The WTO Dispute Settlement Implementation Procedures: A System in Need of Reform

I. OVERVIEW When the World Trade Organization (WTO) Agreement was signed in Marrakesh in 1994, its new procedures for implementing dispute settlement rulings were widely praised as a decisive improvement over the procedures codified and practiced under the General Agreement on Tariffs and Trade (GATT). The U.S. Statement of Administrative Action (SAA) accompanying the transmittal of the Uruguay Round Agreements Act (URAA) to the U.S. Congress characterized those improvements as follows: [C]ountries that bring successful challenges will be authorized to withdraw Uruguay Round trade benefits from the offending country if, after a period following adoption of the panel or Appellate Body report, the matter cannot be settled in a mutually satisfactory manner. These changes mean that when the United States brings a successful challenge against another government under the DSU, the United States will have improved leverage to insist that the defending government remedy its violation.(1) Today, as the WTO concludes its fifth year of operation, its dispute settlement implementation procedures (and the SAA assessment of them) are still being tested and debated. Thus far, only 26 of the 185 cases, or 14% of the total case load, that have gone to WTO dispute settlement(2) have even reached the point where the implementation procedures established under the Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU) apply.(3) In fourteen of those, the offending member either fully implemented or agreed to implement in a manner acceptable to the winning party.(4) Six have led to non-compliance procedures,(5) and the remaining six are still awaiting either final implementation,(6) or the establishment or expiration of their reasonable period of time for implementation.(7) Because WTO rulings have been implemented to the satisfaction of the winning parties more often than not under the new WTO procedures, some may insist, on the basis of that record, that the implementation procedures function in an effective manner. The instances of non-compliance over the last year, however, have been divisive and well-publicized. Consequently, they have substantially undermined that view and raised questions about the adequacy of the current implementation rules and procedures. The disputes over non-compliance that have cast doubt on the system are principally those that have led to formal non-compliance action, which thus far have included EC--Bananas,(8) EC--Beef Hormones,(9) Australia--Salmon,(10) Australia--Leather,(11) Brazil--Export Financing Programme for Aircraft,(12) and Canada Measures Affecting the Export of Civilian Aircraft.(13) Because these more contentious cases have required fullest recourse to the new WTO implementation procedures, they offer the best barometer of what has worked under that system and what has not. Among the several lessons that can be derived from the noncompliance cases, one is that the existing DSU text contains obvious ambiguities and drafting oversights that need to be corrected. Another is that its implementation procedures, when used to their fullest extent, create an undesirably long timetable for the injured party. Still another is that improved incentives or sanctions are needed under the DSU to help achieve the WTO's implementation objective of prompt compliance.(14) Beyond the reform guidance they offer, the non-conformity cases also raise more challenging questions about the future of the WTO system. They pose, in particular, the issue of whether the European Community (EC), the largest WTO member, will ever properly implement dispute settlement rulings, especially in the area of agriculture, and what it will imply for the system if it does not. More broadly still, the cases pose the question of whether the WTO, faced with a growing array of challenging cases--from U. …

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