Developing countries and strategizing at the WTO

I have often written about developing countries participation at the WTO both in terms of negotiations and dispute settlement. An example that is often heralded as a beacon of hope for the developing and Least Developed Countries in multilateral trade participation is Brazil. Brazil's successful participation and strategy at the WTO has been a subject of extensive research over the years.

Came across this interesting paper by Gregory Shaffer, Michelle Ratton Sanchez and Barbara Rosenberg that summarizes the strategy that Brazil has adopted in engaging successfully with the multilateral trading system. It summarizes the strategy thus:

First, we argue that international trade law and judicialization have mattered in Brazil, unleashing a competition for expertise and helping to transform the government’s relations with business and civil society regarding trade policy. 

Second, and related to this point, we contend that being a defendant in WTO cases can help catalyze these changes, giving rise to mechanisms of public-private coordination to defend a country’s interests at the international level.  

Third, we find that these developments have not represented a weakening of the state, but rather the strengthening of the state’s ability to engage at the international level through a diffusion of international trade law and policy expertise. 

 Fourth, we observe that these processes reflect a growth of pluralism for trade policymaking within Brazil, as the government has been pressed to become more transparent and open to dialogue. 

Fifth, we maintain that these processes are not automatic, but are a function of domestic as well as international factors. We highlight the roles of Brazil’s professional, merit-based Ministry of Foreign Affairs, the development of Brazilian career paths in the international trade field, Brazil’s private sector that has been able to overcome collective action problems to engage with the government, and a general shift in orientation in Brazil’s development strategies.

 Sixth, we find that although the example of Brazil offers some hope to other developing countries, these countries generally face greater challenges and will need to develop their own strategies in light of their own contexts.  

Seventh, we conclude regarding the need to take into account the reciprocal interaction of the domestic and international spheres to understand the operation of international legal orders."

Are there lessons for other developing countries to develop internal institutional capacities to engage with the multilateral trading system? Another more recent study on the participation of Latin American countries participation in the WTO highlighted the importance of private sector involvement and the need for creative solutions to engage with the rule based system. 

Developing countries must engage proactively in the system be it through negotiation, dispute settlement, participation in the  proceedings of various Committees at the WTO or private sector engagement. The strategy should be to actively engage withthe rules rather tan shy away from it. However each country would have to develop its own creative, need based strategy depending on its own requirements. Though there is no one-size-fits-all strategy, lessons learnt in Brazil's engagement would surely help other developing countries. A BRICS strategy perhaps?

UNCTAD and selection of it's next chief - some issues

While all eyes are on the selection of the next WTO DG (the press conferences at the WTO have been fascinating to me), my attention was brought on the selection of the next Secretary General of the UNCTAD considering the institutional issues that have arisen in UNCTAD in recent times. The Globalization and Development blog raises the issue here. 

In an open letter to the Secretary General of the UN, leading academics and scholars have called upon certain criteria to be followed for selection of the next Secretary General of UNCTAD. 

"We very strongly urge that the next Secretary-General of UNCTAD, in addition to all the necessary experience, knowledge and management abilities, should have in particular the capacity and courage for independent thought. It is this characteristic that has been the distinguishing factor among the eminent persons who have held the post over nearly 50 years of UNCTAD’s existence. 

A demonstrated ability to provide strong and independent leadership to global analysis from a development perspective and to promote fresh thinking on trade and development issues is needed today more than ever. The world clamours for innovative economic thinking that charts a sustainable way out of the current crisis and that contributes to development and poverty reduction. We would regard the capacity to stimulate such thinking and to articulate the resulting policy approaches in the relevant forums as the single most important consideration when sifting among possible candidates in the requisite consultations with member States. The growing weight of developing countries in global matters requires an intellectually outstanding personality as the new leader of UNCTAD."

Interesting lessons for the the WTO DG selection process? Any lessons that one can learn from the points raised in the letter? the focus of most of the candidates for the WTO DG stressed on reworking the Doha round - some would recommend an innovative approach here too. A lot to watch for in the coming months!

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.

China, national interest and the WTO

China's participation in the WTO is often a subject matter of intense debate and analysis. Experts have argued that since its accession to the WTO in 2001 China has benefitted immensely from its membership of the multilateral intruding institution and has seen unprecedented growth in trade. Critics have often argued that China takes advantage of the multilateral system for its benefit and continues to violate trade rules by subsidizing its export industry and "manipulating" its currency. "Made in China" products seem to permeate countries and is a source of tension.I have blogged about China and its participation in the multilateral system here and here.

This piece in the National Interest highlighted China's growth in the WTO system and why it is important for China to stay within the multilateral system.

"Now that China has arrived as a global trading powerhouse, it must take on more responsibility for maintaining the system from which it benefits.First, it needs to play by the rules. The current international order was created by Western powers, but China has profited from these rules more than any other country and thus should abide by them. 

Second, China can’t afford to play the “developing country” card forever. It’s true that China’s GDP per capita is only around $5,500 and that it is still working to lift millions of people out of poverty. But at the same time, some of its economic practices are proving to be counterproductive and are stoking protectionist impulses abroad, a dynamic that is certainly not in China’s own best interests. 

Finally, as a rising power, there will be an increasing number of global challenges to which China will be expected to contribute resources. Setting aside phrases such as “non-interference” and “responsible stakeholder” for a minute, if China wants to build a “new type of great power relationship” with the United States, then it must shoulder more great-power burdens."

Jayati Ghosh and C.P.Chandrasekhar in this piece in the Hindu Business Line have differentiated the growth of China with other developing countries (especially other BRICS countries) and highlighted the growth story of China in world trade. It is clear that in terms of share in world trade China has clearly benefitted from its participation.

(The charts above all present data calculated from the online database of the WTO, http://stat.wto.org/Home/WSDBHome.aspx?Language=E)

Are there lessons to be learnt from China's involvement in the multilateral trading system? Is China charting its own course within the framework of trade rules that other developing countries can learn from? Is there a national strategy to engage with the multilateral system in order to ensure that national interest is protected?

Africa's WTO Chief?

I have followed the race for the next WTO chief in this blog regularly here and here based on press reports. While the race is heating up, unexpected runners are coming into the fray. The WTO website announced that Ghana, on 17 December 2012, nominated Mr Alan John Kwadwo Kyerematen for the post of WTO Director-General.Jordan had also planned to put up its candidate.

Reflecting on the concerns of less developed countries interests at the WTO, Ghana's candidate got support from some press reports here:

"From the mission, functions and principles of WTO highlighted above, it is clear in theory that the WTO is committed to serving the collective interests of all member states. In practice however, the role of WTO as a conduit for improved and democratic international trade has been very controversial as it seems to serve the interests of predominantly the major nations and multinational enterprises. It continuously remains governed by world superpowers to the detriment of the voiceless economies. Can we expect a more responsive, representative and sensitive global trade governance with the election of yet another illustrious son of Africa – Mr. Alan Kwadwo Kyerematen - as the Director General of the World Trade Organization? 

In order that, the World Trade Organization (WTO) remains focused on its guiding principles, the need to reduce the influence of superpowers is paramount. There should be a redefined commitment to encourage sustained economic development and transparency. Not until this is done, there is little the developing world can do to compete favorably with the advanced world. Consequently, the effectiveness of WTO would be scarcely felt. In the events where the WTO does not give a listening ear to the concerns of the less-privileged nations, the dream and desire to bridge the inequality gap between the north and the south will everlastingly be a hallucination. Taking constructive actions to respect the views of the marginalized in the trade policy-making process is the surest way to address the anti-democratic and non-transparent negotiating procedures characterized by the World Trade Organization (WTO)."

Some questions:

1. Will a Director General (DG) from a developing country or least developed world have a bearing on the interests of these countries at the WTO? Is it a matter of representation only or more substantive efforts can be made to make the WTO more concerned about developing country interests?

2. Will dispute settlement mechanism processes and outcomes be impacted by the nationality of the DG? In a rule-based system, how much impact does a DG from a developing world have on charting the course of disputes?

3. Will the focus of negotiation change because of the concerns of a DG from the south? If the WTO is a member driven organization then to what extent can the Secretariat and DG influence the course the WTO takes?

4. Does the WTO actually favor the interests of the developed economies? Is it as simple as that?



The previous DGs were from UK (Eric Wyndham White), Switzerland (Olivier Long and Arthur Dunkel), ireland (Peter Sutherland), Italy (Renato Ruggiero), New Zealand (Mike Moore), Thailand (Supachai Panitchpakdi) and France (Pascal Lamy).

Jordan, Ghana, New Zealand or another surprise .. whose next?

Update: Costa Rica, on 19 December 2012, nominated Minister Anabel González for the post of WTO Director-General

10 things WTO can do

The WTO website has an interesting booklet on what the WTO can do. It is called "10 Things the WTO Can do". And the 10 Things are:

1.The WTO can ... cut living costs and raise living standards 

2. The WTO can ... settle disputes and reduce trade tensions
3.The WTO can ... stimulate economic growth and employment
4.The WTO can ... cut the cost of doing business internationally
5.The WTO can ... encourage good governance
6.The WTO can ... help countries develop
7.The WTO can ... give the weak a stronger voice
8.The WTO can ... support the environment and health
9.The WTO can ... contribute to peace and stability
10.The WTO can ... be effective without hitting the headlines

I found the point about settling disputes particularly interesting.

"The fact that the disputes are based on WTO agreements means that there is a clear basis for judging who is right or wrong. Once the judgement has been made, the agreements provide the focus for any further actions that need to be taken.The increasing number of disputes brought to the WTO does not reflect increasing tension in the world. Rather, it reflects the closer economic ties throughout the world, the WTO’s expanding membership and the fact that countries have faith in the system to solve their differences.

Sometimes the exchanges between the countries in conflict can be acrimonious, but they always aim to conform to the agreements and commitments that they themselves negotiated." 

The increasing number of disputes brought to the WTO does not reflect increasing tension in the world. Rather, it reflects the closer economic ties throughout the world, the WTO’s expanding membership and the fact that countries have faith in the system to solve their differences. 

Sometimes the exchanges between the countries in conflict can be acrimonious, but they always aim to conform to the agreements and commitments that they themselves negotiated."

It also highlighted the active role played by developing countries play in the dispute settlement mechanism. These graphics indicate the level of participation:

(Sources: WTO dispute settlement data; Raúl A. Torres,“Use of the WTO Trade Dispute Settlement Mechanism by the
Latin American Countries — dispelling myths and breaking down barriers”, WTO Staff Working Paper ERSD-2012-03, February 2012.)

South south trade, protectionism and generalizations

Argentina has been charged with being increasingly protectionist with its import licensing procedures by the EU, Japan and the U.S. While this could be dubbed as a developed world vs. emerging economy dispute, Mexico joined the group complaining against Argentina at the WTO with this complaint questioning the north-south divide stereotype. How Argentina reacts to the trade onslaught will need to be watched, especially when it has taken on the EU and Spain against Spain's biofuel directive.

A World Bank study had declared Argentina as the most protectionist emerging economy with a number of import restrictive measures. Is this a north south tussle or are emerging economies equally impacted by protectionist measures by developing economies. The mexican challenge is an example of a developing economy being impacted by Argentina's (another emerging economy's) measures.

Chad P. Brown has done a detailed econometric study on trade barriers and their impact on south south trade and protectionism. In his study titled "Emerging Economies and the Emergence of South-South Protectionism" he analyzes the long run cost to emerging economies of South South protectionism i.e what impact does trade restrictive measures (like antidumping, safeguards and countervailing duties) of an emerging economy have on another emerging economy that is engaged with it? The paper asks the important question:

"First, major emerging markets have increased the scope of their imports covered by TTBs. Second, major emerging countries have a sizeable share of their total exports and exports sent to other emerging economies impacted by foreign-imposed TTBs. An important question yet to be addressed is what happens to exports when these temporary trade barriers are finally removed? To what extent do exports resume?"

The study comes to the conclusion that, barring China, emerging economies export recover sluggishly even though trade barriers are removed subsequently by other emerging economies indicating the negative impact they have on south south trade:

" Not only do more emerging economy exporters have an economically sizeable share of their exports impacted by TTBs imposed by other emerging economies, but such barriers may have effects that long outlive the duration of the imposed barrier. For even once the temporary barriers are removed, emerging economy exporters experience greater relative difficulty in resuming their exports – whether measured in volumes or in market shares – to other emerging economy trading partners."

Protectionist trends are dictated by strong domestic compulsions, primary among them being protecting one's domestic industry. It is often viewed as a part of industrial policy and as an effective tool to engage with the competition and often "unfair" onslaught of the developed economies. However, this study show that protectionism is not always the developing vs. the developed world. Emerging economies are increasingly involved in trade and any such protections measure does have an impact on their respective economies. To what extent this would influence sovereign behavior is, however, debatable since protectionist measures are dictated by strong national business sentiment. 

There is also ambiguity as to what actually constitutes protectionism at times. Do legitimate domestic policy interventions also fall under this category? For example, antidumping and safeguard measures are permitted as per WTO rules provided they satisfy the conditions set forth therein. Merely because a country is imposing antidumping duties does not make it protectionist. Similarly, a number of countries do not impose blatant trade barriers but are engaged more systemic violation of trade rules like offering subsidies and state support that violate WTO rules. The word "protectionism" is a much abused term as much as countries actually abuse it. One needs to tread cautiously on this slippery path at the same time keeping in mind the dangers of an inward looking path.

Development, WTO and a few dilemmas

Sonia Rolland's new book "Development at the WTO" seems to be a brilliant exposition of the relationship between "development" and multilateral trade rules. What roles does the developmental agenda have in the context of a rule-based trading regime? Some would argue that the WTO's role and the role of trade rules is not to address the complex issues of development. Other disagree and posit that the developmental agenda is very much, or should be, a central part of the multilateral system. The book takes us through the complexities of this debate and touches upon many pertinent issues like "policy space, developing countries interests at the WTO and "non-trade" issues like labour, environment being part of the agenda.

The Introduction, which is only accessible online (and which is what I have read), puts forth two views of development in the context of the WTO:

1. Development as an Idiosyncrasy 

2. Development as a Normative Co-constitutent

As the Introduction states:

"The first paradigm treats development as a second-order normative considera- tion that does not fundamentally displace the objective of trade liberalization as the primary mandate of the WTO. In this framework, the needs of develop- ing members arising out of their economic, social, and political constraints are dealt with on a case-by-case basis rather than at a systemic level. Exceptions and carve-outs dealing with development issues, whether in general agreements or in individual members’ schedules of commitments and accession protocols, are idiosyncratic—ad hoc solutions rather than instantiations of an overarching normative principle. 

The key feature of the idiosyncratic paradigm is the absence of a principled approach to incorporating development at the WTO. Of course, that does not mean that no development issues will be included in WTO rules, but simply that there will be no systematic or coherent approach, no overarching legal obligation, or, at best, only a very loose and soft one, such as the statements in the preamble to the Marrakesh Agreement."

Explaining the Normative Co-constituent concept, she states:

"In this paradigm, development constraints are balanced against the trade liber- alization objective of the WTO. Unlike the more pragmatic underpinning of the idiosyncratic model, this paradigm has an explicit normative underpinning. As a result, the need for derogations, safeguards, and escape clauses should be reduced because the mainstream rules are designed to account for development concerns. The issue then is how the WTO legal architecture would be redrawn if develop- ment were to be on par with trade liberalization."

Which stand should a developing country take in terms of addressing development at the WTO? IS there a unified stand of all developing countries? Would the stand of China, India and Brazil be the same at the negotiating table? What impact would consideration of "development" as a source of differential treatment have on the "formal equality" that WTO rules professes? Should countries with differing levels of development be treated differently at the WTO, much more than the SDT provisions presently available? Should unequals be treated unequally? Treating countries that are on different stages of their development path equally, some would say, is a very discriminatory and unjust treatment. How does this fit into the "same rules for all - big or small" paradigm? 

This Book sure does offer some very interesting insights into the complex relationship between trade, development and multilateral rules - dilemmas to be addressed.

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.

Developing countries and compliance in WTO disputes - Some thoughts

Normally, one tends to focus on WTO disputes in terms of the issues they raise, developed -developing country relations as well as the political economy of the dispute. Seldom is detailed analysis done after the Panel or Appellate Body provide their decisions. What happens to compliance? How are the decisions implemented? What is the efficacy of the implementation of WTO disputes and what bearing does it have on implementation of international law? What special lessons does the study of compliance in WTO disputes have for developed-developing country dynamics at the WTO?

Sonia Rolland has a brilliant, detailed piece on development status of members at WTO disputes and what implications it has for implementation and compliance of the decision? Does it make it easier for developing countries to ensure compliance from developed countries? Does the WTO provide for such preferential treatment? Does one view developing countries more favourably as compared to a respondent developed country in terms of the need, speed and nature of compliance?

In her article "Considering Development in the Implementation of Panel and Appellate Body reports" Sonia Rolland makes a detailed analysis of Article 21 and 22 of the DSU and the impact it has for developing countries. Article 21 of the DSU, as suggested by the author has three specific clauses that pertains to a "development" preference:

"The Article includes three clauses regarding developing members: 

-Article 21.2 specifies that “[p]articular attention should be paid to matters affecting the interests of developing country Members with respect to measures which have been subject to dispute settlement”

- Article 21.7 provides that “[i]f the matter is one which has been raised by a developing country Member, the DSB shall consider what further action itmight take which would be appropriate to the circumstances” and

- Article 21.8 states that “[i]f 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.”

The article, however, after making a detailed analysis of Panel and Appellate Body decisions comes to the conclusion that "development" considerations are not paramount in deciding on implementation issues and though there are guiding principles in the provisions the Panels and Appellate Bodies have been rather "neutral" in their interpretation. Discussing the proposals of various developing countries during both the Uruguay and Doha rounds for a re-look at compliance of WTO decisions and developing country needs, the author raises pertinent questions about developing countries and their participation at DSM:

"The effect of the shift to a rule-based system is generally thought to have leveled the playing field for weaker members in terms of the accessibility of adjudication and their ability to win disputes. While it has been assumed that the reinforced procedures of the DSU would benefit developing country litigants, both the qualitative and quantitative data regarding developing country participation (and even more so the virtual absence of LDC participation as a main party in disputes)132 suggest a more complex story. With respect to implementation, the rule-based framework’s impact on developing members’ ability to gain compliance from more powerful members is equivocal. While some large developing members have been successful at obtaining compliance from powerful members (see Brazil’s success against the US in the Upland Cotton dispute), smaller developing members remain at a serious disadvantage. With some exceptions, such as Antigua in the Gambling dispute, weaker members have not often taken on more powerful members (developed or developing) in part because they realize that the retaliatory system of Article 22 may not be of much use to them.

Perhaps equally noteworthy is the virtual absence of developed country submissions on compliance procedures, both during the Uruguay Round and the Doha Round. Yet the reality of WTO disputes is that they have involved mostly developed countries–though the trend is rapidly shifting in favour of developed/developing country disputes and disputes between developing countries. In fact, trade asymmetries and the limitations they pose to effective retaliation affects small developed countries as well as developing countries.Submissions, however, generally propose to differentiate implementation recourses along the lines of the developed and developing members, rather than on macroeconomic criteria such as a ratio of the size of the economies of the country in disputes. Another approach would be to give all members access to the full range of implementation mechanisms (individual, third party and collective retaliation, for example) and to let the economic conditions of the disputants in specific cases determine which mechanism would be the most effective."

While the present report card of compliance and implementation issues vis a vis developing country concerns is not very positive, the author suggests a number of measures that could take into account the "development concern" during compliance:

"Nonetheless, a number of alternative avenues exist to reinforce the DSU’s effectiveness for developing countries with respect to compliance and retaliation, even in the absence of any textual reform. First, a more coherent and concerted practice by arbitrators, Panelists and the AB could lead to the emergence of new standards of interpretation. For instance, provisions urging members to “take into account” the developmental conditions of some members may be read as due diligence or best efforts obligations rather than be ignored altogether or treated as merely hortatory language. Second, decisions by the DSB, or WTO members acting as the General Council, could also be used to implement an interpretative framework that could be more cognizant of the needs of developing members. Third, increased resources and technical assistance could support both a shorter litigation calendar and faster compliance by developing country members. While trade asymmetries are certainly an economic problem hindering small developing countries from obtaining compliance from more powerful members, it is one that can be mitigated in part by legal and institutional intervention."

What should the theoretical framework be in the context of developing country disputes? Also "developing countries" is not a monolithic homogeneous unit. It has countries of varying trading power, influence and capacity. Also, I was trying to contextualize this article, albeit in a very preliminary manner, with recent decisions of the Panel and Appellate Body of the WTO. The Tuna case, Cloves Cigarettes case, COOL case as well as Export of raw material case all have developing countries pitted against developed countries. While the first three have U.S.as the developed country with Mexico, Indonesia and Mexico as respondents, the fourth case has China as the defendant and a developed country (United States) as the complainant. What thrust should the "developing" country context play in ensuring compliance by the respondents in this case? Compliance should increasingly reflect the rule based nature of the DSU rather than trading power or politico-economic realities of countries. Will we see innovative interpretations of "compliance" that would make the decisions ineffectual? Will the developing countries involved have the legal capacity to take on the developed country in establishing the right way of implementation? On a different note, is the developing country-developed country dichotomy irrelevant for compliance? Will we see some lessons for compliance in the way these decisions are complied  (or not complied?) with?

Developing countries and dispute settlement proceedings

A lot has been written about the role of developing countries in the WTO, especially the use of the dispute settlement mechanism. China and India are often quoted as examples of how a country actively engages with the WTO to further its national interest. However, critics of the WTO often argue that developing countries are at a disadvantage at the WTO since they do not possess the capacity to face complex dispute settlement proceedings. Enhancing legal capacity is offered as a common panacea to overcome this shortcoming so that countries are equipped to take on a more active role.

Jan Bohanes and Fernanda Garza have made a brilliant analysis of developing countries participation in the dispute settlement mechanism of the WTO. In their piece titled "Going beyond Stereotypes : participation of Developing Countries in WTO Dispute Settlement" they have analysed a broad range of issues related to developing country participation in the WTO dispute settlement mechanism. Apart from the trading power of the country and its role in global trade, many other factors impact a developing countries participation in the DSM. The authors have analysed how legal capacity, domestic governance, duration and complexity of dispute resolution, limited retaliatory capacity, preferential trade, political pressure and potential cultural factors have a bearing on how active a developing country is in the WTO dispute settlement proceedings. They have noted the role of ACWL in enhancing legal capacity for developing countries. I have often noted in this blog that private-public collaboration, that is between the government and business would be necessary to effectively deal with a WTO dispute. This collaboration due to a variety of reasons, including lack of information and a cultural mindset of animosity, is lacking in developing countries. The authors have with numerous examples explained the lack of legal capacity both within and outside government in WTO law to deal with the quagmire of WTO legal issues.

The conclude:

"The conclusions that emerge from our analysis are as follows. First, participation of developing countries in the WTO dispute settlement system is a reflection of a broad range of factors.

...

Second,  participation in WTO litigation is not a goal in itself. Being an active participant in WTO disputes is of course a healthy expression of being a participant in the global economy. 

...

Fourth, the major challenges for developing countries to effectively use WTO litigation appear overwhelmingly linked to their  domestic governance. Developing countries should therefore strengthen their bureaucracies, streamline their internal decision-making mechanisms, and reorganize institutions to create conditions favourable for coordination and communication both within the government, and between the government and the private sector.

...

Fifth, governments should actively seek to participate as third parties in WTO disputes. This will provide them with first-hand  experience of WTO litigation, which has been shown to be very significant for active participation, because it provides valuable experience and de-dramatizes perceptions of international litigation within the domestic bureaucracy.

...

Sixth, developing countries should take advantage of the services offered by the ACWL. The ACWL has proven to be a uniquely successful international legal aid organization, but many WTO developing countries do not take advantage of its services, largely because they lack the internal capacity to capitalize on what the ACWL can offer them."

Overall, the piece is a very useful guide for developing countries to strengthen their capacity to engage with a complex, international legal system.

Is the WTO Transparent?

Transparency in functioning of democratic institutions has often been the subject of intense discussion and debate. Transparent decision making enhances accountability and ensure that public policy decisions are not arbitrary and capricious. It is considered as a hallmark of a well functioning democracy.Is the principle of transparency equally applicable to international institutions? Are international institutions as transparent as national institutions?

The WTO as an international institution has often been accused of being non-transparent in its dealings. Be it the negotiations during the earlier years, functioning of the Secretariat or the conduct of the dispute settlement proceedings, critics often emphasis that decisions of the body are taken without taking into account the interests of public transparency. This often leads to public criticism and a suspicion that decisions are taken under a cloud of secrecy against larger public interest. While various WTO Agreements require that countries should follow transparency in terms of notification of their measures in accordance with WTO rules, the functioning of the WTO itself in terms of a transparency record is a subject matter of debate. The questions therefore is: Is the WTO transparent in its functioning?

Gabrielle Marceau and Mikella Hurley have comprehensively addressed this issue in "Transparency and Public Participation in the WTO: A Report Card on WTO Transparency Mechanisms" in the Trade, Law and Development Journal. The article analyses three broad themes: Transparency in the context of information available to the public, the status of amicus curiae (friend of the Court) briefs in the dispute settlement proceedings as well as public participation in the WTO of non-State actors. The articles lauds the efforts of the WTO in terms of the innovation it has made in bringing about transparency in dissemination of information through the WTO website. Further, the increasing trend of acceptance of amicus curiae briefs is seen as a sign of opening up of the functioning of the WTO. Increasing participation of NGOs in various fora of the WTO is also cited as proof of the willingness of the WTO to engage with the outer world and not act as a closed door entity.

Preparing a "report card" of WTO's efforts to enhance transparency, they have suggested specific measures to enhance the "transparency" of the WTO, especially in the area of dispute resolution:

"In the area of dispute settlement, some have pressed for the following: 

1. WTO Members should take the initiative to make their submissions available 

to the public, sanitizing any confidential or proprietary information. The United States is already taking this initiative as a matter of policy. Increased Member willingness to do so is thus encouraged so as to help prospective amici provide more useful information to panels and the Appellate body. Such initiative would also do a great deal to dispel the remaining public concerns about the WTO dispute settlement process.  

2. There is a need to negotiate clear rules regarding the acceptance of amicus curiae briefs. Members have not done so, despite repeated calls for such guidelines, leaving prospective amici and litigants alike in a state of continuing uncertainty.

          ...

3. Panels and the Appellate Body should take a predictable and uniform approach in the treatment and discussion of amicus briefs, both in terms of why they are accepted for consideration (or not), and how they are used. In order to ensure maximum transparency, reports should address the main arguments put forward in  amicus briefs, which will allow Members and the public to understand how they may influence the outcome of a case.    

4. All open hearings should now be made available to the public by webcast. This technology is now established, and  is already in use in other fora.  In addition to furthering the WTO's reputation as a transparent organization, this practice would also ensure that developing country interests are not left out. 

 For the working committees of the WTO: 

5. WTO Members should consider additional, systematic avenues for the participation of and consultation with NGOs. If the membership is not prepared to open committee and working group meetings to NGO participation at this time, the WTO should make certain that the agendas of other meetings – particularly the Public Forum – reflect the important issues under consideration in Member-only discussions."  

Some observations:

1. The WTO website is exceptionally well organised and "transparent". I had blogged about it here a few months back. The ease with which one can find information based on one's need itself signifies that a lot of thought and energy has gone into the design and construct of the website. Agreements, interpretations, updated proceedings as well as status of dispute settlement proceedings all find their place. It definitely promoted transparency. It definitely outshone several other Government and International organisation websites. The design, layout, ease of access and most importantly content and "uptodate" nature of subjects uploaded is very impressive. The Agreements, Dispute settlement cases as well as plethora of documents make very interesting reading. The use of this tool of public transparency will go a long way in enhancing WTO's record of transparency. It is one of the most well organised website for a public institution, especially an international organisation. However, Steve Charnovitz in the IELP blog was rather critical of WTO's transparency in putting accession protocol details on the website.

2. The WTO can be transparent largely to the extent its members want it to be. The WTO, as is often referred to, is a member driven organisation. Though the Secretariat does exist as an independent entity and does play a critical role, decisions at the WTO are largely that of the members. The need and contours of transparency must be thus defined by the members after due deliberation. Is increased transparency detrimental to developing country interests or interests of weaker countries? Why does the notion prevail that enhanced transparency can jeopardise developing country interests? Is transparency in the interests of only powerful trading partners? Can transparency be used as a tool against the less equipped world? This notion has to effectively combated. Transparency in decision making, whether national or international, should be valued as a universal value which enhances the public interest. 

3. Is transparency necessarily increased participation of non State actors? While increased participation of various interests like NGOs, citizen groups enhance the diversity  of the WTO and democratises the working of international institutions, several countries feel that it is an encroachment of its sovereign right to represent its people. they accuse "civil society" of representing elite interests within their countries as well as at times representing other countries interests. How representational are non State actors? How transparent are they in their functioning? While this may be an alarmist and inward looking view, the fear that non State actors can be non-representational, elitist and the concealed flagbearers of vested interests needs to be adequately addressed.

4. Lastly, on the dispute resolution mechanism. The DSM is the jewel crown of the WTO system. The idea of increased public access to proceedings is a welcome step. Public broadcast of proceedings can open the doors to public interest in the WTO. Today, WTO and dispute settlement at the WTO is absent in the national discourse except when a country's interests are adversely affected. WTO is commonly seen as an institution that invades national sovereignty and domestic policy space. This is largely due to the perceived "opaqueness" of the international institution's functioning as well as the "closed door" aura of the dispute settlement mechanism. Can opening proceedings to the public change this perception? Will it bring about a positive change in public perception? Can it lead to increased interest in the functioning of the dispute settlement mechanism as a "rule based system" having its  grounding in transparent rules and procedures rather than being a power based decision making body? In most national judicial proceedings, Court proceedings are open to the public except when in-camera proceedings are specifically ordered. Can this be made the rule at the WTO? This would not only increase transparency but also make the country accountable to its domestic constituents of the positions it takes in international disputes. Is it too radical for implementation?

The debate of transparency at the WTO needs to be one of the foremost agendas at the negotiating forum. While many steps can be undertaken by the Appellate Body itself many measures will require concrete, bold steps from member countries. Achievable or highly unlikely in the context of the Doha impasse?