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• HOW THE WTO RESOLVES TRADE DISPUTES
• Presented by Marie Kidwell, Partner
• A PRESENTATION TO AQSIQ
• 12 NOVEMBER 2003

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INTRODUCTION

• WTO compared to GATT
• What kinds of disputes?
• Who can be a party to a dispute?
• What the WTO dispute settlement system consists
  of
• China and the WTO dispute settlement system
• Conclusions

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WTO COMPARED TO GATT

• The Uruguay Round Agreements 1995
• Single greatest accomplishment of Uruguay Round
• Vast Improvements more structured process
• 301 trade disputes initiated in less than 9 years
  compared with 300 disputes initiated under GATT
  during 50 years
• Faith and confidence in the system.

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WHAT KIND OF DISPUTES?

• Broken promises
• Supplemental or alternative dispute settlement
  procedures (i.e. Appendix 2 DSU)
• Breach of obligation and/or nullification and
  impairment of benefits
• Breach WTO Agreements
• Failure to live up to obligations
• Third party Member with a substantial interest
  in a matter before a panel (Article 10 DSU).

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WHO CAN BE A PARTY TO A DISPUTE?

• WTO Member governments
• All groups with a stake in the outcome of trade
  decisions through their governments
• Includes affected non-governmental and
  transnational actors
• NB Importance of lobbying governments
• Private individuals/entities have rights under
  Article 4 of the Pre-Shipment Inspection
  Agreement.

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WHAT DOES THE WTO DISPUTE SETTLEMENT SYSTEM
CONSIST OF?

• Political and Legal Methods
• Consultation (Articles 4 DSU)
• The panel process (Articles 3, 6, 7, 8, 10, 11,
  13, 14, 15, 18, 19 and 20 DSU)
• Opportunity for appeal (Articles 16, 17 DSU)
• Implementing dispute decisions (Articles 21, 22
  DSU)

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POLITICAL METHODS OF DISPUTE SETTLEMENT

• Consultation (Article 4 DSU)
• Good Offices (Articles 5, 24 DSU) sort of amiable
  compositeur
• Conciliation (Articles 5, 24 DSU)
• Mediation (Articles 5, 24 DSU)
• Recommendations by
• Panels (Article 19 DSU)
• Appellate Body (Article 19, DSU)
• Dispute Settlement Body (Articles 16, 17 DSU)
• cont

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• Surveillance of Implementation of Recommendations
  and Rulings (Article 21 DSU)
• Compensation and Suspension of Concessions
  (Article 22 DSU)

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THE MAIN LEGAL METHODS OF DISPUTE SETTLEMENT

• Panel procedure (Articles 6-16 19 DSU)
• Appellate Review Procedure (Articles 17-19 DSU)
• Rulings by Dispute Settlement Body and Panel and
  Appellate Body Reports (Articles 16, 17 DSU)
• Arbitration among states (Article 25 DSU)

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CONSULTATION

• Looking for a mutually acceptable solution to a
  problem
• Mandatory 60 day bilateral consultation period
• Significant number of disputes settled or
  diffused at this stage.

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PANEL PROCESS

• Settling disputes is the responsibility of the
  Dispute Settlement Body (DSB)
• NB Must notify DSB about consultation otherwise
  no panel
• Formal process
• Conducted by a neutral 3 person panel
• That makes binding decisions
• Under objective legal criteria
• Panels have detailed working procedures.

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MULTIPLE CLAIMS (Article 9 DSU)

• Where more than one Member requests the
  establishment of a panel related to the same
  matter, then a single panel may be established
  (Article 9 DSU)
• Example Shrimp-Turtle case one panel
  established to hear complaints of Malaysia,
  Pakistan, Thailand and India.

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RIGHT TO SEEK INFORMATION (Article 13 DSU)

• A panel has right to seek information and
  technical advice from any individual or body
  which it deems appropriate.
• Status of Amicus Curiae briefs?
• Examples Shrimp-Turtle case EC-Asbestos case.

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• HOW DOES THE DISPUTE SETTLEMENT BODY FIT WITHIN
  THE WTO STRUCTURE?

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THE OPPORTUNITY FOR APPEAL

• 7 out of 10 panel reports to date have been
  appealed
• Appeal is limited to issues of law covered in the
  panel report and the legal interpretation
  developed by the panel
• Appellate body has 7 Members 3 sit at any one
  time, although note the approach of collegiality
  to ensure consistency
• Report of appellate body adopted by DSB after 10
  days.

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THE CURRENT SEVEN MEMBERS

• James (Jim) Bacchus (US national) Chairman of
  the Appellate Body (retires from the AB at the
  end of 2003)
• Georges Abi-Saab (Egyptian)
• Luiz Olavo Baptista (Brazilian)
• Arumugamangalam Venkatachalam Ganesan (Indian)
• John Lockart (Australia)
• cont

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• Giorgio Sacerdoti (Italy the EU judge) and
• Ysauhi Taneguchi (Japan)
• Question When will there be a Chinese Member on
  the Appellate Body?

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IMPLEMENTING DISPUTE DECISIONS

• Losing Defendant to bring its policy into line
  with the ruling or recommendations
• Reasonable period of time
• Trade sanctions
• Implementation of adopted recommendations or
  ruling kept under surveillance by the DSB
• Query the significance of national objectives and
  regulatory regimes re implementation of decisions
  Example case re EU ban on hormones in beef.

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CHINA AND THE WTO DISPUTE SETTLEMENT SYSTEM

• Joined 11 December 2001
• Fourth largest trading body in the world
• China not yet joined as a respondent in any
  disputes to date
• Complainant re legality of US steel tariffs
• Position as a third party in panel disputes.

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CONCLUSIONS

• Effectiveness of system
• Also used by smaller and developing countries
• Balance between use of a panel interfering with a
  specific countrys trade policy and hoping to
  increase trade
• Cancun the importance of Chinas role
• China to host next round of discussions in 2005.

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• Thank you.
• Marie KidwellHunton Williams, London
• Beijing, China12 November 2003