Developing Countries And The Wto Dispute Settlement Mechanism

As is stated in the Understanding on Rules and Procedures Governing the Settlement of Dispute (DSD), the WTO dispute settlement mechanism is a "central element in providing security and predictability to the multilateral trading system".The dispute settlement mechanism of the WTO is based on the principle that any Member can challenge trade measures taken by any other Member, so that even those countries that are economically weak can challenge the more economically powerful. In view of the high proportion of developing countries in the WTO Membership, their participation is vital to the credibility and acceptability of the system, and to the proper defence of their interests as well.Indeed, the developing countries had expected that the new dispute settlement process would help the weaker trading partners in enforcing the rights and obligations under the various WTO agreements. In fact, the supposed benefits of such an effective dispute settlement system were one of the main persuasive factors for several developing countries to agree to the Uruguay Round agreements. Though the DSU has brought about some degree of predictability and efficiency in the resolution of disputes, the utility of the system in actual operation has fallen far short of the initial expectations and euphoria. Furthermore, in some respects, it has operated against the interests of the developing countries.This paper analyzes in detail the problems that have come to the fore in the last several years of the operation of the system. The dispute settlement process is very costly for the developing countries. Most of the time, they have to call upon the assistance of the law firms of major developed countries, which charge heavy fees. The developing countries would therefore not be as promptand willing to initiate the dispute settlement process for exercise of their rights as would a developed country. Hence there is a basic imbalance in rights and obligations between a developing country and a developed country, because of a vast differential between the capacities of these two sets of countries to invoke the enforcement process. There are several other handicaps for the developing countries in the system. The relief granted by the system is generally very much delayed; as it may take up to about 30 months from the time the dispute settlement process was started. And this delay may be very detrimental to the developing countries. They are likely to suffer irreparable damage by the time they get full remedy. And in really difficult cases, the only remedy they may get is in the form of permission to retaliate against the erring country. Obviously, such a remedy is impractical, because a developing country will naturally hesitate to take retaliatory action against a developed country in view of the economic and political costs involved. Moreover, even if the remedy is available, it is usually through corrective action by the erring country after approval of the panel report by the Dispute Settlement Body. There is no retrospective relief from the time the incorrect measure was applied by the erring country. In the case of a developing country, this gap in relief may be very costly. Apart from all these systemic problems, a major new problem is emerging in the operation of the panel and appeal process. The panels and the Appellate Body (AB) very often engage in very substantial interpretations of the provisions of the WTO agreements. By coincidence, it has so happened that in a large number of cases, these interpretations have enhanced the obligations, which are mostly those of the developing countries and enhanced the rights which are mostly exercised by the developed countries.There are a number of special and differential provisions relating to developing countries in the Understanding on Rules andProcedures Governing the Settlement of Disputes. But almost all of these legal provisions are "loose" and "unenforceable". This paper analyses these provisions in detail and examines the implementation of them.Laws are only as...