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The New Dispute Settlement:From the GATT to the WTO

Published online by Cambridge University Press:  21 July 2009

Amelia Porges
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Extract

On 30 December 1994 in Geneva, the four major players in world trade -the United States, the European Union, Japan, andCanada - accepted the Agreement Establishing the World Trade Organization (WTO Agreement).The entry into force of the Agreement on 1 January 1995 brings both expanded and improved trade rules and greatly improved enforcement. We have entered a new era in international dispute settlement. This brief article discusses the Understanding on Rules and Procedures Governing the Settlement of Disputes in Annex 2 of the WTO Agreement, the negotiating process that led to it, and the implementation of the Understanding in the United States.

Keywords

dispute settlementGATTUnited StatesWTO.
Type
Current Legal Developments
Information
Leiden Journal of International Law , Volume 8 , Issue 1 , Spring 1995 , pp. 115 - 133
Copyright
Copyright © Foundation of the Leiden Journal of International Law 1995

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References

1. See text of the Understanding and of the WTO Agreement, reproduced in 33 ILM 1125 et seq. (1994).

2. The contracting parties to the GATT acting jointly are referred to as the CONTRACTING PARTIES, in upper-case; the General Agreement does not otherwise establish any formal institutions.

3. Art. XXIII(2) GATT.

4. See Corfu Channel case (UK v. Albania), 1949 ICJ Rep. 4 (Judgment of 9 April 1949).

5. See Netherlands Measures of Suspension of Obligations to the United States, Determination of8 November 1952, BISD IS/32, authorizing the imposition of a limit on imports of US wheat flour during 1953, in response to US import quota on dairy products. For a complete account of GATT dispute settlement practice, see the Analytical Index (Guide to GATT Law and Practice), 6th ed. (1994), prepared by A. Porges with contributions by F. Weiss and P.C. Mavroidis.

6. The most recent recorded policy decision adopted by vote (other than decisions on waivers or accessions) was the Recommendation on Freedom of Contract in Transport Insurance, adopted 27 May 1959, BISD 8S/26, adopted by 22–7 vote, with 4 abstentions, GATT Doc. SR.14/9, at 115. See also the chapter on GATT institutional practice in Analytical Index,supra note 5, at 1007–1043.

7. See, for this decision, BISD 36S/61; application was extended until entry into force of the WTO Agreement by decision of 22 February 1994 (GATT Doc. L/7416).

8. See S. 301 of the Trade Act of 1974 as amended, 19 USC 2411 et seq.

9. Failure to agree on terms of reference had been a significant source of delay. Since adoption of the 1989 Decision there have been no GATT disputes with non-standard terms of reference.

10. For instance, the GATT Council, acting on behalf of the CONTRACTING PARTIES, decided to “note” the panel report Spain - Measures Concerning Domestic Sale of Soybean Oil(GATT Doc. L/5142 and Corr. 1), and not to adopt it; in the discussion many contracting parties had stated the view that the report's legal analysis was wrong (C/M/152 (3 November 1981)); see also Analytical Index, supra note 5, at 710.

11. See Agreement on Trade in Civil Aircraft, BISD 26S/162, 1186 UNTS 170; and Agreement on Interpretation and Application of Articles VI, XVI, and XXIII of the GATT, BISD 26S/56, 1186 UNTS 204.

12. See panel report EEC - Subsidies and Payments Made to Processors and Producers of Oilseeds and Related Animal-Feed Proteins, adopted 25 January 1990, BISD 37S/86, at 131–132 (para. 154).

13. See note on Uruguay Round legal drafting process by A. Porges, 33 ILM 1125 (1994).

14. Under the GATT, panel reports have on very rare occasions been “noted” and not adopted (as in the case of Spain – Measures concerning Domestic Sale of Soybean Oil, supra note 10) or adopted subject to conditions (as in the case of the panel report United States – Imports of Certain Automotive Spring Assemblies, adopted in 1983 subject to an understanding; see Analytical Index, supra note 5, at 709–710).

15. Art. 19(1) DSU.

16. Art. 26 DSU; for an example of such a recommendation, see the Second Oilseeds case, followup on the panel report – Payments and Subsidies Paid to Processors and Producers of Oilseeds and Related Animal-Feed Proteins, BISD39S/91, at 118–119 (1992).

17. Art. 19(2) DSU.

18. See case 26/62, Van Gend en Loos v. Nederlandse Administrate der Belastingen, ECR 1963, 1–28.

19. See Omnibus Trade and Competitiveness Act of 1988, PL 100–418, 102 Stat. 1121, S.1101(b)l (19 USC 2901).

20. See panel report United States – Import Restrictions and Labelling of Tuna from Mexico,circulated 3 September 1991, BISD 39S/155 (unadopted but derestricted); reproduced in 30 ILM 1594 (1991).

21. E.g., a group of labor and environmental groups published a full-page advertisement entitled “Sabotage! of America's Health, Food Safety, ” (“We all become subject to the veto of an international body that nobody elected, that nobody knows, and that operates in secret beyond national laws or thedemocratic process. […] Under GATT,when one country sues another, a panel of three trade officials is formed to hear the case. The hearings are secret. No testimony from consumer, health, labor or environmental groups. No press, no public. The manner of the deliberations is unknown”), New York Times, 14 December 1991; San Francisco Chronicle, 27 May 1992 (and other newspapers).

22. ‘Fast track’ refers to special rules enacted by Congress in S. 151 of the Trade Act of1974 (19 USC 2191), guaranteeing that legislation submitted to implement certain trade agreements will be unamendable once submitted and will be voted on within a set number of legislative days. The Uruguay Round implementing bill was given access to these procedures by S. 1103 of the Omnibus Trade and Competitiveness Act of 1988 (19 USC 2903) as amended. Since ‘fast-track’ bills are unamendable, they are negotiated informally between the Administration and Congress, and are subject to intensive informal hearings and mark-ups before they are formally submitted to Congress.

23. See S. 125 URAA, PL 103–465. Withdrawal would, of course, be subject to the provisions of Art. XV of the WTO Agreement, which provide for withdrawal to be effective on six monthś notice.

24. See S. 102(a)-(c) URAA, 19 USC 3512(a)-(c). These provisions are identical to provisions in the US legislation implementing the Tokyo Round agreements (19 USC 2504(a) and (f); the US-Canada Free Trade Agreement (19USC 2112 note); and the North American Free Trade Agreement (NAFTA) (19 USC 3312). Council Decision 94/800/EC, OJEC1994, L 336/1,of 22 December 1994, on approval of the Uruguay Round results, includes a recital stating that by its nature, the WTO Agreement, including the Annexes thereto, is not susceptible to being directly invoked in Community or member state courts; this may refer to the effect of the implementation clause in the WTO Agreement Art. XVI(4) in making the agreement and its annexes non-self-executing. Section 6 of Canadian Bill C-57 implementing the WTO Agreement expressly rules out any private action to enforce rights claimed under the Agreement without the consent of the Attorney General of Canada. This provision repeats language used in the Canadian implementing legislation for the US-Canada Free Trade Agreement, and for NAFTA.

25. See Appendix 3, para. 3, DSU; S. 127(d) URAA.

26. See S. 127(a)-(b) URAA. The private-sector advisory committees were established by the President under S. 135 of the Trade Act of 1974 (19 USC 2155), to provide general policy advice on negotiating objectives, bargaining positions, the operation of trade agreements,other trade policy matters, and (since January 1995) disputes. They areto be representative of various sectors of industry, agriculture and labour; they now include representatives of environmental and consumer organizations.

27. See S. 127(e) URAA.

28. See S. 123(d)-(f) URAA.

29. See panel report United States – Measures Affecting Alcoholic and Malt Beverages, adopted 19 June 1992, BISD 39S/206.

30. See S. 102(b.l), (C)-p) URAA; SAA, at 16–17.

31. The legislation, the SAA, the Uruguay Round agreements, and US market access schedules were printed in House Doc. 103–316 (2 Vols.).

32. At the end of each Congress (a two-year period ending in even years), legislation that has not been enacted into law dies. In 1994, the House and Senate parliamentarians each determined that the provisions in S. 1103(a) of the Omnibus Trade and Competitiveness Act of 1988 (19 USC 2903(a)) which permit the President to transmit ‘an implementing bill’ under ‘fast-track’ procedures meant that only one such bill could be transmitted; as an exception to normal legislative procedure, the ‘fast-track’ provisions had to be interpreted narrowly. Hence, if the URAA had not passed in 1994 under ‘fast-track’ procedures,implementing legislation would have had to be reintroduced in 1995 under normal (‘nonfast-track’) procedures and could be amended and delayed without limit.

33. Letter to Senator Bob Dole dated 23 November 1994 from US Trade Representative Michael E. Kantor (on file with Editors), at 3. A joint resolution is similar to a bill and becomes law in the same manner; it must be approved by both Houses of Congress and presented to the President, who may sign it, veto it, permit it to become law without his signature, or ‘pocket veto’ it if Congress has adjourned. In January 1995, Senator Dole introduced S. 16,a billto establish such a commission, but there has been no action on this bill as yet.

34. Art. 11(4) of the WTO Agreement defines the ‘GATT 1947’ as the GATT dated 30 October 1947 as later amended: in short, the historical GATT. GATT 1947 is legally distinct from ‘GATT 1994’, which is alegal construct incorporating the text of the GATT as amended up to the date of entry into force of the WTO Agreement (1 January 1995); plus the acquis as of that date (tariff protocols, protocols of accession, certain decisions on waivers and other decisions of the CONTRACTING PARTIES); plus Understandings on certain GATT articles which were agreed in the Uruguay Round; plus the Marrakesh Protocol of market access concessions on trade in goods; minus the Protocol of Provisional Application and other provisions dealing with provisional application. GATT 1994 is one of the agreements attached to the WTO Agreement and its rules can be enforced under DSU procedures.

35. See decision of the CONTRACTING PARTIES, adopted 8 December 1994, GATT Doc. PC/12, dated 13 December 1994 (text to be reproduced in 34 ILM (1995)). The decision provides that the legal instruments through which the contracting parties apply the GATT 1947 are terminated one year after the WTO Agreement enters into force. This formula was chosen because the GATT has never entered into force.

36. As noted above, the 1989 decision on improvements to dispute settlement has now expired and so panel establishment can be blocked in GATT 1947, as was the case prior to the Uruguay Round.

37. See Art. 18(3) Agreement on Implementation of Article VI (1994); Art. 32(3) Agreement on Subsidies and Countervailing Measures.

38. See decisions (adopted 8 December 1994 by the Implementation Conference and later adopted by the Committees on Anti-Dumping Practices and Subsidies and Countervailing Measures): Transitional Arrangements – Committee on Anti-Dumping Practices, GATT Doc. PC/14, L/7585; and Transitional Arrangements – Committee on Subsidies and Countervailing Measures, GATT Doc. PC/16, 177587.

39. See decisions (adopted 8 December 1994 by the Implementation Conference and later adopted by the Committees on Anti-Dumping Practices and Subsidies and Countervailing Measures): Transitional Co-Existence of the Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade and the Marrakesh Agreement Establishing the World Trade Organization, GATT Doc. PC/13, L/7584; and Transitional Co-Existence of the Agreement on Interpretation and Application of Articles VI, XVI and XXIII of the General Agreement on Tariffs and Trade and the Marrakesh Agreement Establishing the World Trade Organization, GATT Doc. PC/15, L/7586.

40. See R. Hudec, Enforcing International Trade Law: The Evolution of the Modern GATT Legal System 358–360 (1993).