DSU talks miss another deadline

Geneva, 28 May (Chakravarthi Raghavan) -- The Special Session of the Dispute Settlement Body, where talks are being held on improvements and clarifications to the WTO Dispute Settlement Understanding, has missed another deadline - end of May 2004 - and is asking the Trade Negotiations Committee and the General Council to take appropriate action for continuation of its work, but without suggesting or setting a new deadline.

The chairman of the Special Session, Amb. David Spenser of Australia, is sending in a report to the TNC on his own responsibility stating that more time was needed to complete the work, and bearing in mind the DSU negotiations are outside the Single Undertaking.

The text of the proposed chair’s report to the TNC said:

“In my report to the TNC on 21 April, I foreshadowed that there were some considerable doubts as to the chances of concluding the work on improvements and clarifications to the DSU by the end of May 2004. This has proved correct.  However, there is agreement among Members that the Special Session needs more time to complete its work, on the understanding that all existing proposals would remain under consideration and bearing in mind that these negotiations are outside the single undertaking.

I would also like to make the following additional points of a specific nature.  While I have consulted on these points with Members and believe no Member objects to any of them, I am putting them forward to the TNC solely on my own responsibility as Chair:

·        first, I note that additional progress has been made in the Special Session since the General Council meeting of 24 July 2003, building on the work done thus far, including the proposals put forward by Members as well as the text put forward by the Chairman in May 2003;

·        secondly, some delegations have made additional written contributions to the negotiations during this period, which were welcomed by participants;

·        thirdly, there is consensus among Members on the need to continue working towards improvements and clarifications of the DSU;

·        Accordingly, I would suggest that action be taken by the TNC and/or the General Council as appropriate, for the continuation of work in the Special Session;

·        Finally, whilst there are some Members who would prefer to establish a new specific target-date for this continued work, I do not propose to recommend at this point, any such benchmark, although such a date might be considered later.”

At the beginning of the informal meeting Monday, Spenser had read out the text of the report, and had asked delegations to send any comments to him. On Friday, he said he had received comments from two delegations (whom he did not identify) expressing some uneasiness at the lack of any new deadline.

At the meeting Friday, India sought some procedural clarifications about the chairman’s report and its relationship to other reports to the TNC from other bodies, since the DSU review stood on its own.

The Chairman would appear to have merely said that the TNC would be receiving other reports.

But Spenser did not clarify, whether the appropriate decision sought for continuation of the DSU review would now become part of the July framework package, and its implications in terms of the Single Undertaking.

There was even a suggestion Friday, from Bulgaria, that the Special Session on DSU did not even need any new authority or mandate from the General Council to extend the negotiations, but they could continue the work themselves!

The DSU talks, which have been going on in one form or another under the Marrakesh Treaty (since 1998) and got a fresh mandate of sorts at Doha but not made a part of the Single Undertaking, had a deadline of May 2003, which was missed.

Subsequently, the General Council extended the mandate and fixed a new deadline of May 2004 (which ended Friday, the last working day in May at the WTO - Monday 31 May being a holiday).

The talks so far have been focussing on clarifying what are essentially technical and procedural issues - but have not come to grips at all with the core and substance of the DSU problems, namely the functioning of the panels and Appellate Body and their creating new obligations and legislating new rules - which they have been expressly prohibited from doing. They are doing so taking advantage of the fact that the rulings are to be adopted by negative consensus, that is, they cannot be rejected except by consensus.

Though the WTO members all claim that the DSU is working and helps enforce rights of all members, unlike under the old GATT where the powerful can block consensus, in fact a Canadian funded trade policy research body study at end of 2002 (by Marc L. Busch and Eric Reinhardt) reached a contrary conclusion.

The study brought out that complainants from developing countries have not received greater concessions from the richer countries under the WTO and its DSU - in the pre-panel consultation process or post-panel ruling and compliance processes - than under the old GATT. Nor has the new WTO/DSU resulted in better settlement of US-EC disputes and the two parties complying with their obligations and implementing rulings. The study found that the WTO-DSU has benefited the developed countries most by ensuring compliance by developing countries of their obligations.

The WTO panels are named by the secretariat - for a long time now, parties cannot agree on a list of three members to form a panel, and ask the Director-General to name the panellists. The secretariat serviced the negotiations (under the Uruguay Round and now under the Doha Round), and produced texts which are agreed upon because of what the former WTO Director-General Mike Moore has called ‘constructive ambiguity’ to achieve an agreement.

The same secretariat services the panels (which are chosen and named by them), and it is more or less general practice that the secretariat advises the panels on the meaning or interpretation to be given, often behind the back of the disputants, and often even guide the panels on the ruling.

The review process has not even been able to accept a simple suggestion from India at one stage that any inputs to a panel from the secretariat or any other sources should not be done behind the back of the disputants, but copies given to them so that they could respond.

The practice of the secretariat guiding the panels thus was justified at a recent consultation in Paris (at which the writer was a participant) on the ground that panellists (chosen by the secretariat) don’t have the time to read or understand the intricacies.

There have been some rare exceptions where the panels and the chair have not allowed this, and in one or two cases, they asked the secretariat to withdraw when the panellists had discussions on their ruling. But by and large, the rulings are guided and drawn up by the secretariat.

At the Appellate Body stage, three members hear an appeal on issues of law, and under working procedure rules framed by themselves, consult the other four (at what stage it is not clear) before providing a ruling.

In the process, the panels begin to harden the ‘constructive ambiguity’ in the language of the agreements, which is required to be the ordinary dictionary meaning of a term. But panels have gone dictionary hunting and used some convoluted arguments, even citing Black’s Law dictionary, to provide an ordinary meaning, for an interpretation.

They have been continuously adding to the obligations of developing countries or reducing their rights - the GSP ruling in the case brought by India against the EC is just one more of the latest examples in a long series.

The Marrakesh Agreement clearly envisaged that authoritative interpretations of a rule or agreement had to be given by the Conference of Ministers, and in their absence by the General Council, and panels and the AB were expressly told not to add on to the rights and obligations. But the interpretation route remains blocked because of the consensus decision-making, elevated to the status of a WTO dogma, though the Marrakesh treaty while preferring consensus decisioin-making, envisages decisions by voting, and by two-thirds majority to provide authoritative interpretations.

The secretariat advice was also the practice in the old GATT days, but at that time the ruling had to be adopted by consensus by the Contracting Parties, and thus became a decision by consensus of the GATT membership - not a view of three-member panel or three-member division bench of the AB that is forced down on members through the negative consensus rule.

This week, on Wednesday, at a non-governmental forum at the WTO, the ambassadors of both Brazil and India conceded that there were problems in the DSU, which is now handled at technical level, and that the DSU problems need to be tackled and fixed. They however felt they could do so after the Doha Round is over.

In actual working, the WTO dispute settlement process and procedures - the panels and the Appellate Body - are thus functioning in violation of all legal and judicial norms (whether Anglo-Saxon or the continental Droit Administratif.  The panels and the AB are usurping the legislative authority of the Ministerial Conference and the General Council and the members, changing and creating new trade law which become binding. The DSU has thus become like the Star Chamber in English legal history.

The Star Chamber, named after the chamber where the King and his Council met from the reign of Edward III, by the 16th century was the place where the of the councillors and judges met. It began as a benevolent body to provide complete and substantive justice that may not be available under English Common Law. But after a while it became an instrument of oppression and used for enforcement of unpopular measures. It was brought to an end with the regicide of Charles I and subsequent rule of Protector Oliver Cromwell when the Long Parliament was sent home.

Hopefully, the WTO perhaps would heed history. – SUNS5583