1st June 2007
Access to Justice in the WTO
The creation of the WTO dispute settlement system is hailed as one of the major achievements of the multilateral trading system. It is unique among international tribunals adjudicating disputes among sovereign States in that it is generally able to enforce, in an economically and politically meaningful way, rulings sufficient to compel a violating party to reform its act or omissions. By improving the prospect of compliance with rulings, the WTO Dispute Settlement Understanding (DSU) constitutes an essential element in ensuring the legal certainty and predictability of the multilateral trade system. With more rigorous disciplines and a growing body of jurisprudence, the dispute settlement system has however become significantly more legalistic and consequently more arduous to navigate. WTO Member countries which are keen to avail of the system to protect or advance their trade rights and objectives face the daunting challenge of grasping and keeping pace with its increased complexity. While developing countries’ participation in trade disputes has increased considerably since the days of the old dispute settlement system under the GATT, most disputes are still confined to a small number of ‘usual suspects’ – countries such as the US, the EC, Canada, Brazil, India, Mexico, Korea, Japan, Thailand and Argentina. So far, 76% of all WTO disputes have been initiated by this group of Members. Given that the countries facing possible undue trade restrictive measures certainly extends beyond this group, it begs the question of engagement of other Members, particularly developing countries.
Various reasons have been propounded for this lack of active participation. These include, among others, a lack of sufficient awareness of WTO rights and obligations; inadequate coordination between the government and private sector; difficulty in determining the existence of undue trade barriers and the feasibility of legal challenge; financial and human resource constraints in lodging disputes; and an oft-cited lack of political will to pursue trade disputes due to fear that trade preferences or other forms of assistance will be withdrawn, or some form of retaliatory action will be taken, if developing countries pursue cases against certain major trading partners. While these constraints need to be addressed at the national level, the WTO membership nonetheless need to continue considering ways to improve the functioning of the dispute settlement system. In this regard, the current review process of the DSU offers a potential avenue to facilitate access to the system.
The DSU is in principle blind to the commercial stakes involved in a dispute between its Members in that it makes no distinction between a claim of 100,000 dollars and a claim of 100,000,000 dollars. Arguably, a system where the procedures are the same while the stakes differ makes it less attractive for Members to engage, especially for smaller trading countries whose trade volumes may not, from their governments’ perspective, merit a full-blown dispute under the current set-up. In this sense, the impartiality in the system impedes less developed countries’ willingness and ability to pursue their trade interests and sustainable development objectives through the existing procedures.
Proceeding from a review of the rationale and practices of small claims procedures at the national level, the paper explores whether a similar institution can be adopted at the WTO to offset the disproportionate element of the system. The paper does not attempt to propose a specific model or to draw a direct parallel between small claims procedures at the national level and those proposed at the multilateral level; rather, the paper employs the underlying philosophy of the former to think through a creation of the latter with an aim to encourage a policy discussion.
While cognisant of the legal and political challenges involved in establishing such an institution, the paper posits the need for creative thinking and poses a series of questions to launch the debate. For instance, is it in fact possible to define a “small claim” in a meaningful way in a context where government policies are being disputed? Will a dispute ever be considered “small” no matter the monetary value? And can it really be expected of a government to honour a ruling by an international small claims panel with no possibility of appeal?
The paper does not purport to deny that many arguments can be made against the establishment of a small claims procedure under the multilateral trading regime. Given the small nature of the claims at stake, a prejudicial issue is whether they are truly worth the cost of operating the proposed system. The risk that bigger economies will use the system against smaller and weaker ones, creating even further discrepancies in the dispute resolution system, as well as the establishment of a two-tier system that may result in a ‘second class’ form of justice being meted are also highlighted.
In the sense that, at this stage, all alternatives geared towards redressing the problems referred to in the paper are imperfect, it behooves practitioners, analysts and indeed WTO Members to consider various options that will enhance the accessibility of the DSU. Obviously, the details of the proposed small claims procedure would need to be clarified were such a procedure be adopted. However, since the primary purpose of this paper is simply to raise issues for discussion, including regarding the appropriateness of such a procedure, we leave further examination of those details for another day.
This paper is produced under ICTSD’s research and dialogue program on Trade and Dispute Settlement which aims to explore realistic strategies to optimise developing countries’ ability to avail international dispute settlement systems to pursue their trade interests and sustainable development objectives. The authors are Håkan Nordström, Chief Economist with the National Board of Trade in Stockholm and Gregory Shaffer who holds the Wing-Tat Lee Chair of International Law at Loyola University Chicago School of Law.
We hope you will find this paper a useful contribution to the debate on whether a small claims procedure should indeed be established under the WTO Dispute Settlement Understanding and, if so, the form such a mechanism should take.