Comparative Analysis of Dispute Settlement under WTO Law and Regional Free Trade Agreements

Comparative Analysis of Dispute Settlement under WTO Law and Regional Free Trade Agreements

The theoretical basis for this article consists of foreign scholars works related to the issue of dispute settlement within international tribunals and analytical materials, prepared by the Max Planck Institute for Comparative Public Law and International Law.

Actuality of research. Ukraine already has an experience of participation in several proceedings raised before the Dispute Settlement Body of the WTO (as a claimant in case “Australia - Plain Packaging” [2], and as a respondent in cases “Ukraine – Distilled Spirits” [7] and “Ukraine – Safeguards on Cars” [8]).Our country is also a party to regional trade agreements, which have their own order of dispute settlement. Current research is aimed on defining and clarifying differences in mechanisms of such disputes settlement which will be useful for Ukrainian scholars, professionals and students.

Condition of scientific research of the topic. Current topic is a subject for permanent and deep research by foreign scholars, in particular, by Joost Pauwelyn, Werner Zdouc, Federico Ortino, Gabrielle Marceu, Markus Krajewski and many others. At the same time, this topic is poorly discussed among Ukrainian scholars.

The subject of research is the legal regulation of settlement of disputes, which raise between sovereign states, and which are solved in result of consultations or judgment of specially established international tribunals.

The WTO law serves as the set of rules, which must be implemented into national legislation of all of the members of this international organization. As any rules, set by any institution or organization, they have a risk to be breached by any of the respective parties. In this case, the effective mechanism of sovereign states rights protecting must be granted and established. The history of international trade law shows that previously disputes were settled exclusively in a “diplomatic way” (e.g. by special conferences, working parties, referred to as “conciliation“) [6; 269-271].

Nowadays, the special Dispute Settlement Body (hereinafter – DSB) serves as a mechanism of dispute resolution within WTO. The DSB was established pursuant to Article 2.1 DSU [4] to administer the dispute settlement process. It generally meets monthly and membership is open to all WTO Members. The DSB establishes Panels, which settle disputes directly and maintains the Appellate Body.

If dispute between WTO Members can’t be resolved during formal consultations, Members may request the establishing of the Panel. Panels are established by the DSB. They are composed on an ad hoc basis of three individuals, selected by the parties. Panelists are selected from list presented by the DSB Secretariat. Panelist must be a professional familiar with WTO law, but it is not always a lawyer. Panelist serves as a private person, but not as a representative of his/her state of origin. At the same time, a panelist may not be a national of any of disputed countries [3; 273].

The decision taken by the Panel is called “Panel report”. These reports are subjects for revising by the Appellate Body. The Panel and Appellate Body are often called “quasi-judicial bodies” by the specialists [3; 277]. Instead of the Panel, the Appellate Body functions on a permanent basis. It consists of 7 members, who are appointed for a four-year term with a possibility to be re-appointed once [5; 348]. Procedural opportunities to appeal are limited to “issues of law covered in the Panel report and legal interpretations developed by the Panel” [4].

The general terms of Panel proceedings shall derive from six to nine months [1; 1271]. In fact, it takes more time, because of sophisticated procedure of the Panel establishing and selection of panelists. To resolve this problem, over the last years the Director General of the DSB has relied on himself the role of panelists selection, which made the process faster [3; 279-280].

The enforcement of the Panel and Appellate body findings and decisions is the duty of the DSB. The Panel doesn’t judge, but “makes a ‘recommendation’ that the DSB request the Member to bring its measures into conformity with WTO obligations” [4]. At the same time, the Panel or Appellate Body are on their own to suggest ways on which their recommendations should be implemented by the Member [3; 278].

To summarize, the WTO dispute settlement system has a long history, which formed a system of special quasi-judicial bodies with comprehensive rules, which grant settling disputes by neutral third parties, whose judgment have enforceable results.

The largest regional trade agreements (hereinafter – RTAs) are NAFTA, ASEAN, Mercosur and the European Union. All of them have their unique dispute settlement mechanisms. Other RTAs, like so-called “EU’s Association Agreements” don’t establish specific bodies of dispute settlement, however they prescribe instruments of “diplomatic resolving”.

The general dispute settlement system contained in NAFTA Chapter 20 resembles the WTO system. At the same time, provisions of NAFTA don’t provide a possibility of appealing. The quasi-judicial body of NAFTA is likewise consisted of panelists, who are selected by disputing party. Such similarities between WTO and NAFTA provisions on state-to-state dispute settlement arise from the history of their establishment, as both systems were subject for disputes and creation in early 1990s’ [5; 350]. On the other hand, the NAFTA state-to-state dispute settlement system was used just three times, which is far away from DSB’s effectiveness.

The Mercosur was established in 1991. The system of dispute settlement was introduced in 1993 and then amended in 2002 by the Olivos Protocol. After it came into force in 2004, Mercosur dispute settlement became “a more WTO-like system with, inter alia, permanent review tribunal to hear appeals from ad hoc panels” [5; 373]. The Mercosur dispute settlement system is believed to be well-functioning and relatively effective RTA dispute settlement system. Perhaps, the success of Mercosur can be explained that Mercosur is a customs union with too much deep integration of Member states than usual RTA has. Thus, the more effective dispute settlement system is needed for parties with such a deep integrative links.

The ASEAN since its establishment in 1967 had no formal system of dispute settlement until 1996. However, even after establishment of a WTO-like system, all disputes still remained settled in result of diplomatic consultations. Federico Ortino suggests that “ASEAN countries are more comfortable with negotiating compromises”, at the same time he notes that “they have occasionally used the WTO system, even against each other” [5; 373-374].

The European Union has a well-established European Court of Justice, which has a wide jurisdiction, which covers all of the state-to-state disputes (including trade-related), which arise between Member-states. As the European Union is also a customs union with a highly deep level of integration, its dispute settlement system also seems to be rather effective. Moreover, EU’s Member States waived their rights to appeal to the WTO to the European Commission, which acts in the name of all EU. Thus, the only mechanism remained for Member state’s “self-defense” is the European Court of Justice.

Smaller RTAs typically provide for periodic meetings of the parties at a high politically level (like it is prescribed by the EU-Ukraine Association Agreement). These meetings often contain agenda items involving trade disputes. All of the decisions taken at such meetings are the subject to diplomatic consultations but not jurisprudence.

To sum-up, the WTO dispute settlement system is a sophisticated mechanism of solving disputes with effective instruments of enforcement. The last years’ experience shows that most RTAs dispute settlement systems tend to copy the WTO-one. At the same time, besides political consultations, dispute settlement under RTAs still remains ineffective. Scholars believe that the reason lays in a risk of non-neutral and prejudiced panelists to be appointed, as there are only few Member-states to those RTAs. As the experience of pre-NAFTA Canada-US FTA showed, the panelist (which were always Americans or/and Canadians) tended to be “too nationalistic” [5; 375]. In fact, the necessity of dispute settlement system establishment within RTA is justified only in case of deep integration. Without this level, political consultations remain effective and sufficient instrument.

List of References:

1. Arthur Appleton, Michael Plummer. The World Trade Organization: Legal, Economic and Political Analysis, – Springer Science, – 2005.

2. Australia – Certain Measures Concerning Trademarks, Geographical Indications and Other Plain Packaging Requirements Applicable to Tobacco Products and Packaging [Electronic resource]. Access mode: https://docs.wto.org/dol2fe/Pages/FE_Search/FE_S_S009-DP.aspx?language=E&CatalogueIdList=100507,70841&CurrentCatalogueIdIndex=0&FullTextSearch=

3. Daniel Bethlehem, Donald McRae, Rodney Neufeld, Isabelle van Damme. The Oxford Handbook of International Trade Law, – Oxford University Press, – 2009.

4. Dispute Settlement Understanding [Electronic resource]. Access mode: http://www.wto.org/english/tratop_e/dispu_e/dsu_e.htm

5. Lorand Bartels, Federico Ortino. Regional trade agreements and the WTO legal system, – Oxford University Press, – 2006.

6. Rudiger Wolfrum, Peter-Tobias Stoll. Max Planck Commentaries on World Trade Law, Koninklijke Brill NV, – 2006, – 671 p.

7. Ukraine – Definitive Safeguard Measures on Certain Passenger Cars - Request for the establishment of a panel by Japan [Electronic resource]. Access mode: https://docs.wto.org/dol2fe/Pages/FE_Search/FE_S_S009-DP.aspx?language=E&CatalogueIdList=122598,121111,120897,120833,100507,108962,78285,106080,103798,100160&CurrentCatalogueIdIndex=0&FullTextSearch=

8. Ukraine – Taxes on Distilled Spirits [Electronic resource]. Access mode: https://docs.wto.org/dol2fe/Pages/FE_Search/FE_S_S009-DP.aspx?language=E&CatalogueIdList=122598,121111,120897,120833,100507,108962,78285,106080,103798,100160&CurrentCatalogueIdIndex=5&FullTextSearch=

Дата добавления: 2015-11-04