Monday, August 13, 2012

Developing countries and Dispute Settlement at the WTO - Some practical steps

The ICTSD has brought out brief informational notes on various aspects of the Dispute Settlement mechanism. This note that summarizes the book "Dispute Settlement at the WTO: The Developing Country Experience" by Gregory Shaffer and Ricardo Melendez-Ortiz (ed.) deals with the developing countries experience in handling the DSU. 

Quoting from examples of Thailand, Brazil and China, the note gives implementable suggestions as to how a country can develop its legal capacity to engage with the multilateral trading system.
"The introduction of the DSU has significantly altered the way in which international trade disputes are processed and resolved. This has created both opportunities and challenges for developing countries. While enjoying a more balanced playing field, these countries face difficulties in terms of resources and capacity to effectively utilise the system. The experiences of the nine WTO members examined in ICTSD’s studies show that countries at alternative levels of development and facing various resource constraints can develop different specific strategies to resolve economic disputes. However, the studies also reveal a common approach that should be taken into consideration in order to make better use of the system. This includes development of a strong institutional structure with one coordinating focal point and a strategic, comprehensive approach to legal capacity building for WTO litigation or even international economic law disputes in general.
With respect to the former, ICTSD’s legal capacity work has shown that any successful use of WTO dispute settlement procedures inherently requires strategic inter-agency coordination as well as public-private partnerships. Interdepartmental cooperation may go beyond the ministry-ministry or capital-mission interaction and extend to coordination among public agencies of different countries with shared economic interests.
Strengthening public-private partnerships is also crucial for a complete institutional structure. Such a synchronisation process may take place under the lead of a dedicated unit specialised in dispute settlement. Such a body would operate as a focal point for the triangle of government agencies in the capital, in Geneva-based missions and in the private sector. Sufficient coordination as such also facilitates the political process when the government is exposed to a clash of interests among different agencies and departments and/or different industries or public and private interests.
With regard to legal capacity building, it should be noted that no perfect system for managing economic disputes can be created overnight. In the beginning, developing countries exposed to disputes can rely on the support of ACWL and other counsel. Working with outside counsels and experts also facilitates learning. However, it is advisable to develop a long-term plan to build up internal legal staff. This requires a long-term process based on learning-by-doing experiences. In this regard, training and internship programs to educate government officials as well as third party participation are crucial. Such efforts make it possible to develop a trade law network that includes governmental actors, industry as well as academia, media and civil society."
The following need to be put in place:

1. A clear vision and strategy of how to engage with the multilateral trading system to further one's developmental agenda and national interests in consonance with international obligations.

2. Dispute settlement proceedings is part of this larger engagement with the multilateral trading system.

3. Using the dispute settlement system must not be viewed as a negative factor that might necessarily hurt international relations. The EU and US have been having one of the longest trade disputes (Airbus-Boeing) but neither have their trade relations or political relations been effected as a result. Neither do they view it as a trade war. It must be viewed as a legitimate use of one's rights under the dispute settlement system of the WTO as long as it is not used frivolously or to pressurize a trading partner.

4. The recognition that a multi-stakeholder team of experts is required to engage on behalf of a country's team at the dispute settlement at the WTO is essential. The multi-disciplinarity and complexity of the issues at hand must ensure that it is not viewed in silos. Trade policy experts, economists, trade lawyers, academics, private business interests, data analyists as well as subject matter specialists should form an integral part of this team. There should be a right mix of specialists and generalists who can combine specialized knowledge with general administrative realities. 

5. As mentioned in the note, public-private partnerships are essential for success in dispute settlement proceedings. Most of trade data, trade reality is with the people who deal with the business. Since the WTO allows only the government to be represented, it is essential that opinions and interests of domestic business interests are taken into account. At the same time, national interest at times may not be in conformity with certain business interests in which case the government would have to take a larger call.

6. Finally, there has to be a recognition that multilateral trading rules are going to become significant not only in the arena of trade but in other areas of domestic policy making too. Thus, it is not relevant only for a Ministry or agency dealing with it but requires immense interministerial co-ordination. Developing an overall strategy to engage with the multilateral trading system must be a national priority and not something that is distant, international and inconsequential.

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