Why has the operation of the WTO dispute settlement procedure become politically contentious?

        The dispute settlement procedure certainly seems to have become politically contentious in the case on these large developed countries. The US and EU continually use the DSU merely as a political tool in which to tackle each other and indeed other powerful members. These powers with their large financial resources can afford to complicate the procedure through legal wrangling which is no more than politics in a court room. This gives them more influence within the WTO and is often described as ‘Power Politics’. It is this notion of an one member having more control or influence over the system that has raised further questions and supported any previous claims that the system is flawed by political contentiousness. Good examples of how these developed countries can dominate developing countries through power politics can be seen in the high-profile case of the Shrimp-Turtle dispute that was brought to the WTO. The US proposed a law that would protect sea-turtles. Every year thousands of turtles are killed in shrimp nets throughout the world. The US wanted to impose a law that saw all ships equipped with ‘turtle excluder devises’, measures by which turtles can escape from the nets unharmed. Challenges were brought to the WTO by India, Malaysia, Pakistan and Thailand who argued that it was an illegal restriction on their exports. The US who claimed to be standing for the good of conservation called upon relevant NGO’s to become involved. Among others the Centre for Marine Conservation submitted a report on the situation. The WTO rejected this as they do not recognise the role of NGO’s within the settlement system. However, although this is the case at a later failed US appeal, social society won a victory as the WTO did formally acknowledge the role of NGO’s in the WTO dispute procedure. This is an example of power politics that has placed a question mark on the DSU. Americas intervention to allow NGO’s a role with in the system even though NGO’s cannot me members just illustrates the US influence on the system.

        Another major reason why the dispute settlement procedure has become politically contentious is one that involves economically developing countries. These countries are actually discriminated against due to the nature of the new dispute settlement procedures. As mentioned before the new DBU is geared towards a legalistic approach to affairs, however this does not benefit the developing countries at all. “International law firms charge anything between US$250 to $1000 per hour in fees for WTO cases.” There are very few poor countries that can afford figures like these so what is happening is although member nations might feel they have a valid case to bring before the DSB they simply cant afford to go through with it due to the alarmingly high litigation costs, meaning the rich countries get away unpunished. What’s more, these poorer countries can be dragged before the DSB panels and forced to participate in a dispute. When they find matters to costly or complex they face losing the case through default even if they are in the wrong. This is simply not good enough on an international scale. A system is needed where by all parties are represented equally and can function within the same arena. If any action is taken in the future then I would hope it included reforms which tackle the problems faced by economically developing countries and in particular that of African absence.

        In its initial 9 years of operating, the DSU had only had discussions with 2 out of the 41 African member nations. This in itself has created problems for the dispute settlement process which can be labelled as contentious. In these opening years the system as been new to everyone and as a result is still evolving. Therefore issues such as practise and procedural matters are still taking shape and they will continue to do so with experiences gained from concluded cases. However, these procedural matters can only be shaped and affected by those parties involved with the DSU system, therefore African absence from this means that these member nations can not give anything towards the development of this system. More importantly, not only are the African countries missing out on the chance to mould the system they are also missing out on the benefits that moulding the system could bring them. They are missing out on the large educational curve that other members are attaining. A great example of this can be found in the sugar dispute. The experience gained by African countries being involved was invaluable. In September 2002, Australia, Brazil and Thailand requested a hearing at the DSU regarding the EU’s sugar regime. They argued that export subsidies were of violation of the WTO laws. However, African countries among others, who export sugar and are beneficiaries of these subsidies, requested third party status at these consultations. At the end of the first panel assembly these countries requested extended third party rights after some relative success. What this means is that the sugar dispute was important as the outcome will have major effects on the future operations of the DSU. In a case such as this, where both parties are putting forward strong arguments the involvement of any third parties can easily influence the overall result. The African countries, 7 in total, argued on the side of the EU and explained the role of sugar in their countries in regards to economic, social and political issues. Previously, panel decisions have not taken into account effects of their rulings on third parties; this therefore could be a landmark case, as the African countries could have played a large part in the outcome. It has since been pointed out that the DSU needs to take into account the special and differential circumstances of Africa as a continent. The experience for the nations that took part in this dispute has been invaluable. They have learnt about the system and how to use it for their own benefits. It will also have given them priceless confidence going into any future disputes.  

        This absence of the African members in particular needs to be made a thing of the past so that the whole process can move forward as one. It is perhaps these small issues that are holding back the whole system and questioning it in the first place. If a few of these problems were ironed out then maybe the question of political contentiousness would never have been asked. The development of African countries must be included in the WTO’s plans for the future; therefore the reasons for any absence must be highlighted and resolved. The “DSU is at the core of the WTO and its effective access and use is necessary in order to ensure that the rights of Members are enforced and maintained. The absence of African States in the DSU effectively means that their role and participation in the WTO is peripheral and that their rights are not being properly asserted”. How is it possible to solve this problem though? African nations must be involved in more cases, but yet disputes cannot and should not be manufactured. So what else can be done? Well I think the answer is to encourage more trade on the African continent. The bigger problem faced by Africa is its limited involvement in the international trading arena let alone the DSU. It is no coincidence that those members who have little participation in the DSU also have little participation in the international trade arena. The WTO needs to actively encourage the growth of trade in Africa both on a national and international scale. As the rate of trade increases so will the rate of trade disputes. By increasing the trade of the African nations this in turn will naturally improve their national economies which in the long run will nullify other problems for them such as international legal costs. However, until anything like this actually happens African participation in the DSU is going to be marginal. Any changes made to the trading patterns of Africa will be aimed at long term change, so the WTO should also encourage member nations to take any opportunities possible to appear in front of the DSU panel, even if only as a third party. As we have seen in the sugar dispute, third party nations are often affected by trade dispute between bigger countries. Third party status in such disputes are therefore hugely important as it means these smaller or poorer countries can have their views and opinions aired in the dispute, often as in the sugar case with a beneficial affect.

        Aside from these long term changes that are needed to develop the DSU there are also a whole host of changes or reforms that can be changed to help the problem in the short term, which will tackle the current question of the systems contentiousness. For example, when the DSU panel concludes its decision on a specific matter, the only penalty given is that the offending party must withdraw what ever measure it was that first brought the case to light. This simply is not good enough. At the very least compensation should be awarded to cover litigation costs as well as probably something extra. Anything less than this just merely is not justice. Moreover, this would benefit developing countries within the DSU as they would not have to worry about legal costs should they win and the consideration of gaining any damages would hopefully be enough to encourage more participation, especially to the African nations. All too often these developing countries will not attempt to take on a developed country with a large economy through fear of financial hardship even if ending up on the right side of the ruling. What’s more, in WTO law if a country who has been on the losing end of a dispute does not take remedial measures within a specified time period then the winning party can take retaliatory action. The problem is that when the dispute is between a developing and developed country, often the developing country cannot retaliate to any affect, also there is the added threat that any counter-retaliation could be even more severe. It is therefore, in these circumstances necessary for the WTO to take action and enforce its decisions. As we saw in the US vs. EU steel dispute the lack of enforcement on the part of the WTO saw the dispute go round and round and drag on for a long time. 

        Another reform that should be considered to the DSU is one that would make information more readily available. The system has been targeted by criticism for its closed nature. The sheer nature of preventing access to the entire process can contribute to its labelling as politically contentious. Measures should be taken to allow anyone including the public to observe the whole dispute settlement process. This would be an easy change to make. “Non-confidential copies of the briefs of the parties and of the panel reports should be released to the public shortly after they are submitted” Also it would be fairly easy and conciliatory to allow the public a viewing area where they could actually follow the proceedings. In practise, all matters discussed during any hearings find there way to the press and therefore to the public, so considering that the concealed nature of the current system has proved to be an expedient target for critics, it seems only logical that the release of documents should be formalised and open to the public and thus take away this issue of contention.

        Is the WTO an organisation capable of reform? This is a very important question that we need to be asked when answering the question of why the operation of the settlement procedure has become politically contentious. Many people have stated that the WTO and the DSU is beyond reform, they say it is fatally flawed and therefore the system is not worth continuing with. This is a key area as to why it has been labelled politically contentious. Obviously there are problems, constitutional and structural problems but as I have mentioned before these go hand in hand with any organisation. They have to be able to evolve though; through experience reforms can change the processes to make them work. On this note it appears that the DSU has been working. The DSB has addressed some important procedural problems in the DSU, and the result is that changes are slowly taking place to solve these problems.

        However, the actual execution of reforms at the WTO is quite a colossal task. The reason being, that the WTO operates as a consensus, meaning that it makes it relatively difficult to make changes. Every member has the chance to veto any decision, so ever when a perceived change is long over due, the actual task is a challenge. Therefore, reform can be severely restricted and limited. This is a cause for concern for the future of the DSU; nonetheless there are things that the WTO can do to encourage the efficiency of the dispute settlement process. For example, they can focus on individual governments and offer them ways to work around problems within the system. “The United States Trade Representatives Office, for example, solicits the views of the public as a matter of course in all dispute settlement cases and consults closely with affected parties throughout a proceeding. There is no reason why other member governments should not adopt the same open door policy as a part of their participation in the process”. So even though, giving the dispute settlement process a more open approach might be difficult in terms of rushing through reform. They can certainly encourage national governments to make it their own individual policy.

        The Dispute Settlement Procedure has become politically contentious for a number of reasons. The DSU has faced a number of problems that it failed to consider when first set up. Furthermore little so far has been done to counteract these problems. Major points are that the DSB has no way of enforcing its rulings and matched parties can therefore drag out dispute for long periods of time through retaliation and counter-retaliation. Another contentious issue is the lack of any compensatory laws. Countries that are affected by illegal acts from another party have no way of regaining any lost wealth either from trade lost or legal costs. This has led to an unwillingness of certain parties to become involved in certain dispute through fear of financial burden. This is true of most African members, many whom have never appeared before a DSU panel. This issue of absence had sparked lots of controversy as the nations who have been absent the most are usually developing countries. So what this means is that the more powerful actors in the trading arena have more control within the DSU. This has been shown through the rate of participation alone but can be backed up by cases such as the Shrimp-Turtle case. This was an example of how the US used ‘Power Politics’ to dominate the system and discriminate against a developing country. So obviously, when certain actors are discriminated against, questions are asked and fingers are pointed. Why hasn’t the WTO done more to safeguard the position of the developing countries within the dispute settlement system? Why have these problems been neglected for so long? Well possibly because reform is not so straight forward to carry out. As I discussed earlier it is simply not black and white when it comes to reforms. It will take a long time for even the smallest changes to be made. However, as long as work is being carried out to improve the situation then progress is being made. On the whole the system is considered to have been successful especially when compared to the old GATT system. However, it needs to evolve to keep up with the fast changing world around it. Until this is done, there will always be critics of all systems, and until some fundamental changes occur to the DSU it will be continually label as politically contentious.

Bibliography

        

• Jackson, J, H. ‘Dispute settlement and a new round’ in J. Scott ‘The WTO after Seattle’.

• www.WTO.org   ‘Understanding the WTO: dispute settlements’, viewed on the 12/03/05

• www.twnside.org  ‘The WTO’s dispute settlement system and the proposed centre for WTO law’, viewed on the 12/03/05

• www.tralac.org  ‘African countries and the WTO dispute settlement procedure’, viewed on the 12/03.05

• www.seatini.org  ‘Strengthening Africa in world trade’, viewed on the 12/03/05

• www.sidsnet.org  ‘Conflict over EU sugar regime’, viewed on the 12/03/05

• Shirzadi, F. ‘The WTO Dispute Settlement System: Prospects for Reform’ at ‘

• www.ictsd.org  ‘DSU reform: members fear another deadline will be missed’, viewed 12/03/05

• www.twnside.org  ‘Trade politics’, viewed 12/03/05

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