Understanding the WTO Dispute Settlement Process

A Growers Guide
Understanding the WTO Dispute Settlement Process
From the American Soybean Association
May 28, 2003

The following information describes the WTO process and is provided as a backgrounder on what the WTO process may have in store for the U.S. vs. EU WTO biotechnology case.

The WTO Process:

1. Consultations. Although the four complainants -- the United States, Canada, Argentina and Egypt -- have joined together to challenge the EU, they decided (for logistical reasons) to submit separate but coordinated requests to the EU. The United States and Canada submitted their requests on May 13, Argentina on May 14, and Egypt is expected to follow suit before the end of May. The EU formally accepted the requests to consult, and consultations are expected to be held in mid-June in Geneva and last one to two days. The European Commission will take the lead in representing the EU during the consultations, with member State representatives present. The complainants must allow the consultation period to run at least 60 days before moving on to the next stage. There is no maximum length for consultations. The objective for consultations is to determine if the countries can work the differences out between themselves.

2. Panel Established. If consultations are unsuccessful the complainants can request the establishment of a panel by the Dispute Settlement Body (DSB). The EU could block the establishment of a panel once, but when the DSB considers the request for a second time (which will likely be late August), the appointment can no longer be blocked. The panel is to assist the DSB by reviewing the facts, developing legal findings and providing a recommendation on the case. Typically, the parties will attempt to negotiate the selection of 3 neutral panelists, but after 20 days, either side can ask the Director-General to appoint the panel within another 10 days. The panel then has up to 6 months to complete its assessment. The panel's report can only be rejected by consensus in the DSB, s o its conclusions are difficult to overturn. The panel's findings have to be based on the agreements cited by the parties.

Panel Process:

· Pre-work: Each side presents its case in writing to the panel before the 1st hearing. First hearing: the complaining country (or countries), the responding country, and those that have announced they have an interest in the dispute, make their case at the panel's first hearing.

· Rebuttals: the countries involved submit written rebuttals and present oral arguments at the panel's second meeting.

· Experts: if one side raises scientific or other technical matters, as in this case, the panel may consult experts or appoint an expert review group to prepare an advisory report.

· First draft: the panel submits the descriptive (factual and argument) sections of its report to the two sides, giving them two weeks to comment. This report does not include findings and conclusions.

· Interim report: The panel then submits an interim report, including its findings and conclusions, to the two sides, giving them one week to ask for a review.

· Review: The period of review must not exceed two weeks. During that time, the panel may hold additional meetings with the two sides.

· Final report: A final report is submitted to the two sides and three weeks later, it is circulated to all WTO members. If the panel decides that the disputed trade measure does break a WTO agreement or an obligation, it recommends that the measure be made to conform with WTO rules. The panel may suggest how this could be done.

· The report becomes a ruling: The report becomes the Dispute Settlement Body's ruling or recommendation within 60 days unless a consensus rejects it. Both sides can appeal the report (and in some cases both sides do).

3. Appeal. Either side can appeal a panel's ruling. Sometimes both sides appeal. Appeals have to be based on points of law such as legal interpretation - they cannot reexamine existing evidence or examine new evidence. The appeal can uphold, modify or reverse the panel's legal findings and conclusions. Normally appeals should not last more than 60 days, with an absolute maximum of 90 days. The Dispute Settlement Body has to accept or reject the appeals report within 30 days - and rejection is only possible by consensus.

4. Decision/Implementation. The priority at this stage is for the losing "defendant" to bring its policy into line with the ruling or recommendations. The dispute settlement agreement stresses that "prompt compliance with recommendations or rulings of the DSB [Dispute Settlement Body] is essential in order to ensure effective resolution of disputes to the benefit of all Members".

If the country that is the target of the complaint loses, it must follow the recommendations of the panel report or the appeals report. It must state its intention to do so at a Dispute Settlement Body meeting held within 30 days of the report's adoption. If complying with the recommendation immediately proves impractical, the member will be given a "reasonable period of time" to do so -- generally 15 months. If it fails to act within this period, it has to enter into negotiations with the complaining country (or countries) in order to determine mutually--acceptable compensation - for instance, tariff reductions in specific areas.

If after 20 days, no satisfactory compensation is agreed, the complaining side may ask the Dispute Settlement Body for permission to impose limited trade sanctions ("suspend concessions or obligations") against the other side. The Dispute Settlement Body should grant this authorization within 30 days of the expiry of the "reasonable period of time" unless there is a consensus against the request. All in all, this is about a 3 year process.