THE DISPUTE SETTLEMENT SYSTEM

1
THE DISPUTE SETTLEMENT SYSTEM

• the GATT system
• - consensus rule and non adoption of reports
• - non compliance of reports (no sanctions)
• the WTO system
• - inverted consensus
• - sanctions
• - appellate stage

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THE DISPUTE SETTLEMENT SYSTEM

• the WTO system is based on a balance of
  interests and advantages
• the aim is not legality for itself
• adversarial vs inquisitorial systems
• complaints are introduced just by the interested
  State
• violation and non violation complaints
• proposal to introduce a prosecutor

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THE DISPUTE SETTLEMENT SYSTEM

• obligation to engage in consultations (2 months)
• even after the start of the judicial phase i can
  interrupt the procedure at any time if I find a
  mutually agreed solution
• panel formation
• - ad hoc body
• - experts in the subject matter
• - report by 6 months

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THE DISPUTE SETTLEMENT SYSTEM

• the interim review
• - before the report is issued
• - a draft report is circulated among the parties
  who can make comments
• - diplomatic feature
• the panel report is adopted by inverted
  consensus by the DSB

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THE DISPUTE SETTLEMENT SYSTEM

• The Appellate Body
• - standing organ of experts in legal matters
• - both parties can submit an appeal request
• - just issues of law and not of fact
• - just the issues proposed by the appealing party
  (completing the analysis technique)
• - report in 2 months adopted by inverted
  consensus

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THE DISPUTE SETTLEMENT SYSTEM

• States are obliged to put their legislation in
  conformity with WTO rules (no compensation)
• determination of a reasonable period of time
• the implementation phase
• - possibility of countermeasures under
  authorisation of the DSB
• - compliance report

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MEMBERSHIP

• - equality of members
• - special and differential treatment
• - observers
• - conditionality and WTO plus obligations
• procedure negotiations working party General
  Council decision
• - the accession Protocol is an integral part of
  the WTO system

8
THE NORMATIVE POWER

• normative power is very limited and trade
  relations are mainly managed through negotiations
• - amendment
• - interpretation
• - waiver
• ex decision on access to essential medicines
• 1. Doha Declaration
• 2. Declaration on TRIPs

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THE NORMATIVE POWER

• (continued)
• 3. Decision about TRIPs and access to essential
  medicines and the amendment of the TRIPs
  agreement
• - compulsory licence the holder of a IP right is
  obliged to allow exploitation by other persons
• - according to the TRIPs agreement compulsory
  licence is only for national sale and use
• - compulsory licences can be used by WTO members
  to export medicines to DCs and LDCs

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THE MAIN PRINCIPLES

• The most favoured nation principle
• any advantage granted by any contracting party
  to any product originating in or destined for any
  other country shall be accorded immediately and
  unconditionally to the like product originating
  in or destined for the territories of all other
  contracting parties
• - promotion of better int'l relationships
• - efficient allocation of resources
• - exceptions only 5 of world trade is managed
  through the MFN!

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THE MAIN PRINCIPLES

• the stand-still clause
• each contracting party shall accord to the
  commerce of the other contracting parties
  treatment no less favorable than that provided
  for in the Schedule annexed to this Agreement
• the Harmonised System identifies goods
• example 01 LIVE ANIMALS
• 0101 horses, asses, mules and hinnies, live
• 0102 bovine animals, live

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THE MAIN PRINCIPLES

• the national treatment clause
• par.1 internal taxes and laws should not be
  applied to imported or domestic products so as to
  afford protection to domestic production
• par.2 the imported products shall not be
  subject to taxes higher than those applied to
  like domestic products. Moreover, no contracting
  party shall otherwise apply taxes to imported or
  domestic products in a manner contrary to the
  principles set forth in paragraph 1

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THE MAIN PRINCIPLES

• national treatment (continued)
• par.4 imported products shall be accorded
  treatment no less favorable than that accorded to
  like products of national origin in respect of
  all laws, regulations and requirements affecting
  their internal sale, offering for sale, purchase,
  transportation, distribution or use.

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THE MAIN PRINCIPLES

• prohibition of quantitative restrictions
• no prohibitions or restrictions other than
  duties, taxes or other charges, whether made
  effective through quotas, import or export
  licences or other measures, shall be instituted
  on the importation of any product or on the
  exportation or sale for export of any product
• - mainly under the form of technical requirements

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THE LIKENESS ISSUE

• likeness equality of competitive relationship
• - physical characteristics (risk)
• - consumer tastes and habits
• - custom classification
• - end-use
• process and production methods issue
• - extraterritoriality
• - no traces in the final products

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TRADE DEFENCE MEASURES

• 1) dumping and antidumping
• - in a neoliberal economy dumping is not
  prohibited
• - WTO disciplines antidumping measures
• - in the DSS the complainant is the State against
  which the AD measure is taken

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TRADE DEFENCE MEASURES

• the AD Agreement
• - determination of dumping
• - determination of injury
• - the investigation
• - evidence
• - imposition and collection of AD duties
• - duration and review of AD duties
• Zeroing practice by US

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TRADE DEFENCE MEASURES

• article VI GATT
• - definition of dumping the normal value
• - conditions under which dumping is condemned
• injury to an established industry or
• the birth of an industry is delayed
• remedies the AD duty according to the margin of
  dumping price difference
• the aim of the AD duty is to re-balance the
  competitive relationship

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TRADE DEFENCE MEASURES

• 2) subsidies and countervailing mesures (CVMs)
• GATT art.XVI
• - definition of subsidy any form of income or
  price support which determines a rise of exports
  or reduction of imports
• - obligations of the subsidising State
  notification to other parties of the extent,
  nature and effect of the subsidy why it is
  necessary
• - if serious injury obligation to discuss the
  possibility of limiting the subsidy

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TRADE DEFENCE MEASURES

• Agreement on subsidies
• - definition of subsidy financial contribution
  by the State under the form of
• 1. direct transfer
• 2. non-collection of duties/taxes
• 3. purchase by the State
• 4. delegation of these functions by the gov't to
  another entity
• benefit

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TRADE DEFENCE MEASURES

• specificity
• - access explicitly limited to some firms
• - if there are clear and objective criteria
  specificity does NOT exist
• - if there are reasons to believe that
  specificity exists other factors can be
  considered ex. predominant use by certain
  enterprises

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TRADE DEFENCE MEASURES

• traffic lights approach
• - red light (prohibited) contingent on export
• - yellow light actionable
• 3 conditions
• injury to domestic industry
• nullification or impairement of benefits
• serious prejudice to interests
• - in both cases duty to consult and possible
  referral to DSB for immediate creation of a panel
  but for red light subsidies timeframes are
  shorter

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TRADE DEFENCE MEASURES

• - green light (non actionable)
• - non specific
• - research activities
• assistance to disadvantaged regions
• adaptation of existing facilities to env'al
  requirements
• possibility of consultations
• referral to a Committee which issues a NON
  binding decision

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TRADE DEFENCE MEASURES

• remedies
• - in the case of red and yellow light subsidies,
  if the defendant does not comply with the
  panel/AB report, the DSB can authorise CVMs
• - CVDs shall be levied on a non-discriminatory
  basis on imports of such product from all sources
  found to be subsidized and causing injury, except
  as to imports from those sources which have
  renounced

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TRADE DEFENCE MEASURES

• 3) safeguard measures (GATT art.XIX)
• unchaining event any product is being imported
  in such increased quantities and under such
  conditions as to cause or threaten serious injury
  to domestic producers in that territory of like
  or directly competitive products
• reasons unforeseen developments and the effect
  of GATT/WTO obligations, including tariff
  concessions

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TRADE DEFENCE MEASURES

• remedy the contracting party is free, in respect
  of such product, and to the extent and for such
  time as may be necessary to prevent or remedy
  such injury, to suspend the obligation in whole
  or in part or to withdraw or modify the
  concession.
• - this also works for the State which is the
  beneficiary of the concession! (ex. China)

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CUSTOM UNIONS AND FTAs

• - definition of FTA and custom union
• GATT authorises the creation of the custom unions
  and FTAs if trade creation is higher than trade
  diversion
• - creation of regional blocs
• - benefits or regionalisation vs race to the
  bottom argument
• - hub and spoke theory