1. 1 UWI Study Tour 7 May 2008 7 May 2008 Presented by: Jan Yves Remy Appellate Body Secretariat Enforcing the Agreements: D ISPUTE S ETTLEMENT IN THE WTO

2. 2 Structure of the WTO Agreement WTO Agreement GATT GATS TRIPS Trade Policy Review Dispute Settlement AA AA AA AA

3. 3 Agriculture Sanitary and Phytosanitary Measures Technical Barriers to Trade Trade-related Investment Measures Anti-Dumping Rules of Origin Valuation Import Licensing Subsidies and Countervailing Measures Safeguards WTO GATT GATS TRIPS TPRM DSU

4. 4 Dispute Settlement under the GATT 1947 Articles XXII and XXIII of GATT 1947Articles XXII and XXIII of GATT 1947 –Very limited rules –Central concept was “nullification and impairment” of benefits flowing from the agreement Diplomatic character of dispute settlementDiplomatic character of dispute settlement: No judicial arm, rather all matters were within powers of GATT Contracting Parties “Evolved” practice under GATT 1947“Evolved” practice under GATT 1947

5. 5 Aim Dispute Settlement in the WTO: Aim Dispute Settlement Understanding:Dispute Settlement Understanding: –Mechanism aimed at securing compliance with the Covered Agreements (CA) –Preserves the rights and obligations of Members under the CA (Art 3.2 DSU)

6. 6 New innovations of the DSU More detailed procedures for the various stages of dispute Appellate review of panel reports and surveillance of implementation by the DSB

7. 7 Objectives Dispute Settlement in the WTO: Objectives To secure a “positive solution” to the dispute. (Art. 3.7 DSU) Preferred outcome:Preferred outcome: –To reach a mutually agreed solution If not,If not, –Panel Proceeding …. –[….and AB review.] And then,And then, –Implementation, or …. –Retaliatory trade sanctions may be imposed

8. 8 Scope Dispute Settlement in the WTO: Scope An integrated systemAn integrated system : Applies to all the WTO multilateral agreements (Appendix 1) A single set of rules for all disputes (Art 23) Only a few special or additional rules in some CA (Appendix 2)

9. 9 Dispute Settlement in the WTO: Main Features Dispute Settlement in the WTO: Main Features compulsory jurisdictioncompulsory jurisdiction detailed procedures and deadlinesdetailed procedures and deadlines “complainant-driven”“complainant-driven” “quasi-judicial”“quasi-judicial” “automaticity“automaticity”

10. 10 Dispute Settlement in the WTO: Main characters Dispute Settlement in the WTO: Main characters Parties to the dispute: WTO Members onlyParties to the dispute: WTO Members only Dispute Settlement Body (all the Members)Dispute Settlement Body (all the Members) Panel ( 3 or 5 panelists)Panel ( 3 or 5 panelists) Appellate Body (7 persons)Appellate Body (7 persons) WTO & AB SecretariatsWTO & AB Secretariats

11. 11 Consultations Panel Appeal Implementation Adoption Good Offices, Conciliation, Mediation, Arbitration

12. 12 Consultations Dispute Settlement in the WTO: Consultations Who?Who? –One or more Members (complainants) against another Member (respondent) –Possibility for third party Members to join Confidential processConfidential process Minimum time limits for complainantMinimum time limits for complainant

13. 13 Panels Dispute Settlement in the WTO: Panels Establishment of a panelEstablishment of a panel: Automatic CompositionComposition “well-qualified government and/or non- governmental individuals” 6 months or 9 months to issuance of final report Process confidential, report public

14. 14 Dispute Settlement in the WTO: The “matter” in dispute The specific measures at issueThe specific measures at issue The legal basis (claims)The legal basis (claims)

15. 15 Dispute Settlement in the WTO The Mandate Dispute Settlement in the WTO: The Mandate Panel Request Measures Claims Mandate Jurisdiction Inform the parties for their defence Matter

16. 16 Dispute Settlement in the WTO: Panel Procedures: deadlines Establishment of a panel Composition of a panel Final Report circulated max. 6 months max. 9 months

17. 17 Dispute Settlement in the WTO: Art. 16 DSU Dispute Settlement in the WTO: Adoption of Panel Reports Art. 16 DSU Panel reports not considered for adoption until 20 days after circulation Adoption within 60 days of circulation, unless negative consensus…. Except if appealed … Except if appealed

18. 18 Dispute Settlement in the WTO: Dispute Settlement in the WTO: Appellate Review WTO dispute settlement system innovation Rules applicable to Appellate Review –Dispute Settlement Understanding (Article 17; Article 16.4; Articles 1, 3, 18 and 19) –Working Procedures for Appellate Review –Rules of Conduct

19. 19 Dispute Settlement in the WTO: Dispute Settlement in the WTO: Appellate Body Members A standing body of 7 Members Appointment by DSB 4-year term, renewable once Requirements –authority and expertise in international trade law –“unaffiliated with any government”

20. 20 “broadly representative of membership” – Art. 17.3 DSU Dispute Settlement in the WTO: Dispute Settlement in the WTO: Appellate Body Members

21. 21 Appellate Body Dispute Settlement in the WTO: Appellate Body

22. 22 Dispute Settlement in the WTO: Article 17 DSU WHAT? appeals limited to “issues of law and legal interpretations” developed by the panel, including “cross-appeals”WHAT? appeals limited to “issues of law and legal interpretations” developed by the panel, including “cross-appeals” WHO? appeal only open to parties to the disputeWHO? appeal only open to parties to the dispute WHEN? Appeal must be commenced no later than 60 days after the Panel Report is circulated to Members; takes 60-90 daysWHEN? Appeal must be commenced no later than 60 days after the Panel Report is circulated to Members; takes 60-90 days

23. 23 Notice of AppealNotice of Appeal Written SubmissionsWritten Submissions Oral HearingOral Hearing Exchange of ViewsExchange of Views Circulation of the ReportCirculation of the Report Dispute Settlement in the WTO: Appellate Procedure 60/90 days

24. 24 Outcome of Appeals Number of appeals to date < 78 Frequency of Appeals: 66 % Outcome of Appeals:

25. 25 Caribbean participation in appeals WTO MemberAppellant/ Appellee Third Party Antigua and Barbuda 20 Barbados1 Dominica2 Grenada1 Guyana1 Jamaica3 St. Kitts and Nevis1 St. Lucia2 St. Vincent and the Grenadines 1 Trinidad and Tobago1

26. 26 Adoption by the DSB of the Panel Report, as upheld, modified or reversed, by the Appellate Body Report Within 30 days circulation (60 days if no appeal) Negative consensus Dispute Settlement in the WTO Adoption by the DSB Dispute Settlement in the WTO: Adoption by the DSB

27. 27 Implementation Dispute Settlement in the WTO: Implementation What if it cannot be implemented immediately?What if it cannot be implemented immediately? reasonable period of time Determination of “reasonable period of time” for implementation ( Guideline: 15 months) Is it properly implemented?Is it properly implemented? If there is disagreement, refer to c ompliance panel (original panel preferred) under Article 21.5

28. 28 Surveillance and Implementation Dispute Settlement in the WTO: Surveillance and Implementation Surveillance by the DSBSurveillance by the DSB: Status reports on implementation compensation suspension of concessionsIf Member fails to bring measure into conformity within reasonable period of time, possibility of temporary measures : compensation or “suspension of concessions” (retaliation)

29. 29 Facts and Figures Dispute Settlement in the WTO: Facts and Figures Requests for consultations:363 Mutually agreed solutions: 83 Panels established: 148 Panels composed: 129 Panel reports: 110 Appellate Body reports: 68 Compliance panels: 23 Appeals from compliance panels: 14 Arbitrations on "retaliation" : 16 Authorizations to "retaliate" : 7

30. 30 Selected Disputes in Progress Dispute Settlement in the WTO Selected Disputes in Progress Continued EC Hormones Dispute New Bananas dispute Zeroing disputes EC/US cases on aircraft subsidies

31. 31 Case review United States – Measures affecting the cross-border supply of gambling and betting services

32. 32 Major Issues The US measures affecting the cross-border supply of gambling and betting services –3 federal laws: Wire Act, Travel Act, Illegal Gambling Business Act –54 State laws, government practice Whether “total prohibition” on the supply of Internet gambling and betting services constitutes a numerical quota for purposes of GATS MA commitments Interpretation of “public morals” defence in GATT Article XX

33. 33 The Parties The complainant: Antigua and Barbuda The respondent: United States Third Parties (Panel and Appellate Body): EC, Japan, Mexico, Chinese Taipei, Canada Appellant/appellee: both Antigua and Barbuda and the United States

34. 34 Findings of the Panel and AB Panel + AB: The United States’ Schedule (sub-sector 10.D) includes specific commitments on “gambling and betting services” –AB confirms, but for different reasons The US laws prohibiting cross-border supply constitute a numerical limitation in the form of a “zero quota ”; consequently, the laws are inconsistent with the United States’ specific commitments under Article XVI:2;  The AB confirms the Panel’s findings with respect to the federal laws, but reverses the findings concerning the State laws because Antigua failed to provide a prima facie demonstration of inconsistency.

35. 35 The measures inconsistent with Article XVI are designed to protect public morals and maintain public order (Article XIV(a)) against money laundering, fraud, pathological gambling and underage gambling (AB confirms). On the other hand, the Panel finds that the measures were not necessary for that purpose in that the United States did not explore and exhaust the reasonably available WTO- consistent alternatives because it did not hold consultations with Antigua before imposing the prohibition

36. 36 The AB rejects the Panel’s interpretation of “necessity” and finds that it was not indispensable for the United States to hold prior consultations with Antigua before taking measures to protect the public order; The AB upholds the final conclusion that the United States did not demonstrate that the prohibition (for example the Interstate Horse Racing Act) is applied both to foreign suppliers and domestic suppliers in a manner consistent with the requirements of a chapeau of Article XIV (prohibition of arbitrary or unjustifiable discrimination and disguised restriction).

37. 37 Current state of Gambling case? In June 2007, Antigua requests authorization from the DSB, to suspend concessions and related obligations of Antigua and Barbuda under the GATS and the TRIPS Agreement.In June 2007, Antigua requests authorization from the DSB, to suspend concessions and related obligations of Antigua and Barbuda under the GATS and the TRIPS Agreement. Arbitrator determined that the annual level of nullification or impairments is US$21 million and that Antigua may request authorization from the DSB to suspend obligations under the TRIPS Agreement at a level not exceeding US$21 million annually.Arbitrator determined that the annual level of nullification or impairments is US$21 million and that Antigua may request authorization from the DSB to suspend obligations under the TRIPS Agreement at a level not exceeding US$21 million annually.

38. 38 Dispute Settlement in the WTO Trends? Increasing composition of panels by DG Increasing number of compliance cases Decreasing rate of appeal Increasing use of dispute settlement system by developing countries Private lawyers / pro bono / ACWL

39. 39 The Doha Mandate Dispute Settlement in the WTO: The Doha Mandate Doha Declaration, paragraph 30: –“improvements and clarifications” –Original May 2003 deadline, extended to May 2004, then July 2004 Package. Negotiations suspended second half 2006, then resumed. Continued negotiations outside the single undertaking, but on what basis and what timeframe?

40. 40 Selected Issues in the Negotiations Dispute Settlement in the WTO: Selected Issues in the Negotiations Streamlining procedures at consultation and panel stages “Transparency” Remand Enhance Special & Differential treatment Implementation –Sequencing –Remedies (compensation, retaliation)

41. 41 Dispute Settlement in the WTO Final Thoughts What changes needed and how extensive? Relationship dispute settlement/decision- making? Relationship dispute settlement/rule-making (negotiations)? Bottom line: system is being used and is working -- security and predictability

42. 42 Information and Resources http://www.wto.org/english/docs_e/legal_e/legal_e.htm http://www.wto.org/english/docs_e/legal_e/legal_e.htmLegal Texts (agreements etc.): http://www.wto.org/english/docs_e/legal_e/legal_e.htm http://www.wto.org/english/docs_e/legal_e/legal_e.htm http://www.wto.org/english/tratop_e/dispu_e/distabase_e.htm http://www.wto.org/english/tratop_e/dispu_e/gt47ds_e.htmPanel and Appellate Body Reports: http://www.wto.org/english/tratop_e/dispu_e/distabase_e.htm http://www.wto.org/english/tratop_e/dispu_e/gt47ds_e.htm http://docsonline.wto.org/gen_home.asp http://docsonline.wto.org/gen_home.aspOfficial WTO Documents: http://docsonline.wto.org/gen_home.asp http://docsonline.wto.org/gen_home.asp http://www.acwl.ch http://www.acwl.chAdvisory Centre on WTO Law: http://www.acwl.ch http://www.acwl.ch http://www.wto.orgRegister for news and information http://www.wto.org (at very top of the page, click “register”)