Reflections on WTO Dispute Settlement Author(s): Alan Wm. Wolff Source: The International Lawyer, Vol. 32, No.

3, Symposium on the First Three Years of the WTO Dispute Settlement System (FALL 1998), pp. 951-958 Published by: American Bar Association Stable URL: http://www.jstor.org/stable/40707450 . Accessed: 24/04/2014 15:33
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AND ROUNDTABLE SUMMARY LOOKING TO THEFUTURE

on WTO Dispute Settlement Reflections
Alan Wm.Wolff*

I. Overview willreview itsparticipatheUnited States In the 2000,byActofCongress, year intheWorld TradeOrganization tion (WTO), andmay expedited legislathrough is made consider withdrawal tiveprocedures, if,on balance,thedetermination thebenefits. that thecostsof membership outweigh oftheWTO, for theUnited States-andperhaps Thejewel inthecrown many was thenewDisputeSettlement (DSU). UnUnderstanding negotiators foreignof theWTO in theUnited in thepolitical a keyfactor sustainability doubtedly oftheperformance ofthedispute settlement willbe an assessment States system. thesystem. that Americans shouldapplyin evaluating Thereare several tests These fallintothree categories: general and Other Interests. The first lawtest,which (a) U.S. NationalCommercial WTO dispute of Congress, is whether overlook, might yers,butnotmembers of law. American interests. This is notjust a question is serving settlement in fact?This of foreign markets Does dispute settlement lead to theopening of numbers of cases wonor lost,butwhathappened to trade is nota calculation realworld test.If a case brought States flows.Thisis a practical, bytheUnited access follow? if theUnitedStates was "won", did market unusual, Although market access was in any it will stillbe asked whether lost a case it brought, eventachieved? is a defendant, or might becomeone, does theWTO WheretheUnited States interfere with of actionin an unacsettlement mechanism U.S. freedom dispute in form of challenges to U.S. mayarisemostoften way. Thisquestion ceptable in thenameof environmental concerns. It mayoccur trade restrictions imposed
of Dewey Ballantine LLP. *AlanWm. Wolff is a partner withthelaw firm 951

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of U.S. traderemedies. in theform of challenges to thedeployment Wherea mustbe asked decisionwas made notto invokea traderemedy, thequestion whether U.S. leverage was diminished to an unacceptable degree,wherein the meansto pry absenceoftheDSU, theUnited Stateswouldhavehad alternative marketsand unilateral action. through diplomacy open foreign Therewill also be testswhich (b) TheEffectiveness of theExisting System. to the are internal system: infull resolved with established substantive (1) Aredisputes consistency being rules?Have the substantive results been everything thatwas bargained for? Attheother didtheresults what member nations extreme, go beyond for? bargained settlement fairand impartial? (2) Is thedispute processitself demonstrably - do plaintiffs Is the processbalanced and defendants bear appropriate burdens? thepanelists(3) Are thedecision-makersadequateto thejob at hand? and adequately and impartially staffed? (4) Is thesystem efficiently managed third countries andtheprivate at interest, havesuffi(5) Do interested parties cientaccess to theprocess? itslitigation Statesstaff effort andmanageit (6) Does theUnited adequately well? reviewadequate? (7) Is appellate Does the information? (8) publicat largereceiveadequateand timely The Need New Substantive andProceInstitutions Rules, (c) forNegotiation of dures.The third and lastsetof questions involves in order to increase whether, the valuetothe United States andthe world of the settlement system trading dispute are needed. These have to come system, changes changes might primarily through to expandthecoverage of thesubstantive of rules,themembership negotiation, theWTO, andreform thedispute settlement in to order defects process, remedy found thefirst twosetsof questions. under II. Discussion Americans have a natural forseeking and long affinity to introduce judicial into international trade Thisseemsnatural toa group oflawyers, process disputes. butit is relatively unusualin America'sapproach to international in relations thepolitical We do not,as a nation, in sphere. acceptas many legalconstraints international on transgressors, be theyCuba or politics.We place embargoes in matters of international Iraq. Whilewe seek international approval, politics, we generally do notseekinternational We wouldnotaccept adjudication. putting to an independent arbitral decisionas to whether the seventh panel a binding fleet or thesixth should fleet theIndianOcean. But occupytheTaiwanStraits, this is exactly what theUnited States didinthe1994Uruguay Round with respect to our commercial interests.
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The UnitedStatesbounditself under theDSU of theWTO: (1) notto make an independent of national whether U.S. rights had beenviolated under finding ofa panelnor(3) theadoption theWTO accords,(2) nottoblocktheconstitution ofitsreport, that wouldquickly and(4) tosubject itself toa binding panelprocess of theWTO if it actedto apply sanctions findthe UnitedStatesin violation oftheWTO. In short, States without theUnited approval gave up itsBig Power ofdisputes Size and influence were no to count. The outcomes advantage. longer in of the were notto be influenced America's relative hierarchy by standing our as "section nations. The DSU, notthesix-shooter to (known partners trading 301") was to be thegreatequalizer. on balance,thisis wholly Whether, good fortheUnitedStatesor theworld will become thepassageof time.Duringthe system onlywith trading apparent this felt that trade Round some,including author, diplomacy negotiation, Uruguay inthefavor ofsubstituting as a stand-alone be doneawaywith should not litigation weredefects with thestatus It is true that there toolfor trade addressing disputes. As it considered not defendant. was most often States plaintiff, quo. The United itfelt that thiswas thoseof itstrading itsmarket to be moreopenthan partners, in of a Theability defendant, dominant interest litigation. tobe itscontinuing likely of thatpanel's report was theadoption havinglost beforea panel,to prevent inprior cases. Moreover, andhasoccurred USTR'slawyers important frustrating, from the old, would be legallyindistinguishable arguedthatthe new system without GATT approval had alwaysbeena becauseacting sanctions) (applying Thiswas technically butAmeriviolation ofU.S. international true, obligations. theUnitedStatesdid in fact,on occasion,act. knewthat ca's trading partners ofapproval. orwithout a United Nations resolution The sixth fleet sailwith might made some sense in the cases thatmost thelitigative Moreover, approach inthe1980s,involving trade troubled European agriculture. Europe's negotiators CommonAgricultural Policy,sincethe ChickenWar in the 1960s, had been threats or diplomacy. made good sense to either Litigation largely impervious with a relatively whenfacing trade powerthat employed problems largeforeign of protection. But it was equallyobviousto boththosewho forms transparent bureaucrats for decadeswith andtheJapanese hadnegotiated themselves, Japan, theUnited that a litigation wouldprobably notworkwhere Statessought system suchas thoseemployed or in to attack systems, by Japan, opaque protectionist in thecase of state-invested enterthecase of China,whenitbecomesrelevant, workto America's necessarily disputesettlement prises. (Nor would binding suchas Helms-Burton, whenitstrade laws, or specialmeasures, remedy liking to international weresubjected review.) to thelawyerin us, the new system playedimmediate Although appealing relations with couldsimply havocwith U.S. trade Japan. Japan reject diplomacy In part, to the as no longer thiswas in reaction partofthebilateral relationship. over autocase. The UnitedStatesand Japan had goneto thebrink highprofile of theU.S. tradedeficit thelargest element withJapan-autosand autoparts,
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intrade retaliation. After a time, theAmerican $6 billion negotiators threatening declared theissue settled and wishedto standdownfrom a trade-war footing. Threats of massiveretaliation have been made and would notbe made again soon.When thenext U.S. -Japan trade issuesarose,Japanese authorities affected an air of moralsuperiority, to talk.This policyof notanswering a and refused knockat thegate- monzenbaraiworked.America'snegotiators stoodthere, Butunlessa gunboat frustrated and fuming. couldbe called intoaction,as the in theportsnegotiation, FederalMaritime Commission demonstrated or there in was something as the civil air talks after the autos confrontation wanted, Japan and theadoption of binding bilateral trade settlement, dispute progress through talkson manufactured issues ceased. goods A further limitation on disputesettlement is thattheremustbe applicable inplacebefore a market accesssuit substantive rules canbe successfully brought. A majorhole in theWTO is thatprivate restraints of tradeare notactionable undertheWTO, although section theycan be madethesubjectof a domestic 301 action.With an to a to (a) inability negotiate, (b) seeming inability retaliate, of litigating, and (d) without substantive rules (c) no possibility comprehensive in place,theUnited States had constructed a fundamentally defective It system. worked well forsome kindsof cases. For complex,largecases afflicted with imbeddded of protection, U.S. tradepolicywas effectively neutered. systems The system seemedto be created to resolveclear-cut, less complexcases. Ofcoursethere are solutions tothese trade The first andbest larger problems. solution would appearto be, if theyprovenegotiable, new substantive rules behavior thatwouldextend theWTO beyondits governing market-restricting current of achieving newdisciplines on market-restricting limitations. Short beare a of there number procedural reforms whichsuggest themselves. havior, III. Needed Reforms A. Transparency To buildconfidence, thepanelprocessmust be mademoreopen. Confusion stillexistsin Genevaas to thepanel's function. Werethepanelperapparently a mediating itmight wellmakesensefor ittoholditsproceedfunction, forming makesenseto keepall submissions Under confidential. ingsin camera.It might current WTO procedures, a panel's interim is notevenmadeavailableto report in thecase as interested countries that have intervened third parties. To MickeyKantor'scredit, theUnitedStateshas pledgedto do whatit can to bring intothesystem. The UnitedStatesmakespublicits greater openness own submissions. reasonnotto opentheentire Thereis no good and sufficient notonly toother buttothepublic, interested andtothose whose nations, process, interests are reallyat stake-workers, and firms, industries, non-governmental in short, thosewhose abilities to function are directly affected organizationsWTO It be remembered that are should interests by panelrulings. governments'
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unlessin theextremely rarecircumstance wheretheactivities onlyderivativeof a government is of the the suit. subject monopoly Thereis no compelling forGeneva's affinity forsecrecy.It is a justification disservice to theWTO, depriving it of publicsupport. Opennesswouldbe the on bestdefense attacks the institution it must be hiding that against something. concerns that the in feeds WTO be assaults Secrecy may engaging unwarranted on national or it or that is worse. bias, incompetence, sovereignty, masking B. A Standing Judiciary Thecurrent which draws from a roster ofindividpanelmembers panelsystem, uals- mainly, butnotexclusively, former trade is a holdover from negotiatorstheera of conciliation and mediation. This cozy, earlierera whentheGATT was smallandmembers oftheclubmight comeup with somehelpful suggestions on resolving a dispute, rather thanadjudicating it, is over. ofprocedure, Thenewjuridical functions needa judiciary. Questions interpreof doctrines tations ofagreements, andestablishment (suchas judicialrestraint) is freefrom an independent, that unduebias, has the standing judiciary requires and is notsubjectto claimsthattheymay timeto devoteto complexmatters, ofinterest. The word' 'independent" deserves to be stressed. The haveconflicts nor should neither be beholden to WTO member dominated governments judges as is now thecase. The newjudges will also bureaucracy, by an international of qualified own choosing. theassistance law clerksof their require C. Private Sector Participation- Adequate National Staffing No government will be able to staff theprosecution and defense adequately of many cases simultaneously. Smallcountry cannot evenmakethe delegations in partstemsfrom of doingso. Inadequate theconfusion that pretense staffing is whatis taking thanadjudication. In diplomacy place undertheDSU, rather theAnglo-Saxon traditionanditis this tradition that must theresponsibilaccept and theright result in any controversy will arise from ityfortheDSU- truth theprocessof issuesbeingcontested. For an adversarial to workat all system must be bothskilled and well prepared. Neither thesmall well,theadversaries WTO members' northelarger WTO members' broader hard-pressed delegation, and number of cases in whichthey are involved, will allow sweepof interests theproper forpresentations of consistent to serve necessary preparation quality theinternational settlement dispute system. It shouldbe increasingly clear thatfora variety of reasonsprivate counsel should be permitted to serveas members ofWTO dispute settlement delegations. In anycase brought a foreign andall cases are, measures, government's against thereis a fundamental imbalancein favorof thosewho are denying market access- theofficials ofthecountry of.They themeasure maintaining complained have fullinformation at hand,as to thenature of therestrictions created. they
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thesystem can sit in On its side of theroom,thosewho administer protection of thecomplaining serried ranks rows,whilethethin may government well be and outmaneuvered. outgunned This is also a question of resources. No WTO member will everdevotethe of numbers and economic to or defend all their necessary experts prosecute legal cases well. Thereis thesimplepractical matter thatprivate counselto private atinterest be steeped a number ofyears inthefacts for mayoften parties affecting a givengoods or serviceindustry, or agricultural civil sector,thatgeneralist servants cannot be expected tomaster within relevant time their frame, any given extensive Privatecounselwill have to be swornto represent responsibilities. theWTO member's thatis party to thedispute, until government independent for and are allowed the with economic interest. representation argument parties D. SystematicNational Review WhentheUruguay Roundwas approvedby Congressin 1995, the Senate Leaderproposed, andthePresident a planfor an independent Majority accepted, certain WTO decisions. The judicialpanel(madeup of senior judges) to review domestic was to determine and report on whether a WTO judicialcommission panel,in a case defended bytheUnitedStatesand lostby it, erredin applying or process.This proposalshouldbe revived standards applicableinternational andenacted into law. Itwould theExecutive, andtheAmerican provide Congress, assurance that the international settlement mechanism people, greater dispute was indeedworking. E. What Is The Record To Date? The system moreor less as one might In appearsto be working anticipate. themoststraightforward cases (e.g. Japan where is there copyright protection), no defense and none is offered, settlement of the disputeoccurswithout the to a panel. In themosthighly-charged case (e.g. litigation proceeding political the EU putting theUnited inthe States dockoverCubansanctions (Helms-Burton)) todate,thesystem has notbeentested becausethis is nota subject that theparties feel(at thisstage)can be resolved are talking to each by a panel. At leastthey other.The threat of thislitigation, and thedestructive effect that it might well have on theWTO itself if pursued, to bear foruse apparently brings leverage in attempting to find a diplomatic solution. In themostcomplexcase dealingwithmanufacturing, theJapanfilmcase, settlement an unexpected, The WTO dispute mayhaveserved positive purpose. thattheUnitedStatesmade its case. This occurred panelwas notable to find was supported despitethefactthattheU.S. position by theEuropeanUnion, and twenty thousand documents wereplaced pages of original Japanese-source in evidence. Whether itsresponsibilities willbe thesubject thepaneldischarged ofmuch andcomment oncethereport from Geneva's scholarly analysis emerges
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time.For the UnitedStates,the mostextraordinary secrecyin a few months was that the Government ofJapan, intheprocess ofdefending itself, development made an extensive seriesof remarkable On the record,beforean statements. in some detailhow its laws would be international tribunal, Japandescribed topromote andprotect free initsmarket. Itwouldprovide enforced, competition fullnational it enforce a of and number domestic measures that treatment,said, wouldassurethatimports received even treatment. fair, favorable, of theGovernment of Japan,if implemented, These statements to promise in deliverthemarket-opening results the United States the by sought bringing inthemost case. Thus,ironically, American "loss" before theWTO, publicized a "loss" for the it is too earlytojudge thematter United States. Indeed, truly ifthisdoes becomea "win" fortheUnitedStatesand theEuropeanUnion,it a loss forJapan.Much editorial wouldstillnotbe ultimately comment during ofthiscase focussed on theneedfor thependency to liberalize itsmarket, Japan forits own sake- fortheefficiency of its economy of its and forthebenefit consumers. whichmaybe reachedin themarket Thus, theresults place may ones. Nevertheless, it willbe hardformostobservers to be theright ultimately settlement at itsbest". conclude that"thiswas WTO dispute IV. Conclusions It is vitalthat WTO dispute settlement be expeditious, andwidely predictable, It must be judgedrelevant to thecommercial seen as fairand impartial. issues thisera of deeperinternational that mostconcern economic It integration. must serveto resolveeffectively theproblems of thenextfifty thanthe years,rather lastfifty. TheWTO is not a supra-national itis aninternational onewhosemembers body, to be bound only to the extentof their have contracted amongthemselves should the toreplicate Americans not, therefore, agreements. expect panelprocess owndomestic their Butthetwoshouldhavemuch more exactly judicialsystem. incommon than dotoday. Newnegotiations willbe needed todeliver committhey willprovide ments that member markets forgoodsthat governments functioning havecrossedtheir from other Once thenewsubstantive borders members. rules are in place,however, a sophisticated willbe essential to protect those judiciary in the won rights. new hardIt is nottoo earlyto put intoplace the reforms settlement to deliver on thepromise oftheexisting needed WTO dispute process as well as thosethat willbe necessary forthemoresophisticated commitments, rulesand codes that will be agreeduponin thecoming decades. How goodis theDSU? Thisleavesunanswered for a profound Ameriquestion can industry, In thewake of thefilm tradepractitioners, and our government. finds access forits products deniedabroad case, wherean American industry and government is neither a and there measures, by a complexweb of private clear multilateral nor a bilateral thatcovers,whatoptions remedy agreement
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butthey settlement atpresent. There areoptions, do notlie inWTO dispute exist? ofChina'sentry intotheWTO, what has been inviewoftheprospect Especially ' . Put ' tobejoinedbya ' 'ChinaQuestion' known as ' 'TheJapan Question' is likely toencompass within theWTO rules-based is theattempt thechallenge succinctly, nor not that are economies rules-based, transparent. system, primarily In for the new WTO. the near theWTO Thesearethelarger term, questions be factually cases willincreasingly that could must wrestle with what complicated fertilizer its purview.This is whatthe 1950 Australian and shouldbe within yearsof the GATT- comingto grips subsidycase was all aboutin the first theexisting rules.The pressures to withnew methods of undermining trading therulesdesigned to liberalize tradeare everpresent. The dispute circumvent butitshould also evolvetoensure canandshould be reformed, settlement process rulesare madeas effective as theWTO signatories that theWTO' s substantive intended them to be.

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