Reform and Development of the Dispute Settlement System - Case Study Example

Introduction The World Trade Organization is a globally recognized organization for facilitating trade between various countries. “Multilateral Dispute Settlement,” is one of the key issues handled by the WTO. Like any global network, WTO operates with a set of rules, and these rules will be over looked if there is no effective and systematic approach for settling potential disputes. Initially there was a procedure for settling disputes under the former “General Agreement on Tariffs and Trade” (GATT), but there were no predefined time limits and procedures were quite time consuming and decision implementation was not very affective and suffered from blocking (Borght and Dencho 488). WTO’s dispute settlement mechanism was established by the Uruguay round agreement which has clearly defined set of rules and structured mechanism for procedures, which brought more affectivity and efficiency to the settlement process. WTO is responsible for stabilizing world economy by its timely economical relief effort WTO, and joining the WTO automatically comes with obligations. WTO’s well laid out set of rules, resources and time-lines for dispute resolution, makes the trade contracts and the associated countries well protected and less vulnerable. Dispute settling mechanism is a set of predesigned tools by which compliance is enforced, and if a member country violates any of the rulings, heavy commercial costs and penalties may follow (Borght and Dencho 488). The panel makes recommendations and resolutions and it is left to the full membership of the WTO to decide in favor, or against such rules. Any further possibility for appeal also exists by the appellate body, within specific parameters and conditions. Like all multilateral dispute settling systems WTO is also subject to constant development and reforms. The disputes are generally about trade or deal violations or speedy procurement of contracts etc. A unique characteristic of the WTO’s dispute settlement mechanism is the fast processing of the cases, in comparison to other international dispute settlement mechanisms. Panels can be arranged within just 60 days of notice, and for comparatively less complicated cases the process time is about 9 months, after compilation of the panel’s report. In case of an appeal, the final verdict on panel’s report can be achieved in less than two years after the case initiation. The more complicated Cases may take 36 months at most, due to time involved in factual complications. For a country which is involved in illegal trade violations; it may be a lengthy and time consuming process but the efficiency of D.S.U (Dispute settlement understanding) cannot be questioned, these time limits are flexible. Some cases that remain unsolved for a long time may involve settlement out of court or lengthy consultation. Another remarkable achievement of the Uruguay Round Agreement is that the procedures are so well placed and timely that it is impossible for a country on the verge of losing a case, to block further rulings of it. Under the previously executing body of GATT, rulings were blocked from further adoption by a single objection, now with DSU a consensus of all the WTO members has to be reached for any block or delay in the case proceedings. Which means all the WTO members including the opponent country, will have to block or reject a ruling for it to be termed as rejected or void (Borght and Dencho 488). In its relatively short span of existence of just above 10 years (Yang, Mercurio and Li 592), Dispute settlement (DS) system has become the most crucial part of the equally new WTO. The work load efficiency has been on an all time high as compared to its predecessor GATT. So far the DS System has solved or sufficiently worked upon over 300 complaints initiated by its official government members (Yang, Mercurio and Li 592). The Arbitral awards, (over a 100 so far) also influence and affect the practical applications of the DSU provisions, during the process of Arbitration (Yang, Mercurio and Li 592). Most of these cases have been either settled after deliberations, or could not proceed due to various reasons; the success ratio has been tremendous. Another unique characteristic of the DS System is that it has designed its settlement and negotiating policies, rules and procedures in lines of a local, judicially based court system (Yang, Mercurio and Li 592). These rules and procedures must be carried out within 10 days of initiating the case by any of the members. Understanding the procedures and articles of regulations is important for all the members of the WTO, in order to avoid any conflict or resistance. It is also important to have a thorough understanding of the 27 Articles of the DS Mechanism, and how they apply to the Panel and Appellate body reporting procedures as a whole (Yang, Mercurio and Li 592). 2) THE CASE OF DISPUTE SETTLEMENT: DISPUTE DS381 United States — Measures Concerning the Marketing, Importation and Sale of Tuna and Tuna Products: This case was initiated by Mexico on 24 October 2008 (“United States — Measures Concerning the Importation, Marketing and Sale of Tuna and Tuna Products”). Mexico challenged certain U.S measures regarding the prohibition of labeling of Mexican tuna and tuna related products as “Dolphin Safe” (Trade Commission 80). Mexico argued that although its Tuna and related products are harvested according to the multilaterally agreed upon health care Standards and are fully entitled to the “Dolphin-Safe” label. These standards were in compliance with those approved by the “Inter-American Tropical Tuna Commission.” Mexico appealed for a consultation hearing with the U.S, as similar products of different other countries including the U.S were approved “Dolphin-Safe” and it was affecting the productivity of Mexico’s brand of Tuna products. Mexico also claimed that the U.S standard procedures requirements for labeling are far more stringent than other countries and demanded documentary evidence of the area where tuna is harvested. Mexico complained that the measures taken by the U.S for labeling tuna are not completely consistent with Articles 2, 5, 6 and 8 of the TBT Agreement and Articles I and III of the GATT (Fauchald, Hunter, and Xi 807). Consultation Request Received: On 24 October 2008 Mexico sent a request for consultation in November, other countries such as Australia and Canada including the European committees joined the consultations (Fauchald, Hunter, and Xi 807). They reserved their third party rights. Panel Formed for investigation: On 9 March 2009, Mexico requested for a Panel establishment, On 20 April 2009, the DSB established a panel for case hearing on Mexico’s request. Due to modifications in time table and sudden death of a WTO member, the issuance of the panel’s final report of findings was delayed from February 2011 to June 2011 (Fauchald, Hunter, and Xi 807). Final Report Submission: On 15 September 2011, the panel’s report was circulated to the members. Mexico’s main claim was that the attitude of the U.S was discriminatory against Mexico, and also that hard core documentary evidence was required in order to determine the sanctity of U.S “Dolphin- Safe” standards. Mexico also claimed that the U.S prefers the Tuna products of its own origin rather than Mexico’s, and that was the violation of the rules of Article III: 4 of the GATT 1994 (Conrad 537). Panel’s Findings according to the Articles of TBT OF the WTO: First of all, the panel examined whether the U.S dolphin-safe labeling requirements were in line with the technical regulations of the TBT agreement, they determined that they met the required technicalities of the TBT agreements ("Year in Trade 2009, Operation of the Trade Agreements Program, 61st Report" A-41). Annex 1:1. After this point was settled with a jury majority, the panel then deliberated upon Mexico’s claims under the Articles: 2.1, 2.2 and 2.4.of the TBT agreement ("Year in Trade 2009, Operation of the Trade Agreements Program, 61st Report" A-41). Mexico’s claim under Article 2.1 of the TBT: The panel rejected Mexico’s first claim, as the U.S dolphin-safe regulations were not discriminatory towards Mexico; hence there was no inconsistency with Article 2.1 of the TBT agreement. The panel also concluded that the U.S does not treat Mexico’s tuna as less favorable, against the U.S tuna produce, regardless of their origin ("Year in Trade 2009, Operation of the Trade Agreements Program, 61st Report" A-41). Mexico’s claim under Article 2.2 of the TBT: The panel realized that, Mexico’s claim that the U.S dolphin-safe measures were quite trade-restrictive, which was rather superfluous. The U.S measures emphasized more upon, informing the consumers about the manner in which the tuna was caught was not very favorable for the dolphins. The panel concluded that the U.S dolphin-safe labeling regulations were not completely fulfilling the lawfully required objectives set by the U.S, and also that Mexico indeed came up with a commendable, less stringent method of labeling tuna which was far more achieving the legitimate quality approved targets than the previous method ("Year in Trade 2009, Operation of the Trade Agreements Program, 61st Report" A-41). Mexico’s claim under Article 2.4 of the TBT: As for Mexico’s claim, the panel concluded that the U.S dolphin safety measures for labeling tuna were not violating the article 2.4 which suggests, that technical regulations must follow international standards where possible. However, the panel also recommended the technical method provided by Mexico is equally in line with the international standards, which has not been utilized by the U.S despite its authenticity ("Year in Trade 2009, Operation of the Trade Agreements Program, 61st Report" A-41). The panel also concluded that the measures suggested by Mexico were not sufficient enough for meeting the U.S pre-set objectives for labeling. The panel restrained from issuing any additional ruling with respect to Mexico’s non-discrimination claims under the GATT (1994), hence settled for a more judicially economic approach by passing ruling on Mexico’s claims under Articles I:1 and III:4 of the GATT. On 31 October 2011, Mexico and the U.S requested the DSB to formulate a decision, extending the 60-day time period mentioned in the Article 16.4 of the DSU ("Year in Trade 2009, Operation of the Trade Agreements Program, 61st Report" A-41). On 20th January 2012, both the U.S and Mexico decided to appeal, regarding the Article 11 of the DSU. On 20th March 2012, the chair of the Appellate informed that the report cannot be captured within 90-days due to excessive case load and complex nature of the case. The Appellate body report was finally circulated to the members on 16 May 2012 ("Year in Trade 2009, Operation of the Trade Agreements Program, 61st Report" A-41). Conclusions: This case challenged many U.S legal instruments regarding trade and labeling, especially the dolphin-safe provisions. The Appellate that the contested measure was composed of lawful acts, regulations and provisions of the U.S Federal authorities. The panel also deemed the dolphin-safe label as an authentic and only definition, of an obligatory dolphin safe tuna label. Yet, regarding the Article 2.1 of the TBT agreement, the panel reversed its previous decision, and concluded that the U.S measures were inconsistent with Article 2.1. This was resulted due to facts and figures that were examined, regarding the various fishing methods and origins of harvesting tuna, and the fact that they were exempting Mexico from competing in the tuna market share in the U.S market. The Appellate also noted that the measures were particularly harmful for dolphins, therefore risking the techniques that were adopted for the safety standards required for dolphins, and against the U.S objectives for that matter. Hence it was recommended that the U.S must reconsider their dolphin-safe techniques and measures in order to make them more useful to global economy. The Appellate body report was adopted for conformity of measures on 13 June 2012. The Appellate further added that the panel acted with inconsistency as per the Article 11 of the DSU, due to exercising judicial economy. At the DSB meeting on 25th June 2012, the U.S said that it respects the DSB recommendations and obligations and needs appropriate amount of time to meet them ("Year in Trade 2009, Operation of the Trade Agreements Program, 61st Report" A-41). Works Cited Borght, Kim Van der. and Georgiev, Dencho. Reform and Development of the WTO Dispute Settlement System. Cameron May, 2006. Print. Yang, Guohua. Mercurio, Bryan. and Li, Yongjie. Wto Dispute Settlement Understanding: A detailed Interpretation. Kluwer Law International, 2005. Print. Trade Commission, U.S International. The Year in Trade 2008, Operation of the Trade Agreements Program - 60th Report. DIANE Publishing, n.d. Print. Fauchald, Ole. Hunter, David. and Xi, Wang. Yearbook of International Environmental Law . Oxford University Press, 2008. Print. Conrad, Christiane. Processes and Production Methods (PPMs) in WTO Law: Interfacing Trade and Social Goals. Cambridge University Press, 2011. Print. U.S. International Trade Commission. Year in Trade 2009, Operation of the Trade Agreements Program, 61st Report. DIANE Publishing, 2009. Print. “United States — Measures Concerning the Importation, Marketing and Sale of Tuna and Tuna Products.” WTO. World Trade Organization. 13 Jun. 2012. Web. 28 Jul. 2012. Read More