Hard enforcement: Dispute settlement WTO and other trade forums serve not only as sites for the negotiation of agreements, but also for the...
Hard enforcement: Dispute settlement WTO and other trade forums serve not only as sites for the negotiation of agreements, but also for the adjudication of disputes that arise over their implementation and interpretation. While all WTO members have access to the Dispute Settlement Body, not all of them either bring complaints to this body or are subject to complaints from their partners. The great majority of the cases brought to the Dispute Settlement Body involve developed countries, the larger developing countries, or both. The data in table 20 summarize the level of developing countries’ involvement in WTO dispute settlement through mid-2016.
There are eight developing countries with extensive participation in cases, having 46 TRADE POLICY FRAMEWORKS FOR DEVELOPING COUNTRIES: A MANUAL OF BEST PRACTICES each engaged in at least 10 cases as a complainant and another 10 or more as a respondent. These are mostly large, middle-income Asian and Latin American countries. Fourteen other developing countries have been a complainant at least once and a respondent at least once. Another 10 have been complainants but not respondents, and 3 have been respondents but not complainants. That makes 45 developing countries altogether that have had at least some direct experience in the Dispute Settlement Body, accounting for about one third of all developing country members of WTO. Many of the others have been third parties to one or more disputes, often with the simple aim of learning how the process works, but have otherwise had no exposure to it. It is worth noting that the patterns of participation in dispute-settlement cases are generally comparable to those observed before with respect to the antidumping cases (table 13). This is not entirely coincidental, considering the fact that a great many cases concern measures that a member has taken under the antidumping laws. Those countries that either impose the most antidumping orders, or are subject to most orders, are the same ones that most frequently find themselves either defending or challenging these orders in the Dispute Settlement Body. Developing countries face several practical barriers to their effective participation in the dispute-settlement system. The greatest of these is the need for expertise in the law and process of WTO disputes, a field of knowledge and practice that some developing countries have cultivated (notably in China and in Latin America) but that is lacking in most others. This is a lacuna that can be filled by hiring lawyers that specialize in this practice, but their services do not come cheaply. Another concern is that the aim of the system is not development but legal compliance. Participation in the dispute-settlement system may also be affected by cultural considerations. There are some cultures that view the legal resolution of disputes as a welcome alternative to reliance on power politics, and where the pursuit of a person’s legal rights is not seen as an act of aggression. Others tend to see disputes as unfriendly proceedings that are undesirable because one of the parties is bound to lose face. Developing countries that inherited their legal systems from England, Portugal, or Spain appear to be more comfortable with litigation than are those Table 20. Number of WTO disputes involving developing countries, 1995–2016 Source: WTO data at https://www.wto.org/english/tratop_e/dispu_e/dispu_by_country_e.htm. Notes: Data are through July, 2016; does not include data on countries’ participation as third parties. Data refer to cases in which the member was either a complainant or a respondent. No cases 1 case 2–9 cases 10 or more cases Complainant in 10 or more cases — — — Argentina, Brazil, China, Chile, India, Indonesia, Republic of Korea, Mexico 2–9 cases Egypt, South Africa Dominican Republic, Nicaragua, Venezuela (Bolivarian Republic of) Colombia, Ecuador, Guatemala, Pakistan, Peru Philippines, Turkey Thailand Respondent in 1 case Trinidad and Tobago Malaysia, Uruguay Panama — No cases All other developing countries Antigua and Barbuda, Bangladesh, Cuba, Hong Kong (China), Singapore, Sri Lanka Costa Rica, Honduras, Taiwan Province of China, Viet Nam — IV. TRADE NEGOTIATIONS AND TRADE PROMOTION 47 countries where legal systems were either inherited from France or are primarily based on indigenous legal traditions. These differing perspectives may go a long way towards explaining why even relatively small Latin American countries such as Ecuador and Honduras have brought multiple cases to the Dispute Settlement Body, but to date no sub-Saharan African country has been a complainant in a single WTO dispute. Most Asian countries show a similar reticence, but that is not an absolute rule. There are steps that countries can take to enhance their capabilities in this area. One simple and inexpensive way to build capacity is to follow the advice that countries are often given to participate as third parties in disputes between other countries. A WTO member need not have a direct interest in a case, or play an active role in its adjudication, in order to participate as a third party. Other members recognize that this is one means by which diplomats from developing countries learn the ropes of the dispute-settlement system. Developing countries can also receive help from the Advisory Centre on WTO Law (ACWL), an institution that renders legal assistance in dispute-settlement cases. Membership dues and fees for ACWL services are assessed according to a sliding scale. Among the services offered are legal advice on WTO law, support in WTO dispute-settlement proceedings, seminars and internships. The ACWL’s role in most cases is to assist the complainant country rather than the respondent. ACWL’s legal opinions may also help developing countries in the conduct of trade negotiations. Among the issues on which ACWL has helped countries to understand their rights and obligations include such diverse matters as tax rates, balanceof-payment concerns, import and export restrictions, renegotiation of tariff commitments, national security exceptions, intellectual property rights, trade-remedy laws, technical regulations or standards affecting the sale of goods, and legal issues relating to trade in services. ACWL also provides capacity-building assistance through training courses, seminars and workshops, and runs a secondment programme for trade lawyers through which government lawyers from developing country members and LDCs join its staff as paid trainees for a nine-month term. No amount of technical assistance can change the fact that the smaller developing countries have less leverage in the event that a case comes down to retaliation. The magnitude of retaliatory measures that are permitted to be imposed is determined more by the size of the complaining country than by the size of the respondent, meaning that the dynamics in a small country versus large country case are very different than those in which two large countries are involved. Antigua and Barbuda managed to win a ruling that United States restrictions on Internet gambling violated that country’s GATS commitments, for example, but the retaliation that this small member was authorized to impose on the United States had little impact on Washington. By contrast, when Brazil won a ruling that the United States had violated its commitments not to subsidize cotton the retaliatory power given to Brazil was much more persuasive. The Cotton Four African countries did not have the same leverage as Brazil, which is one reason why they chose to negotiate on that same topic when Brazil had opted to litigate.
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