Implementing WTO Rulings--The Weaknesses And Improvements

The dispute settlement mechanism of the World Trade Organization (WTO) is a revolution in many ways as compared with the GATT era. However, the first few years of WTO greatly dampened people's confidence towards this new mechanism, when the few notorious noncompliance cases such as the EC-Banana and EC-Hormones occurred. As the implementation of WTO rulings matters the normal function of WTO and its future development as well, how to facilitate compliance has become the great concern among its Members and of many interested people. Existing suggestions or practices, however, are not satisfactory at least for the following two reasons. First, either they are too concerned with the procedural weaknesses of the mechanism as such, while ignoring the real cause of noncompliance arising from Members' substantive considerations of their political, economic or social interest; or the suggestions and practices do not conform with the existing principles or practices of WTO so that they are not likely to be generally accepted by Members. Second, these suggestions and practices do not mend the mechanism's two shortcomings related to implementation, one being the overwhelming control over the complying process by the losing party, the other the lack of compensation for the wining party. The former, enabling the losing party to delay the compliance without being punished, is tantamount to encouraging noncompliance, and the latter leaves the distorted balance of interest among Members unadjusted, frustrating therefore their incentive to resolve disputes through this multilateral mechanism.This dissertation proposes new solutions in an attempt to overcome the above dissatisfactions. In doing so, first, a review of the history of WTO's dispute settlement mechanism is made, which indicates that the compliance record has little to do with the dispute mechanism. Then, based on common sense of jurisprudence and an analysis of the non-complied cases, the dissertation argues that procedures are the tools for substantive purposes, and noncompliance is only the tip of the iceberg of Members' unwillingness to honor their WTO obligations. The real element that affects compliance is nothing but Members' concern over their substantive interest and it is upon this substantive interest that any improving methods should rest. After examining the existing suggestions or practices, pointing out the dissatisfactions as mentioned above, the dissertation proposes two approaches to facilitate compliance. One is to adopt a guarantee scheme, which requires the complained party depositing a certain amount of money with WTO to guarantee the implementation. In case of noncompliance, the money will be confiscated and be awarded to the winning party as compensation. The imminent prospect of losing the money is hopefully able to push the losing party towards a decision that favors compliance, whereas the compensation to the winning party helps to mitigate the unfairness resulting from noncompliance. The second approach to facilitate compliance is to allow retaliation at an earlier time, so that the distorted balance of interest could be adjusted timely, minimizing the losing party's possible benefit and winning party's loss from noncompliance, curbing the incentive of noncompliance and encouraging Members to settle their disputes through the multilateral framework.