Bridges Weekly Trade News Digest • Volume 14 • Number 19 • 26th May 2010

DSU Review Negotiations Inch Forward, Despite Doha Lull

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Geneva-based trade officials working on WTO dispute settlement issues were kept busy last week. Besides establishing three new panels at a Dispute Settlement Body (DSB) meeting and monitoring a high-profile arbitration between the US and the EU, they also met as part of the ongoing negotiations on updating the rules governing WTO dispute settlement.

A group of around 42 members has been moving forward with negotiations, based on a draft text compiling countries’ various proposals that the chair of the negotiating group put together in July 2008.

Some of the proposed reforms would, for example, ease administrative burdens on developing countries, make it simpler for members to become ‘third parties’ to disputes of interest to them, formalise procedures for civil society groups to file ‘friends of the court’ briefs, and establish a fund to help developing countries make better use of WTO dispute settlement. The formal talks on the text were supplemented by informal, ‘off campus’ discussions at the Mexican mission to examine the legal implications of different proposals.

While countries participating in the talks have found significant common ground on many issues, two remain untouched. The first, ‘sequencing’, refers to a design flaw in current rules that has created uncertainty about whether, prior to levying retaliatory sanctions, a country that has won a trade dispute must first obtain a multilateral determination that its would-be target has failed to comply with its WTO obligations. In practice, countries have sidestepped the issue by reaching bilateral agreements, but members continue to aim for a negotiated solution. The second issue, ‘post-retaliation’, refers to the rules governing situations where a country facing retaliatory measures asserts that it has brought policies into compliance and that the retaliatory measures should be lifted.

Once draft provisions on these two issues are developed, WTO members would have a full suite of options for potential future DSU rules. This would serve as the basis for future negotiations.

The week’s negotiations attracted a number of senior capital-based delegates for plenary and bilateral meetings.

Despite the progress, the DSU review is far from being finalised. Consensus would need to include members not among the 42 that were participating in the discussions. The chair of the talks, Costa Rican Ambassador Ronald Saborio Soto, has urged delegations to meet bilaterally to bridge positions and achieve consensus on critical issues, delegates reported. These meetings will have to address issues such as panel composition, mutually agreed solutions, cross-retaliation and special and differential treatment.

The DSU review negotiations, which were launched in part to improve developing countries’ ability to take advantage of the WTO’s dispute settlement mechanism, are not formally part of the Doha Round. Nevertheless, there is a de facto link between them and progress in other WTO negotiations. Sources say only a few Members have articulated support for an ‘early harvest’ that would see DSU issues agreed and implemented in isolation. A new round of DSU negotiations is expected to take place within the next two months.

ICTSD reporting.