THE DISPUTE SETTLEMENT SYSTEM
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the GATT system
- consensus rule and non adoption of reports
- non compliance of reports (no sanctions)
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the WTO system
- inverted consensus
- sanctions
- appellate stage
THE DISPUTE SETTLEMENT SYSTEM
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the WTO system is based on a balance of interests and
advantages
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the aim is not legality for itself
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adversarial vs inquisitorial systems
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complaints are introduced just by the interested State
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violation and non violation complaints

proposal to introduce a “prosecutor”
THE DISPUTE SETTLEMENT SYSTEM
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obligation to engage in consultations (2 months)
even after the start of the judicial phase i can interrupt
the procedure at any time if I find a mutually agreed
solution
panel formation
- ad hoc body
- experts in the subject matter
- report by 6 months
THE DISPUTE SETTLEMENT SYSTEM

the interim review
- before the report is issued
- a draft report is circulated among the parties who can
make comments
- diplomatic feature

the panel report is adopted by inverted consensus
by the DSB
THE DISPUTE SETTLEMENT SYSTEM
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The Appellate Body
- standing organ of experts in legal matters
- both parties can submit an appeal request
- just issues of law and not of fact
- just the issues proposed by the appealing party
(“completing the analysis” technique)
- report in 2 months adopted by inverted consensus
THE DISPUTE SETTLEMENT SYSTEM

States are obliged to put their legislation in conformity
with WTO rules (no compensation)

determination of a reasonable period of time

the implementation phase
- possibility of countermeasures under authorisation of the
DSB
- compliance report
MEMBERSHIP
- equality of members
- special and differential treatment
- observers
- “conditionality” and “WTO plus” obligations
procedure: negotiations + working party + General
Council decision
- the accession Protocol is an integral part of the WTO
system
-
THE NORMATIVE POWER
 normative power is very limited and trade relations are
mainly managed through negotiations
- amendment
- interpretation
- waiver
 ex: decision on access to essential medicines
1. Doha Declaration
2. Declaration on TRIPs
THE NORMATIVE POWER
(continued)
3. Decision about TRIPs and access to essential medicines and the
amendment of the TRIPs agreement
- compulsory licence: the holder of a IP right is obliged to allow
exploitation by other persons
- according to the TRIPs agreement compulsory licence is only for
national sale and use
- compulsory licences can be used by WTO members to export
medicines to DCs and LDCs
THE MAIN PRINCIPLES
 The most favoured nation principle
“any advantage granted by any contracting party to any
product originating in or destined for any other country
shall be accorded immediately and unconditionally to the
like product originating in or destined for the territories
of all other contracting parties”
- promotion of better int'l relationships
- efficient allocation of resources
- exceptions: only 5% of world trade is managed through
the MFN!
THE MAIN PRINCIPLES

the stand-still clause
“each contracting party shall accord to the commerce of
the other contracting parties treatment no less favorable
than that provided for in the Schedule annexed to this
Agreement”

the Harmonised System identifies goods
example: 01 LIVE ANIMALS
0101 horses, asses, mules and hinnies, live
0102 bovine animals, live
THE MAIN PRINCIPLES

the national treatment clause
par.1 : internal taxes and laws should not be applied to imported
or domestic products so as to afford protection to domestic
production”
par.2 : the imported products shall not be subject to taxes
higher than those applied to like domestic products.
Moreover, no contracting party shall otherwise apply taxes to
imported or domestic products in a manner contrary to the
principles set forth in paragraph 1
THE MAIN PRINCIPLES
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national treatment (continued)
par.4 : imported products shall be accorded treatment no
less favorable than that accorded to like products of
national origin in respect of all laws, regulations and
requirements affecting their internal sale, offering for
sale, purchase, transportation, distribution or use.
THE MAIN PRINCIPLES

prohibition of quantitative restrictions
“no prohibitions or restrictions other than duties, taxes or
other charges, whether made effective through quotas,
import or export licences or other measures, shall be
instituted on the importation of any product or on the
exportation or sale for export of any product ”
- mainly under the form of technical requirements
THE LIKENESS ISSUE
likeness: equality of competitive relationship
- physical characteristics (risk)
- consumer tastes and habits
- custom classification
- end-use

process and production methods issue
- extraterritoriality
- no traces in the final products
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TRADE DEFENCE MEASURES
1) dumping and antidumping
- in a neoliberal economy dumping is not prohibited
- WTO disciplines antidumping measures
- in the DSS the complainant is the State against which the
AD measure is taken
TRADE DEFENCE MEASURES

the AD Agreement
- determination of dumping
- determination of injury
- the investigation
- evidence
- imposition and collection of AD duties
- duration and review of AD duties
 Zeroing practice by US
TRADE DEFENCE MEASURES
article VI GATT :
- definition of dumping : the “normal value”
- conditions under which dumping is condemned:
injury to an established industry or
the birth of an industry is delayed
remedies: the AD duty according to the margin of
dumping = price difference
the aim of the AD duty is to re-balance the
competitive relationship

16/04/12
TRADE DEFENCE MEASURES
2) subsidies and countervailing mesures (CVMs)
 GATT art.XVI
- definition of subsidy: any form of income or price support
which determines a rise of exports or reduction of imports
- obligations of the subsidising State: notification to other
parties of the extent, nature and effect of the subsidy + why
it is necessary
- if serious injury = obligation to discuss the possibility of
limiting the subsidy
TRADE DEFENCE MEASURES
Agreement on subsidies
- definition of subsidy: financial contribution by the
State under the form of :
1. direct transfer
2. non-collection of duties/taxes
3. purchase by the State
4. delegation of these functions by the gov't to another
entity
+ benefit
TRADE DEFENCE MEASURES
+ specificity:
- access explicitly limited to some firms
- if there are clear and objective criteria specificity does
NOT exist
- if there are reasons to believe that specificity exists
other factors can be considered: ex. predominant
use by certain enterprises
TRADE DEFENCE MEASURES
traffic lights approach
- red light (prohibited) = contingent on export
- yellow light: actionable
3 conditions:
injury to domestic industry
nullification or impairement of benefits
serious prejudice to interests

- in both cases duty to consult and possible referral to DSB for
immediate creation of a panel but for red light subsidies
timeframes are shorter
TRADE DEFENCE MEASURES
- green light (non actionable):
- non specific
- research activities
assistance to disadvantaged regions
adaptation of existing facilities to env'al requirements
possibility of consultations
referral to a Committee which issues a NON binding
decision
TRADE DEFENCE MEASURES

remedies
- in the case of red and yellow light subsidies, if the
defendant does not comply with the panel/AB report,
the DSB can authorise CVMs
- CVDs shall be levied on a non-discriminatory basis on
imports of such product from all sources found to be
subsidized and causing injury, except as to imports from
those sources which have renounced
TRADE DEFENCE MEASURES
3) safeguard measures (GATT art.XIX)
unchaining event: any product is being imported in such
increased quantities and under such conditions as to
cause or threaten serious injury to domestic producers in
that territory of like or directly competitive products
reasons: unforeseen developments and the effect of
GATT/WTO obligations, including tariff concessions
TRADE DEFENCE MEASURES
remedy: the contracting party is free, in respect of such
product, and to the extent and for such time as may
be necessary to prevent or remedy such injury, to
suspend the obligation in whole or in part or to
withdraw or modify the concession.
- this also works for the State which is the beneficiary
of the concession! (ex. China)
CUSTOM UNIONS AND FTAs
- definition of FTA and custom union
GATT authorises the creation of the custom unions and
FTAs if trade creation is higher than trade diversion
- creation of regional blocs
- benefits or regionalisation vs “race to the bottom”
argument
- hub and spoke theory