Monday, January 28, 2013

Dispute settlement and developing countries - How does one engage?

WTO disputes have been a recurring theme of this blog. The dispute settlement mechanism is considered as the crown jewel of the WTO system bringing credibility, predictability and certainty to the system with focus on a rule-based resolution of disputes rather the a power-based system.

A dispute in the WTO can only be brought forth by a member government. The State is the only party before a dispute resolution process even though the interests of private businesses are impacted. For example, in the case of the Airbus and Boeing case at the WTO though the affected parties are large, private aircraft manufacturers, the parties to the dispute are the European Union and the U.S.

Disputes at the WTO require sufficient preparation, competence and thorough groundwork before it is launched. An ICTSD paper titled "Where do WTO cases come from?" highlights the importance of preparation and assessment of cases in the context of the complexity and sensitivity of the issue involved.
"In short, undertaking a WTO dispute requires a significant commitment of nearly full time personnel, which can be a real challenge for WTO Member governments. Some governments, such as the US and EU participate in so many disputes that they can rationally hire a very large staff of in-house WTO litigators, but even these two countries struggle when local industry does not contribute legal support for a case. A comprehensive and detailed assessment of a case done early on in the process somewhat alleviates the work during the very busy litigation proceedings."
The paper notes that loss or impact on market access is one of the primary reasons for WTO litigation by member countries, usually on behalf of their private business interests. WTO litigation is all about preparation and competence involved of experts preparing the case.Many countries engage outside counsel for their cases. Private industry is also expected to contribute to the expenses of the case. Brazil, amongst developing countries, has been at the forefront of engaging with the dispute settlement system to further its national agenda.
"An example of a mechanism in a developing country that is in part similar to USTR’s cooperation with outside counsel but very different with respect to the funding and accessibility of WTO litigation is Brazil. A small office of highly sophisticated WTO experts in the Foreign Ministry, many with experience in Brazil’s mission to the WTO in Geneva, manages the cases. However, cases are usually brought only if the local industry agrees to pay for outside counsel to help.The outside counsel may provide research and submission drafting support but the office in Itamaraty remains in charge. The difference between both models of litigation management became clearly visible in the Brazilian Cotton Case, where unlike the Brazilian counterpart, the US cotton industry did not pay for a large legal support effort. Consequently, USTR was outnumbered by the Brazilian officials as well as US lawyers and US academics all working on the side of Brazil.The US might have lost the case even with more resources, the example underlines the ability of some developing countries to use the WTO dispute settlement process on an equal (or better) footing with larger WTO Members."
The paper discusses the considerations involved in a legal and economic assessment of WTO disputes before they are initiated. It gives a detailed account of the need for expertise, assessment and recommends how disputes must be handled by member countries, especially developing countries, at the dispute settlement process at the WTO. It stresses on pre-litigation legal, economic and strategic assessment of disputes before initiation of a trade dispute at the WTO. The importance of creating in-house WTO expertise is often cited as a pre-requisite to a succesful engagement with the multilateral trading system. The paper, inter alia recommends:
"Create in-house WTO expertise. Most, although not all, developing countries have a mission in Geneva with people assigned to the WTO. Monitoring the daily functioning of the WTO, with its numerous committee meetings, as well as observing litigation as a third party, should be part of the mission’s responsibility. And equally important, delegates who have served in those roles in Geneva should remain involved with WTO issues when they are posted back home. Often, there are bureaucratic obstacles – such as if the mission is part of the foreign ministry – to keeping people on WTO assignments, but a conscious attempt should be made to track people who have served in the mission to the WTO and recapture them from time to time in their career so the expertise is not lost. In addition, many developing countries have students in programs such as the World Trade Institute at the University of Berne or at universities such as Georgetown University Law Center, Columbia Law, National University of Singapore, Cambridge and Geneva and many others. Many of those students would be very valuable as interns in a country’s mission to the WTO in Geneva, or working in related offices in the capitols. Efforts could be made to seek those people out, or at least welcome them when they apply."
How many developing and underdeveloped countries can undertake this exercise of competency building? While facing WTO disputes against developed countries one is confronted with highly qualified legal experts from law firms with years of experience. How does a developing country counter this? Countries increasingly rely on the same set of international law firms to fight their cases. This is one of the dealings with the issue. Another way is to systematically develop internal expertise, engage legal academics within the country and ensure that a local talent pool is nurtured and developed with sufficient expertise to assist the government in WTO cases.This would require long term strategic planning and involvement of a large number of stakeholders. It is, perhaps, the only way to engage with the multilateral legal system.

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