countries initiate disputes against developed country members as well as developing ones. Third party participation of developing and weak economic countries has rose and provides a valuable experience base for members not regularly involved in dispute settlement proceedings. RESEARCH METHODS The research methodologies to be used in carrying out this research will vary with person targeted as well as the level of education of the person. Generally, interviews will be carried out involving high level ranking governmental officials either from the developing countries or the developed countries. Also the researcher will try reaching reliable sources from the World Trade Organization in order to seek their view in regard to the roles of the developing countries in international disputes settlement. Questionnaires will be drafted and completed by carefully selected participants. The people eligible for participation have to be of sound mind and demonstrate a high level of interest in international affairs. The participants will have to be adequately knowledgeable about international trade and well aware of international relations. The participants have also to be citizens of one of the one hundred and forty eight member states of the World Trade Organization. The researcher will also search for more information from previously done research work in relation to the involvement of developing countries and the World Trade Organizations in realization of settlement of international trade disputes. Data Sources This study will be conducted using secondary as well as primary data. The secondary data will mainly be from previously done thesis and research records concerning the subject which will be eligible for use after careful scrutiny. Some journals from online libraries such as Westlaw and Lexis Nexis will be used as secondary sources. Other secondary sources that will be consulted include books, government records, reputable websites, WTO records, articles and speeches that have information about the subject of this research. Data Analysis This research will mainly deal with qualitative data. The research will involve the application of descriptive data analysis in coming up with conclusions. The research will also use correlation in inter-relating the various aspects of the project work. CONCLUSION AND RECOMMENDATIONS Developing countries have a big stake in realization of reduced trade disputes in the international community. Developing countries offer a big market for manufactured goods and source of cheap labour as noted by Lacarte-Muró and Gappah (398). In solving of disputes, sanctions have to be enforced against the countries interfering with a resource that would otherwise directly or indirectly benefit a particular country. For the effect of sanctions to be felt, the majority of the member countries have to be part. The countries which are the market and source of the raw materials have to effect the sanctions for the sanctions to bear fruits. It is the obligation of the developing countries to be aggressive enough in order to reap from the WTO benefits. The developing countries should manufacture goods that are of high quality as well as improve the services to an internationally recognized level so as to compete effectively in the world trade market (WTO, 4). The governments of the developing countries have the obligation of integrating the World Trade Organization’s objectives and principles in their economic activities. Also they have to ensure that the human resources are competitive enough and ready for the international market. REFERENCES Bossche P. V., The law and policy of the World Trade Organization: text, cases and materials. Cambridge. Cambridge University Press. 2005. Chimni, BS. "India and Ongoing Review of WTO Dispute Settlement System". Economic and Political Weekly, 30 January, pp. 264-267. 1999. Das, Lal B. “Some Key Issues Relating to the WTO”. Trade & Development Series No. 3. Third World Network, Penang. 1996 Iwasawa, Y., “WTO Dispute Settlement as Judicial Supervision”, Journal of International Economic Law. 2002. 287 – 305. Kirmani N. and Calika N., International Trade Policies: Background papers World economic and financial surveys Volume 2 of International Trade Policies: The Uruguay Round and Beyond, Nur Calika World Economic Outlook Series (illustrated). International Monetary Fund. New York. 1994. Lacarte-Muró, J. and Gappah, P., “Developing Countries and the WTO Legal and dispute Settlement System: a View From the Bench”. Journal of International Economic Law, 2000. 395 – 401. Raghavan C., The World Trade Organization and its Dispute Settlement System: Tilting the balance against the South (Trade and Development Series No. 9). Viewed on 30th June 2010 from http://www.twnside.org.sg/title/tilting.htm, 2000 World Trade Organization. Developing countries in WTO dispute settlement.Viewed on 30th June 2010 from http://www.wto.org/english/tratop_e/dispu_e/disp_settlement_cbt_e/c11s1p1_e.htm, 2010 Read More