Bridges Weekly Trade News Digest • Volume 6 • Number 19 • 22nd May 2002
DSU: Members Discuss ‘Sequencing’ And Selection Of Panellists
At the second special (negotiating) session of the WTO Dispute Settlement Body (DSB) convening on 21 May, Members discussed a new proposal put forward by a group of 14 countries suggesting reforms of the Dispute Settlement Understanding (DSU) to settle the so- called ’sequencing’ issue as well as procedures to effect withdrawal of retaliatory action once its underlying WTO ruling has been correctly implemented. Based on a list of questions prepared by India on several points raised in an earlier EC proposal, the DSB further addressed the issue of reforming the selection process of WTO panellists. Article 30 of the Doha Declaration mandates negotiations on "improvements and clarifications" of DSU which are to be concluded by May 2003. In an effort to resolve longstanding frictions on ambiguities and inconsistencies of WTO dispute resolution rules, a large number of Members had previously stated that they regarded clarifying the relationship between DSU Article 21.5 (compliance) and Article 22 (compensation and the suspension of concessions) as a key issue for negotiation under the Doha mandate (see BRIDGES Weekly, 19 March 2002). DSU Art. 21.5 provides that where there is disagreement as to whether or not the party losing a dispute has complied with a panel ruling, a so-called compliance panel, if so requested, has to decide on the issue within a 90-day period. On the other hand, Art. 22 requires Members to file a request with the DSU to authorise retaliatory measures within 20 days after the expiration of the implementation period in case the losing party is in non-compliance and has not offered mutually acceptable compensation. So far, in order to reconcile the two procedural tracks and their differing periods, parties to a dispute have frequently taken recourse to informal ’sequencing’ arrangements by which compliance issues are to be resolved prior to requesting retaliation. DSU 21.5 ruling prior to seeking retaliation The group of 14 comprising Bolivia, Canada, Chile, Colombia, Costa Rica, Ecuador, Guatemala, Japan, Norway, Peru, South Korea, Switzerland, Uruguay and Venezuela said in their joint communication (JOB(02)42, restricted) that continuing with these informal arrangements did "little to enhance the security or predictability of the WTO dispute settlement system" and was "particularly detrimental to smaller and developing Members that have limited capabilities to work out such arrangements." The group proposed to amend the DSU so as to ensure that a compliance ruling needed to be sought prior to any request for authorisation to retaliate against non-compliance. Furthermore, the submission suggested that in case a Member is found to be in non-compliance with a panel ruling, the other party should be allowed to request the right to retaliate once the report of the compliance panel has been formally adopted by the DSB. Addressing the question of how a member subject to retaliatory action could effect termination of the sanctions once it has achieved compliance, the group proposed to establish a parallel procedure where the Member retaliated against could ask a compliance panel to determine whether the original WTO ruling has now been correctly implemented. The EC, which set out similar ideas in its earlier proposal (see BRIDGES Weekly, 16 April 2002), together with Members such as New Zealand, Argentina, Brazil and Mexico generally welcomed the ideas proposed in the group’s communication. In addition, the US reiterated its openness to tackling the sequencing issue, but further added that it particularly wanted to see a requirement to conduct the compliance review within a certain timeframe to prevent additional delay of DSU proceedings. Similarly, Singapore and South Korea voiced some time frame-related concerns. Trading partner Australia, on the other hand, questioned the need to amend DSU rules to deal with sequencing, stating that, in practice, the problem had largely been settled. Selection of panellists Responding to a set of questions by India (TN/DS/W/5, searchable at http://docsonline.wto.org) on points made in a recent EC proposal, the European trading bloc noted that the average time for selecting panellists had significantly increased since the establishment of the WTO — 30 days in 1996 and 67 days in 2001 — mainly as it had "become the rule" in recent years to rely on the WTO Director-General to determine the composition of a panel if the parties to the dispute could not agree on the panellists (DSU Article 8.7). India had asked the EC to explain why a system of more permanent panellists — as suggested in the EC proposal — would take less time to handle new procedural developments than the current ad hoc panellist scheme. "Dispute Resolution: WTO Dispute Reform Advocates Outline Proposal To Resolve ‘Sequencing’ Issue," WTO REPORTER, 22 May 2002. ICTSD Internal Files.