DSU review in limbo of sorts

by Chakravarthi Raghavan


Geneva, 2 Aug -- The mandated review of the Dispute Settlement Understanding (DSU) of the WTO Agreement appears to be in a kind of limbo -- with the United States blocking any proposal that would restrict its assertions of unilateralism, and some others unwilling to accept any procedural or other changes without outlawing unilateralism.

A group of key delegations have been involved in informal negotiations (outside the WTO), but have been unable to resolve their differences and complete the DSU review, as originally scheduled, by July end, according to some trade diplomats. The review process is deadlocked, and the informal and formal consultations can resume, if at all, only in October.

The Marrakesh Ministerial meeting in 1994, mandated the Ministerial Conference, to complete a full review of the DSU rules and procedures, "within four years" after entry into force of the WTO (1 Jan 1995) and asked the first Ministerial meeting after the completion of the review, to decide whether to continue, modify or terminate the dispute settlement rules and procedures.

The review was taken up at the Dispute Settlement Body in 1998, and has been conducted in informal meetings.

While several proposals have been put forward by delegations, most are technical and procedural.

But the Banana dispute, and the US assertion in that dispute of its "right" to unilaterally determine whether the EC has complied with a DSB recommendations, based on a ruling by a panel and appellate body, has raised some substantive questions, but with most of the members ranged on one side and the US on the other.

Several of the key members have said that the issue whether or not one party to a dispute, against whom there is a ruling and recommendation, has carried out the recommendation and complied with its WTO obligations should be determined multilaterally, before the other party can seek authorization to 'retaliate' by withdrawal of sanctions.

These countries insist that there should first be recourse to Art. 21.5 of the DSU, providing for a multilateral determination by a reconvened panel whether there has been compliance, and then only go to the DSB for the automatic authorization to withdraw equivalent concessions by a complainant party alleging impairment and nullification.

The United States has so far made clear that it would not agree to any change in the DSU, either by amendment of rules or by an agreed interpretation, that would sequence the process of multilateral determination of compliance and then authorization for 'retaliation'.

The review discussions have brought out a number of related issues in this area -- and on most, if not all of them, the US has declined to agree to any changes that would need changes to its own law.

Any change in the DSU specifically requires a consensus, and thus the US position means 'no change'.

And while there are a number of other changes proposed to other parts of the DSU, some of those opposing the US assertion of unilateralist determination rights, do not seem to be ready to take up and agree to the changes on the non-controversial questions.

The DSB had set itself a deadline of July 1999 to complete its review and make recommendations, to be considered by the General Council, and readied for the Seattle meeting.

An intense round of renewed discussions among the key negotiators, held out the WTO last week, has failed to resolve the differences, and no report could be even be made to the General Council before it recessed for the summer vacations.

The choice before the members, in the review process, appear to be:

* to agree to continue the review process beyond the July deadline, and perhaps roll the consultations over the DSU and changes to be made, into the next round of negotiations; or

* to conclude the review, but without making any recommendations to the ministerial conference (in Seattle) leaving the door open for further talks and or negotiations; or

* make a set of proposals and recommendations, on the purely technical and house-keeping changes and get them adopted.

The last seems most unlikely.

Some delegations say privately that if they cannot get changes to deal with the US unilateralist assertions, they won't agree to other changes - including those sought by the US to satisfy some of its domestic constituencies, like the environment NGOs who want access to the panels and the ability to file amicus curie briefs etc.

The earliest the informal DSU consultations could now be held is said to be October, after the next regular meeting of the DSB in September. (SUNS4490)

The above article first appeared in the South-North Development Monitor (SUNS) of which Chakravarthi Raghavan is the Chief Editor.

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