The Implementation Issue under the WTO Dispute Settlement Procedure
- Procedural factors and proposals for improvement

Author Name KAWASE Tsuyoshi  (Faculty Fellow, RIETI / Associate Professor, Graduate School of Law and Politics, Osaka University)
Creation Date/NO. March 2006 06-J-023
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The juridification of the dispute settlement procedure under the World Trade Organization (WTO) has extended the effective rule of law into the realm of international trade. Over the years, however, there has been a series of cases in which a losing complained party failed to correct its violation in a timely manner and the complainant had to fall back on the suspension of concessions - countervailing measures whereby certain violation measures were maintained and left uncorrected over an extended period of time. Such non-implementation or delayed implementation tends to occur in cases of special importance, with a highly complex political background, and has been observed particularly among major WTO Members such as the U.S. and the European Communities. The presence of this implementation issue does not mean that the WTO dispute settlement mechanism is altogether defective. But major Members' repeated disregard of recommendations and rulings of the Dispute Settlement Body (DSB) will in the long run threaten the legitimacy of the WTO as a forum for solving trade disputes.

Kawase and Araki (2005) examines this problem from various angles to illustrate the diverse factors, both legal and practical, that lie beneath it. Consequently, it has been found that, regarding factors relating to dispute settlement procedures, the adequacy of the interpretation of WTO rules by panel or the Appellate Body, the clarity of panel/Appellate Body recommendations, and the level of concessions to be suspended have provoked the implementation issue. To solve this problem, it is necessary to amend the current dispute settlement procedures.

Against the backdrop of compliance theory, these findings can be summed up as follows. The problem of non-compliance by WTO members primarily stems from two deficiencies - the lack of enforceability that is based on rational choice theory, and the lack of normative recognition or respect on the part of a losing complained party for the particular WTO judgment. Therefore, procedurally amending these two aspects would improve the implementation of WTO rulings. In negotiations on the amendment of the Dispute Settlement Understanding (DSU) under the Doha Round, however, not many proposals made have sufficiently addressed the implementation issue. Moreover, there seems to be no prospect of agreement on the DSU.

Under such conditions, the realistic and most desirable choice would be to seek gradual improvements in the implementation by employing a "soft" method with measures that can be taken under the existing DSU, in lieu of trying to amend it. For instance, to strengthen enforceability the DSB could authorize the suspension of concessions in a way more focused on the qualitative aspects of remedies. From the normative point of view, WTO panels and the Appellate Body could exercise judicial economy and discretion over the recommendations of specific way for implementation with a greater recognition of the feasibility of compliance, while the DSB, as a political collegial body, could strengthen the reviewing of panel/Appellate Body reports.