US vs Rest on unilateralism at WTO

by Chakravarthi Raghavan

Geneva, 9 July -- It was a case of the United States vs the Rest of the WTO, in the informal review of the provisions of Art. 21 and 22 of the Dispute Settlement Understanding relating to what is now called the "sequencing" of actions in disputes over non-compliance by a part of a panel ruling.

This issue which came to the forefront in the disputes over the EC banana regime and the EC's implementation of banana panel rulings, and was the subject of a move by the EC for an authoritative interpretation of these provisions by the General Council, was remitted to the Dispute Settlement Body and its review process, to be dealt with as a priority.

And the DSU, has been engaged on this, as an issue of priority this week, and it has been preceded by several informal consultations among small groups of key countries.

In substance, the technical issues about "sequencing" on which everyone who expressed their views seem to be on one side, and the US on the other is the view of all except the US that in a dispute whether or not a party, at the end of a reasonable period of time (RPT) set for compliance, has complied with a panel ruling and recommendation of the DSB: there should be a multilateral determination whether there has been compliance or not, and this should be sought be recourse to Art.21.5 of the DSU, namely by reconvening the panel, before there is recourse to Art.22 of the DSU for permission of the WTO to impose retaliatory trade sanctions.

Within this broad understanding, there are varied views on how this multilateral determination is to be made -automatically by the original panel, the appellate body (if there had been an appeal), or a separate mixed body and some other technical issues.

But on the substantive question of prior multilateral determination of non-compliance, the US is alone on insisting that it has the right, and should be able to have recourse straightaway under Art. 22 to seek authorization and take retaliatory sanctions, without having to go through the Art. 21 procedures for multilateral determination of compliance.

Even more, the US is also insisting that it has the right and should be able to impose trade sanctions on day one after the RPT (what is called in WTO language now as RPT+1).

But under Art. 22, which provides for authorization of sanctions (though automatic), envisages consultation between parties to agree on compensation before sanctions authority is sought, and recourse to arbitration over the amount of compensation to be authorized where there is a dispute about the impairment.

The US agrees that it has go through this, but insists that it has the right and should be enabled to impose the trade sanctions from RPT+1.

In effect, the US is asking the WTO members to rewrite their rules, or accept an understanding, that would conform to the US Sec. 301 of its trade law.

The WTO requires (apart from the general guidance for decisions by consensus) that any changes to the DSU should be by consensus. So, in theory, if the US refuses to agree, there could be no change at all.

However, the priority review of Art.21 and 22 has come up also in terms of the EC efforts to secure an authoritative interpretation in the General Council where a decision has been blocked (for lack of consensus), but the EC and India have said that if needed, as envisaged in the relevant WTO provision, such an authoritative interpretation has to be provided by two-thirds majority.

But most members (until the current tangle over the choice of a Director-General which has demonstrated the inherent anti- democracy of the consensus decision-making) have been swearing by consensus. (SUNS4474)

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

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