Info Service on WTO and Trade Issues (Mar18/12)
20 March 2018
Third World Network
Azevedo moots "back to old GATT" on dispute settlement
Published in SUNS #8645 dated 20 march 2018
New Delhi, 19 Mar (D. Ravi Kanth) - The World Trade Organization director-general
Roberto Azevedo has begun efforts to set the ground for an alternative
dispute settlement system at the WTO akin to the GATT (General Agreement
on Tariffs and Trade) 1947 framework as suggested by the United States
Trade Representative Ambassador Robert Lighthizer several months ago,
trade envoys told SUNS.
Trade envoys are gathering here for a mini-ministerial that India
The dispute settlement system based on the GATT 1947 required rulings/awards
by the panels to be negotiated among the parties as it was a non-binding
[Until the 1988 mid-term review Ministerial meeting of the Uruguay
Round (UR), all decisions, from the stage of reference to a dispute
panel to the adoption of the recommendations of the panel, required
positive consensus, thus enabling one or another party to a dispute,
even an intending intervener, to block the process at any stage by
[After the then European Community had blocked adoption of rulings
in what became known as the Italian pasta dispute and the French wheat
flour dispute (over the EC providing subsidies to pasta producers
and flour mills using wheat grown within the EC, as against cheaper
imported US wheat), the US had become frustrated, and this was one
of the unlisted issues under the rubric of "Functioning of the
GATT system" that was part of the Punta del Este mandate for
the UR negotiations in goods.
[At Montreal, on the suggestion of the then GATT Director-General
Arthur Dunkel, there was agreement that the dispute process should
be unblocked, and allowed to go forward automatically from the stage
of panel reference until the panel rulings/recommendations were handed
down. The adoption alone was left for adoption by consensus.
[It was in 1993, at the final stages of conclusion of the UR accords
at official level, that at the instance of the US, the current WTO's
integrated dispute settlement system was adopted as a part of the
UR Single Undertaking. And the US initially had no problems, but welcomed
it, when the Appellate Body (AB) stretched the UR's Single Undertaking
to the DSU rulings, and these went against developing countries, like
India, Indonesia etc. It was only when AB rulings went against the
US over anti-dumping issues that the grievance has arisen! SUNS]
Effectively, the US demands now would amount to a fundamental departure
from the existing system wherein rulings issued by the Appellate Body
are final and need to be implemented without any change.
As trade ministers congregate for an informal summit today in New
Delhi, one of the main issues on the agenda is how to overcome "the
systemic challenges" facing the "dispute settlement arm"
of the WTO.
Ahead of the New Delhi meeting, the WTO director-general along with
the new chair for the General Council Ambassador Junichi Ihara of
Japan held a closed-door "green room" meeting with trade
envoys from 20 countries, according to several trade envoys who asked
not to be quoted.
During the meeting, Azevedo has apparently suggested that, rather
than pushing the US hard to continue negotiations on how to de-block
the current impasse for selecting three new members to the Appellate
Body, members must consider the blockage as given and act accordingly,
said a trade envoy from an industrialized country, who asked not to
Azevedo, according to the trade envoy, suggested they have to work
on the assumption that the blockage at the AB is given and work accordingly
on an alternative dispute settlement system that is not as strict
and binding as the current mechanism.
The tenor of the green room meeting, according to another trade envoy
from a developing country, is that "having given up on Doha and
development, now members must give up on the binding dispute settlement
system when it is most needed."
But it is premature to discuss suggestions made by Azevedo even before
the Appellate Body becomes completely defunct in December 2019 when
two more members -- Thomas R Graham and Ujal Singh Bhatia -- complete
their second terms, the envoy said.
After December 2019, the AB's members will fall below three and the
AB will not be able to issue any rulings.
Against the backdrop of three vacancies that remain unfilled because
of the US opposition, another major test comes in April when the Dispute
Settlement Body (DSB) will have to consider a second term for Shree
Baboo Chekitan Servansing - who will soon complete his first term.
Mr Servansing wants to continue for the second term which has become
the normal practice at the WTO over the years, the envoy said.
But Azevedo wants to consider new alternatives one and a half years
before the AB becomes fully defunct, the envoy said.
Azevedo's ideas are "surprisingly similar" to what the US
Trade Representative Ambassador Robert Lighthizer had said over the
last one year, the envoy maintained.
The DG's argument that members have to think in terms of new alternatives
because the US is not prepared to resolve the impasse is dangerous,
said another trade envoy.
"The DG is basically ending up with something that Lighthizer
wants and it really means that we go back to the old non-binding dispute
settlement system," the envoy maintained.
"Azevedo's ideas would imply that we go back to the non-binding
system after giving up on the Doha and MFN," the envoy maintained.
The USTR spoke against the binding dispute settlement system several
times last year.
"On the [WTO's] dispute settlement system, I would answer in
two parts," said Ambassador Lighthizer on 21 September while
speaking at the Center for Strategic and International Studies in
"There are number of areas [where] there is a broad agreement
that the WTO dispute settlement system is deficient," said Ambassador
"There is the transparency issue, there are issues with the staff,
whole lot of areas we have a problem with [the dispute settlement
system]," Ambassador Lighthizer said.
"Beyond that the US sees there are examples that the dispute
settlement system has diminished over the years," he argued.
The USTR suggested that what the US had bargained for and the obligations
it undertook, are different from the rulings issued by the Appellate
"We believe that there have been lot of cases in the trade remedy
laws where the decisions [of the Appellate Body] are indefensible,"
he said, suggesting that "many of the people there [at the AB]
have free trade orientations, and we have tax laws that are struck
down and we have other provisions where the WTO has taken the position
that they are going to strike down something that should not happen
instead of looking down the GATT agreement as a contract."
Ambassador Lighthizer said that "the DSU has evolved in a way
that it creates new obligations and it does not provide benefits to
us both in procedural way and we have to worry about the DSU and it
is a fundamental part of the WTO."
"We are objecting to the [dispute settlement] process because
we don't agree with it as in many cases [as] the Appellate Body has
approached [the disputes]," he said.
"Before 1995, there was a system then in the GATT and then you
would negotiate after a ruling was issued," he suggested.
In short, Azevedo is now on a mission to achieve his two goals during
the next one and a half years before the WTO's twelfth ministerial
The two goals include plurilateralisation of the WTO and replacing
a binding Dispute Settlement Body with a non-binding dispute settlement
system, according to the envoy.