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relating to dispute settlement mechanism . In fact the power to settle trade disputes is what is the difference between the WTO and GATT . When a member files a complaint against another , the dispute settlement body of the WTO steps in immediately . Decisions have to be taken in less than 1 year 9 months if the case is urgent , 15 months if the case is appealed . The dispute settlement system of WTO is faster and automatic and the decisions cannot be ignored or blocked by members .
Offending countries must realign their trade policies according to the WTO guidelines or suffer financial penalties and even trade sanctions . Because of its ability to penalize offending member nations ,the WTO dispute settlement is the backbone of the global trading system The costs of dispute settlement proceedings are disproportionately heavy for developing countries. In general , developing countries do not enjoy a neutral playing field. Although the dispute settlement procedure is not biased against any party in a dispute , developing countries are less well equipped to participate in the process. Necessary training , they are less experienced and as noted above , they face resource constraint.
1. Consultations, good offices, conciliation and mediation 2. Panel proceedings 3. Appellate Body 4. Consideration and adoption of Panel/AB reports by the DSB If the report concludes that a measure is inconsistent with a covered agreement the Panel (/AB) must recommend that the Member concerned bring the measure into conformity with that agreement. Adoption of Panel (/AB) reports by the DSB is automatic. 5. Implementation of reports by members
- Compliance - Negotiation of compensation (voluntary, mutually acceptable) - Authorisation of retaliatory action (suspension of concessions/obligations)
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decision. Prompt compliance reqd. Party to tell DSB its intention of compliance within 30 days. If immediate compliance impractical, DSB will give Member reasonable time period to do so. If dispute whether measures adopted comply with DSB ruling, a Compliance Panel will hear the matter & rule within 90 days.
Complaining party/parties Amount of Compensation through negotiations If no satisfactory agreement, complaining side may seek DSBs permission for ltd trade sanctions Trade sanctions: Suspension of concessions or obligations. In principle, in the same sector as the dispute. If this is not effective or practical, action under another agreement.
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consultations Dispute Settlement Body. Panel process Appellate body Rules are binding and automatically adopted
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Panel
Report
Appellate Body
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Articles XXII and XXIII of GATT 1947 Very limited rules Central concept was nullification and impairment of benefits flowing from the agreement
Diplomatic character of dispute settlement:
No judicial arm, rather all matters were within powers of GATT Contracting Parties
Evolved practice under GATT 1947
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stages of dispute
Appellate review of panel reports and
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To reach a mutually agreed solution If not, Panel Proceeding . [.and AB review.] And then, Implementation, or . Retaliatory trade sanctions may be imposed
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WTO multilateral agreements (Appendix 1) A single set of rules for all disputes (Art 23) Only a few special or additional rules in some CA (Appendix 2)
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Panel ( 3 or 5 panelists)
Appellate Body (7 persons) WTO & AB Secretariats
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Consultations Panel
Appeal Adoption Implementation
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Confidential process
Minimum time limits for complainant
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panel: Automatic
6 months or 9 months to
public
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measures at issue
The legal basis
(claims)
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Measures
Matter
Claims
Mandate
Jurisdiction
Establishment of a panel
max. 6 months
max. 9 months
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Except if appealed
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Appointment by DSB
4-year term, renewable once
Requirements authority and expertise in international trade law unaffiliated with any government
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60 days after the Panel Report is circulated to Members; takes 60-90 days
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Oral Hearing
Exchange of Views
Circulation of the Report
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appeal)
Negative consensus
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immediately?
Determination of reasonable period of time for implementation (Guideline: 15 months)
Is it properly implemented?
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implementation
If Member fails to bring measure into conformity
within reasonable period of time, possibility of temporary measures : compensation or suspension of concessions (retaliation)
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363
83
148 129 110
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23 14 16 7
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Dispute
New Bananas dispute
Zeroing disputes
EC/US cases on aircraft subsidies
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making?
Relationship dispute settlement/rule-making
(negotiations)?
Bottom line: system is being used and is
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