INTRODUCTION

Every good international agreement consists of the obligations that may be enforced when one among the signatories fails to fits such obligations. The Members of the World Trade Organization (WTO) established the present dispute settlement system during the Uruguay Round of Multilateral Trade Negotiations underscores the high importance they attach to compliance by all Members with their obligations under the WTO Agreement.

Settling disputes in a timely and structured manner are very important. It helps to stop the destructive effects of unresolved international trade conflicts and to attenuate the imbalances between the members by having their disputes settled. Most people consider the WTO dispute settlement system to be one of the main results of the Uruguay Round. After the entry into force of the WTO Agreement in 1995, the dispute settlement system soon gained practical importance as Members frequently resorted to using this technique

The World Trade Organization Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU) provides a means for WTO Members to resolve disputes arising under WTO agreements and sets out the procedures and rules that define today’s dispute settlement system. The WTO members of the DSU will first try to settle the dispute by the way of consultations, but still, if it is not resolved then they should go for the resort by initiating the disputes, by calling out for the panel examination and report on its complaint.

The WTO Agreement incorporates all the agreements of the Uruguay Round. It is a guide of all the earlier WTO agreements; it contains 16 Articles that sets out the institutional framework for the international organization.

The dispute settlement understanding provides for an Appellate Body (AB) which will review the panel reports which will help in determining if a defending member has complied with an adverse by the decision which is established in the cases and all other retaliation if the defending Member has failed to do so.

PARTIES TO THE DISPUTE

For the dispute settlement, the only participants who can take part as the party or third party are the members of the government of the WTO. The WTO Secretariat, WTO observer countries, other international organizations, and regional or local governments are not entitled to initiate dispute settlement proceedings in the WTO.

Since only the WTO member government is allowed to bring up the disputes, which means that no individual on a private basis or companies have any direct access to the dispute settlement system. The other nongovernmental organizations (NGOs) are even not allowed to present their general interest in a matter before the dispute settlement system.  They cannot initiate the same. But they can through the government of WTO members trigger a dispute. The members of the WTO have formally adopted the legislation for bringing the private parties, under which they can petition their governments to bring a WTO dispute.

The non-governmental organizations can file their submissions through amicus curiae and according to WTO jurisprudence, panels and the Appellate Body are having the discretion to accept or reject the submissions made with the WTO but the panels are not obliged to consider them.

STEPS IN A WTO DISPUTE

The dispute settlement of WTO takes place in 3 stages – consultations, panel if it is required and the review by the Appellate body and lastly if needed then implementation of the same.

Article 3 clauses 2 of the DSU provides for the dispute settlement system as it states that it will protect the rights and obligations of the members, who are under the agreement and will also treat them in accordance with customary rules of interpretation of public international law. In an early WTO dispute settlement proceeding, the WTO Appellate Body provides that the “general rule of interpretation” set out in Article 31 of the Vienna Convention on the Law of Treaties constitutes an interpretative rule under international law for purposes of Article 3 (2).

ARTICLE 4 – CONSULTATIONS

Under this process of DSU, the WTO members can invite consultations with the other members regarding the “measures affecting the operation of any covered agreement taken within the territory”. If a WTO Member requests for the consultation of another Member under the said agreement, the latter Member must enter into consultations with the former within 30 days.

If they are unable to resolve the dispute within 60 days, the party that has complained can request for the establishment of the panel. A panel can also be established before the expiry of this period on the request of defending Member, if they have failed to enter into consultations or if the disputants agree that consultations have been unsuccessful.

ARTICLE 6 & 8 – ESTABLISHMENT OF THE DISPUTE PANEL AND THEIR COMPOSITION

Under this, a panel will be established, in which the WTO members will request the panel to provide in writing and identify the specific measures of the issue by giving a brief summary of the legal obligations of the complaint which are sufficient enough to present the problem.  A member may challenge a measure of another Member as such applied or both and any such claim challenged by the measure independent of its application in a specific situation.

 If a panel is requested, to be established the dispute settlement body (DSB) must establish the same in the second meeting at the request appeared as an agenda item, unless it decides by consensus not to do so. The defending body may block the establishment of the panel when the first time request is placed by the complaining member in DSB meeting but when the second time the request is placed before DSB a panel will be established, virtually and automatically.  The DSB sets out to meet once in a month, any such meeting on request on the complaining member to convene for the sole purpose of considering the panel request must be held within 15 days.

The composition of the panel consists of 3 persons. The WTO Secretariat is assigned with the task to propose the names of the panelist to the disputing parties, who may not oppose them except for “compelling reasons”. If the disputing parties fail to agree with the panelists in a period of 20 days from the date panel is established, either the disputing party may request the WTO Director-General to appoint the panel members. As the director-general may only act on the request as per the situation, it is possible that disputing Members might not make such a request immediately or might not do so in the least, thus permitting them to aim to resolve their dispute before the adjudicatory process begins.

ARTICLE 16, 17, and 20 – ADOPTION OF PANEL REPORTS, APPELLATE REVIEW, AND THE DECISION

The members are provided with sufficient time to consider panel reports, and it will not be considered for adoption once 20 days have been passed for the circulation of reports to the members. If any member has any objects it has to be raised at least 10 days prior to the DSB meeting.  After the panel report is circulated to the WTO members, the report has to be accepted and adopted by the DSB at a meeting within 60 days, unless and until the disputing party appeal or dispute settlement body decides by consensus not to adopt it. 

Article 17 talks about the Appellate Review and clause 6 puts a limit on appeal to issues of law covered in the panel report and legal interpretations developed by the panel. After the notification of the appeal within 60 days which is extendable to 90 days, the Appellate Body has to issue a report that upholds, reverses, or modifies the panel report. This report is to be adopted by DSB and by the disputing parties without any further questions and conditions, unless and until DSB decides not to adopt the same.

The period of time from the date the panel is established to the date the DSB considers the panel report for adoption isn’t to exceed 9 months and 12 months where the report is appealed unless otherwise agreed by the disputing parties

ARTICLE 21: IMPLEMENTATION OF PANEL AND APPELLATE BODY REPORTS

If a WTO decision comes out and shows that the defending Member has violated any obligation under a WTO agreement, the Member must inform an equivalent to DSB for its implementation plans within 30 days after the panel report has been given. The members got to comply by withdrawing the WTO inconsistent measure or, alternatively, by modifying or replacing it within a reasonable period of time.

The reasonable time period can be seen as what is proposed by the members and accepted by the DSB or on absent approval, the time period which is mutually agreed by the disputing parties within 45 days after the reports are adopted by DSB or still if not able to do the failing agreement, the period determined through the binding arbitration.

The arbitration is to be completed within 90 days from the adoption of the report. The DSU provides the arbitrator with the nonbinding guideline of fifteen months from the date of adoption to determine the length of the compliance period. The DSU envisions that a maximum of 18 months will elapse from the date a panel is established until the reasonable period of time is determined.

ARTICLE 23 – USE OF MULTILATERAL DISPUTE SETTLEMENT PROCEDURES

It needs the World Trade Organization members to invoke the understanding on dispute settlement procedure in disputes involving two agreements which they act in accordance with the principles and laws that are, not unilaterally when choosing varied disputes related actions. These are usually seen as –

•           Determining if another Member has violated a World Trade Organization agreement

•           Determining a date by that the Member should suit a World Trade Organization decision

•           Taking any vindicatory action against a non-complying Member

•           Regarding vindicatory action, the prevailing Member should follow DSU procedures in determining the quantity of trade retaliation to be imposed and must obtain authorization from the DSB in accordance with DSU.

WTO DISPUTE SETTLEMENT AND U.S. LAW

The WTO dispute settlement body of the U.S. law, the panel decision if appealed, subsequent Appellate Body report findings, regulation, or practice violates a WTO agreement doesn’t give the reports direct legal effect within the united states. Only the federal could bring suit against a state or neighborhood to declare a state or native law invalid due to inconsistency with a WTO agreement; personal remedies supported WTO obligations are precluded. The court has made an announcement that the choice of World Trade Organization panel and appellate body reports aren’t binding on the judiciary.

The federal court has made a statement that the decision of the WTO panel and Appellate Body reports are not binding on the judiciary.

Sections 301-310 of the Trade Act of 1974 provide a mechanism for private parties to petition the United States Trade Representative (USTR) to require action regarding harmful foreign trade practices. If USTR attempt to initiate the investigation of the foreign measure violating the World Trade Organization agreement, then USTR ought to invoke the WTO method by seeking a resolution to the situation.

Section 301 of the Trade Act of 1974 provides a mechanism for the USTR, either by petition of an “interested party” or on its own accord, to deal with restrictive foreign trade practices through the initiation of a WTO dispute and authorizes the USTR to require retaliatory action within the event the defending WTO Member has not complied with the resulting WTO decision.

CONCLUSION

The WTO Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU) provides a means for WTO Members to resolve disputes arising under WTO agreements and therefore the use of the DSU has shown the procedural gaps, particularly within the compliance of a dispute. These include a failure to coordinate DSU procedures for requesting retaliation with procedures for requesting a compliance panel and therefore the absence of a specific procedure aimed toward the removal of trade sanctions within the event the defending Member believes it’s fulfilled its World Trade Organization obligations throughout a case.