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A reasonable period of time for dispute settlement implementation: an operative interpretation for developing country complainants
Published online by Cambridge University Press: 31 October 2007
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- Copyright © Alberto Alvarez-Jiménez 2007
References
1 Understanding on Rules and Procedures Governing the Settlement of Disputes, The Legal Texts: The Results of the Uruguay Round of Multilateral Trade Negotiations,World Trade Organization, Cambridge University Press, 1999, at 368, 9 (footnotes omitted) (hereinafter WTO Legal Texts).
2 Award of the Arbitrator, United States – Measures Affecting the Cross-Border Supply of Gambling and Betting Services, Arbitration under Article 21.3(c) of the Understanding on Rules and Procedures Governing the Settlement of Disputes, WT/DS285/13, 19 August 2005 (hereinafter US–Gambling).
3 Award of the Arbitrator, European Communities – Export Subsidies on Sugar, Arbitration under Article 21.3(c) of the Understanding on Rules and Procedures Governing the Settlement of Disputes, WT/DS265/33, WT/DS266/33, WT/DS283/14, 28 October 2005 (hereinafter EC–Export Subsidies on Sugar).
4 Award of the Arbitrator, European Communities – Customs Classification of Frozen Boneless Chicken Cuts, Arbitration under Article 21.3(c) of the Understanding on Rules and Procedures Governing the Settlement of Disputes, WT/DS286/15, 20 February 2006 (hereinafter EC–Chicken Cuts).
5 WTO Legal Texts, supra note 1, at 368.
7 The first two issues could also be relevant in Article 21.3(c) proceedings triggered by developed country Members. However, the analysis of this article is restricted to the impact that the different views of the awards in respect to these issues has over developing country complainants in such proceedings.
9 EC–Chicken Cuts, supra note 4, para. 79.
11 It is important to mention that in EC–Chicken Cuts the European Communities adduced proofs of the relevant standard practice, so the burden would be on the implementing Member to demonstrate the existence of the practice.
12 See US–Gambling, supra note 2, para. 44.
14 See US–Gambling, supra note 2, para. 43.
15 See EC–Export Subsidies on Sugar, supra note 3, para. 69.
16 ibid.
17 See EC–Chicken Cuts, supra note 4, para. 51.
18 The European Communities argued that they required a ruling of another international body, the World Customs Organization, as a step to implementing the adopted panel and AB reports, which made implementation more cumbersome. See ibid. para. 7.
19 ibid. para. 52.
20 ibid.
22 This might not always be the case when a developing country complainant triggers Article 21.3(c) proceedings. More discussion on this issue is provided below in Section 2.
23 (Footnote in the original) Article 21.1 stipulates that ‘[p]rompt compliance with recommendations or rulings of the DSB is essential in order to ensure effective resolution of disputes to the benefit of all Members'.
24 (Footnote in the original) Paragraphs 7 and 8 of Article 21 provide as follows:
- 7.
7. If the matter is one which has been raised by a developing country Member, the DSB shall consider what further action it might take which would be appropriate to the circumstances.
- 8
8 If the case is one brought by a developing country Member, in considering what appropriate action might be taken, the DSB shall take into account not only the trade coverage of measures complained of, but also their impact on the economy of developing country Members concerned.
25 US–Gambling, supra note 2, para. 61. The arbitrator in US–Gambling did not go further because, as will be seen below in this section, he considered that Antigua had not met the burden of proof provided for in Article 21.2.
26 (Footnote omitted).
27 EC–Export Subsidies on Sugar, supra note 3, para. 99 (footnotes omitted).
28 See US–Gambling, supra note 2, para. 35.
29 See this section above.
30 See US–Gambling, supra note 2, para. 62.
31 Brazil demonstrated that its sugar industry accounted for more than 25% of it agribusiness gross domestic product and that in 1997 direct and indirect employment included nearly 1,400,000 people, mostly located in rural areas (see EC–Export Subsidies on Sugar, supra note 3, para. 100). Likewise, Thailand adduced evidence showing that most of the labour force working in the sugar sector had income lower than the country's average. Both countries demonstrated that the European subsidies had a detrimental effect on prices in export markets (see ibid.).
32 See ibid. para. 101.
33 It is important to highlight that the applicability of Article 21.2 in Article 21.3(c) proceedings in which developing countries are the implementing Member had been recognized before by the arbitrator in Indonesia – Certain Measures Affecting the Automobile Industry. See Award of the Arbitrator, Indonesia – Certain Measures Affecting the Automobile Industry Arbitration under Article 21.3(c) of the Understanding on Rules and Procedures Governing the Settlement of Disputes, WT/DS54/15, WT/DS55/14, WT/DS59/13, WT/DS64/12, 7 December 1998, paras. 22, 24 (hereinafter Indonesia–Autos). See text accompanying infra note 52 for the arbitrator's application of Article 21.2.
34 See EC–Chicken Cuts, supra note 4, para. 82.
35 The utility of the EC–Chicken Cuts award, from developing country Members' perspective, is that it sets a lower degree of deference to the selection of means deployed for implementation. Developing countries could argue, and arbitrators recognize, that a similar lower level of deference may also be present in Article 21.3(c) proceedings triggered by them when the developed respondent Members choose means of implementation that take longer for compliance than others available. Section 4 will illustrate how arbitrators, developing country complainant Members, and developed country respondent Members may take into account these two findings of EC–Export Subsidies on Sugar and EC–Chicken Cuts in Article 21.3(c) proceedings.
36 See EC–Export Subsidies on Sugar, supra note 3, para. 106.
37 This could also be so from the developed country respondent Members' viewpoint.
38 It is important to recall that US–Gambling and EC–Export Subsidies on Sugar have determined that Article 21.2 of the DSU is a burden-of-proof provision, in the sense that developing country complainants must adduce evidence regarding not only those interests affected by the respondent Member's inconsistent measures, but also the causality between the measures and the adverse consequences on the respective interests (See US–Gambling, supra note 2, para. 62, and EC–Export Subsidies on Sugar, supra note 3, para. 101). None of the awards provided specific justification for reading Article 21.2 as a burden-of-proof provision. This article draws on such a categorization of this precept.
39 Article 31 of the Vienna Convention on the Law of Treaties provides in pertinent part:
- ‘1.
‘1. A treaty shall be interpreted in good faith in accordance with the ordinary meaning to be given to the terms of the treaty in their context and in the light of its subject and purpose.
- 2.
2. The context for the purpose of the interpretation of a treaty shall comprise … the text, including its preamble and annexes …’
40 See Appellate Body Report, United States – Countervailing Duties on Certain Corrosion-Resistant Carbon Steel Flat Products from Germany, WT/DS213/AB/R, 28 November 2002, para. 64 (hereinafter US–Carbon Steel AB Report).
41 See ibid. para. 70.
42 See ibid. para. 73.
43 The arbitrator in Indonesia–Autos highlighted this situation regarding the application of Article 21.2 when developing country members are respondents in Article 21.3(c) proceedings and have invoked the former provision. See Indonesia–Autos, supra note 33, para. 51.
44 See US–Gambling, supra note 2, para. 61. The arbitrator also stated that Article 21.8 could also be useful to perform this task. However, this paper does not explore this suggestion.
45 Article 21.3(c) orders arbitrators to calculate the reasonable period of time ‘depending upon the particular circumstances’, and Article 21.7 allows the DSB to adopt measures ‘appropriate to the circumstances’.
46 The Oxford English Dictionary, Second Edition. 1989.
47 It is worth mentioning that the contextual role that Article 21.7 plays for arbitrators is to guide them in how to use the existing prerogatives conferred upon them by Article 21.3(c) in order to apply Article 21.2. This is not to suggest that they have new prerogatives by virtue of the contextual interpretation of Article 21.2 in light of Article 21.7. In this sense, the context provided by the latter serves arbitrators solely as guidance on how to deploy their existing powers in the sense that arbitrators may adopt actions – totally within the scope of Article 21.3(c), as will be seen below – that they do not usually use when the complaining Member is not a developing country.This is a fundamental reason to justify why the fact that Article 21.7 refers to the Dispute Settlement Body and not to Article 21.3(c) arbitrators does not prevent them from making use of the former provision as context to find out how to apply Article 21.2 when invoked by developing country complainants in Article 21.3(c) proceedings.
48 With or without the contextual use of Article 21.7, arbitrators would virtually have to adopt actions they do not usually take when considering the developing country Member's affected interests as part of the circumstances relevant to the calculation of the reasonable period of time to implement the recommendations of the DSB. Generally speaking, arbitrators discharge their duties by assessing the circumstances in the respondent Member only in order to fix the reasonable period of implementation (see US–Gambling, supra note 2, para. 35). If arbitrators are to apply Article 21.2, they have to look also at the developing country complainant's affected interest, which is in itself an action they do not usually take, and which may require other actions of this nature. Despite the fact that, materially, Article 21.3(c) arbitrators would have to adopt actions additional to those they normally adopt, the contextual interpretation of Article 21.2 in light of Article 21.7 still serves a purpose of guiding arbitrators in seeing the former precept as an operative and not a hortatory provision, by looking at what the DSB might do in a similar situation. Another important value of the contextual interpretation is that it offers arbitrators a persuasive argument on which to justify the adoption of these additional measures, in the sense that they are doing generally – not specifically – what the DSB is allowed to in a comparable position: to take actions additional to those normally performed.
49 This is without saying, as will be seen below, that the contextual interpretation of Article 21.2 and 21.7 by Article 21.3(c) arbitrators in proceedings initiated by developing country complainants always leads to swifter implementation by developed country respondent Members. More on this in Subsection 3.2 below.
50 Article 3.3 provides:
‘The prompt settlement of situations in which a Member considers that any benefits accruing to it directly or indirectly under the covered agreements are being impaired by measures taken by another Member is essential to the effective functioning of the WTO and the maintenance of a proper balance between the rights and obligations of Members’ (WTO Legal Texts, supra note 1, at 355).
Although the DSU does not contain a Preamble setting its object and purpose, this absence does not prevent interpreters from unravelling such object and purpose from the direct provisions of the DSU. In effect, the AB has done so with regard to the object and purpose of the Agreement on Subsidies and Countervailing Measures, which also lacks a Preamble. See US – Carbon Steel AB Report, supra note 40, para. 73.
51 Although the objectives set in the Preamble of the WTO Agreement seem to be a remote source of support for the interpretation of specific provisions of the DSU, it is important to bear in mind that the AB has assigned to the Preamble of the WTO Agreement a certain degree of usefulness in assisting in the interpretation of the covered agreements. In effect, the AB said in United States – Import Prohibition of Certain Shrimp and Shrimp Products that ‘As this preambular language reflects the intentions of negotiators of the WTO Agreement, we believe it must add colour, texture and shading to our interpretation of the agreements annexed to the WTO Agreement, …’ (Appellate Body Report, United States–Import Prohibition of Certain Shrimp and Shrimp Products WT/DS58/AB/R, 12 October 1998, para. 153). It is also worth mentioning that the AB said in European Communities – Conditions for the Granting of Tariff Preferences to Developing Countries that the ‘Preamble to the WTO Agreement … informs all the covered agreements’ (Appellate Body Report, European Communities–Conditions for the Granting of Tariff Preferences to Developing Countries, WT/DS246/AB/R, 7 April 2004, para. 161). Also important is that the AB specifically invoked the above-mentioned recital referring to developing countries in support of its interpretation of the provision at issue, the Enabling Clause (see ibid. paras. 92, 161, 168, and 169).
52 Indonesia–Autos, supra note 33, paras. 22, 24 (footnotes omitted).
53 I restrict this analysis to the application of Article 21.2 in Article 21.3(c) proceedings initiated by developing country Members and leave open the question whether the analysis is relevant to proceedings of this nature triggered by developed country complainants.
54 Appellate Body Report, Turkey – Restrictions on Imports of Textile and Clothing Products, WT/DS34/AB/R, 22 October 1999, para. 57.
55 To recall, Article 21.2 says that ‘particular attention should be paid to matters affecting the interests of developing country Members with respect to measures which have been subject to dispute settlement’. Although the AB has exceptionally declared that the word ‘should’ may have a mandatory character derived from the context provided by other provisions, there is no contextual provision in the DSU that would allow a similar result for Article 21.2. See WTO Appellate Body Report, Canada – Measures Affecting the Export of Civilian Aircraft, WT/DS70/AB/R, 2 August 1999, para. 187, for the Members' obligations to provide information requested by panels, even though Article 13.1 sets forth that ‘a Member should respond promptly and fully to any request by a panel for such information as the panel considers necessary and appropriate’ (italics added); and WTO Appellate Body Report, Mexico – Tax Measures on Soft Drinks and Other Beverages, WT/DS308/AB/R, 6 March 2006, para. 51, concerning the panel's obligation to make always an objective evaluation of the matter before it, despite that Article 11 consecrates that ‘a panel should make an objective assessment’ of such matter (italics added).
56 Oxford English Dictionary, Second Edition. 1989.
57 This is not to say that arbitrators have to consider only the developing country complainant's situation. In fact, if arbitrators use a benchmark of time of implementation and reduce it to take into account the developing country's affected interests, they are estimating the reasonable period of time to implement on the basis of the whole set of circumstances. In effect, the calculation of the benchmark implies that arbitrators take into account developed country respondent's circumstances, and its reduction signifies that they have taken into consideration the developing country's situation also.
58 Obviously, the justification for the determination of the reduction of time and for its quantification would not go as far as to require Article 21.3(c) arbitrators to demonstrate that the reduction of time is one that will make the implementation of the recommendations of the DSB by the respondent Member the solution to the problems of the developing country complainant's interests. It is much less, and it should be gauged on a case-by-case basis.
59 WTO Legal Text, supra note 1, at 364.
60 The Oxford English Dictionary, Second Edition. 1989.
61 Sir Ian Sinclair, The Vienna Convention on the Law of Treaties, Second Edition, Manchester: Manchester University Press, 1984, at 127.
62 WTO Legal Texts, supra note 1, at 362.
63 See Award of the Arbitrators, European Communities–Regime for the Importation, Sale and Distribution of Bananas. Recourse to Arbitration by the European Communities under Article 22.6 of the DSU, WT/DS27/ARB/ECU, 20 March 2000, para. 20 (hereinafter EC–Bananas III (Ecuador) (Article 22.6 – EC)
64 I am mindful that the AB has held that, in the context of Article III.4, the same words may have a different meaning depending on their context, object and purpose (See AB Report, European Communities – Measures Affecting Asbestos and Asbestos Containing Products, WT/DS135/AB/R, 12 March 2001, paras. 88, 9). However, I do not think that this situation occurs regarding the term ‘dispute settlement procedures’.
65 WTO Legal Texts, supra note 1, at 356 (italics added).
66 In Mexico – Antidumping Investigation of High Fructose Corn Syrup (HFCS) from the United States – Recourse to Article 21.5 of the DSU by the United States the European Communities, acting as a third party, were of the view that the term ‘dispute settlement proceedings’ meant that, to resort to Article 21.5 compliance panels, complainant Members had to first ask for consultations with the implementing Member (see Appellate Body Report, Mexico – Antidumping Investigation of High Fructose Corn Syrup (HFCS) from the United States – Recourse to Article 21.5 of the DSU by the United States, WT/DS132/AB/RW, adopted 21 November 2001, paras. 30–33) (hereinafter Mexico – Corn Syrup (Article 21.5 – US)). The AB pointed out that consultations could be held, but they could also be waived by implementing Members by their not objecting to such lack of consultations in a timely manner before Article 21.5 panels. Thus, these panels can be validly established without the parties having to resort to consultations as a pre-condition (see ibid. paras. 63, 4). The inference that can be made from this finding is that the term ‘dispute settlement proceedings’ in Article 21.5 does not refer to Article 21.5 proceedings only, but to others, specifically consultations, which can be carried out or waived (see ibid.).
67 One still must be cautious in not immediately jumping to the conclusion that any reference to panels in the DSU always has a broad meaning and that, therefore, all provisions alluding to them can be extended to other WTO stages of dispute settlement without any further qualification. This is not the proposition advanced here, because every particular extension must be supported itself on the DSU.
68 Appendix 1 of the DSU includes the DSU as one of the covered agreements. See WTO Legal Texts, supra note 1, at 376.
69 ibid. at 363.
70 Appellate Body Report, Mexico–Corn Syrup (Article 21.5 – US), supra note 66, para. 107.
71 The duty to provide reasons for how arbitrators applied Article 21.2 when it was raised by developing country Members has additional grounds in the special position arbitrators enjoy by the fact that their award is not subject to any appeal and is binding on the parties. Other WTO adjudicators have taken note of the lack of appeal of their decisions in order to provide ample justifications thereof. In effect, the Article 22.6 arbitrators in EC–Bananas III said that ‘given that our own decision cannot be appealed, we consider it imperative to achieve the greatest degree of clarity possible with a view to avoiding future disagreements between the parties’ EC–Bananas III (Ecuador)(Article 22.6 – EC), supra note 63, para. 2.12.
72 This paper limits the analysis exclusively to the applicability of Article 12.11 to Article 21.3(c) proceedings in which developing country complainants have raised Article 21.2. The paper does not deal with the broad proposition that Article 12.11 can be extended over other phases of the disputes settlement in which Article 21.2 may be invoked.
73 A final element is needed to complete this analysis: the use of extraordinary means by the developed country respondent to comply with the recommendations of the DSB. It was seen that Article 21.3(c) jurisprudence is well established in not requiring implementing Members to use such exceptional tools to comply with adopted panel or AB reports. Nothing in Article 21.2 would ground a change in this direction. On the other hand, the interpretation put forward here, if followed by Article 21.3(c) arbitrators, would allow them to properly estimate the reasonable period of time of implementation on the sole basis of the developed country respondent's ordinary means, while at the same time responding properly to the developing country complainant's need for prompt compliance.
74 In fact, the arbitrator in EC–Exports Subsidies on Sugar applied Article 21.2 for the benefit of Brazil and Thailand in a dispute in which Australia, a developed country, was also a complainant. See EC–Exports Subsidies on Sugar, supra note 3, Part II.B.
75 See US–Gambling, supra note 2, para. 31.
76 This is not to say that developed country respondents have the duty to do so. The incentive to act in this fashion, though, is strategic. If they suggest a period of implementation that incorporates a specific reduction to the benchmark of the time their standard practice takes to adopt the measures to comply with the recommendations and rulings of the DSB, developed country respondents become the agenda-setters of the debate regarding this issue.