How the Judges of the Appellate Body Form Their Opinion and its Reflection on the Implementation of the Reports of the WTO Dispute Settlement Body
| Author | Maria de Lourdes Albertini Quaglia |
| Position | Teacher of International Law at the Catholic University of Minas Gerais. Teacher Fellow at Università Commerciale Luigi Bocconi of Milan in Italy. Phd Student in Diritto Internazionale dell’Economia at Università Commerciale Luigi Bocconi de Milão – Italy. |
| Pages | 31-47 |
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“Agents are inseparable from social structures in the sense that their action is possible only in virtue of those structures, and social structures cannot have causal significance except insofar as they are instantiated by agents. Social action, then, is “co-determinated” by the properties of both agents and social structures.”
(Alexander Wendt)
A major debate concerning the Dispute Settlement Body of the WTO refers to the stage relative to the compliance with its decisions. The question of whether the member is subject because of the rules and decisions of the Dispute Settlement
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Body of the WTO, while the organization is composed of sovereign states, the enforcement of the Authority not deriving from a coercive sovereign power that overrides its members, deserves further consideration which is to be undertaken in this article, without the pretension of exhausting it, perhaps tackling it from a new angle that might contribute to a better understanding of the behavior of the Member States in relation to that jurisdiction’s international trade. Thus, we start from the assumption that the decisions issued by the Appellate Body (hereinafter referred to as AB) are built up from a process of innovation, domestic and international publicizing, political selection and establishing an effective institutionalization, that creates an intersubjective understanding on which are based the interests, practices and behavior of governments and other players in the system. Accordingly, and using the statistics that demonstrate that in most cases judged by the DSB, the WTO Member States comply with its decisions, we conclude that these decisions are part of a process built up from negotiations in which all interests, desires and values were discussed and agreed at a forum for negotiation, from the interaction of agents (direct: States, and indirect: those in the domestic context in some way involved in the construction of the foreign trade of the State) and from the rules of the structure embodied in the DSU.
A series of cases shows that this hypothesis is true. We will see throughout the article that the arguments presented during the process, mainly during the phase of formation of conviction of the Judges, members of the Appellate Body occur due to a cognitive process and built up between the litigant parties, third parties and judges, that is the decisions of the Appellate Body are irrefutable evidence that the parties implemented or will implement their decisions because they are the non-coercive result of the broad debate that opens the panel and is consolidated in the oral hearings of the body. Indeed, the judges arrive at their opinion from exhaustive rounds of questions to the disputing parties that, basically, want to know from both parties why the WTO rules, taken as arguments opposed, must be applied in each case at trial. The parties, in turn, should have the expertise to respond in a convincing way so that their arguments are more valid. This is nothing more than the formation of knowledge from maieutics, or the Socratic method. Accordingly, it is the high level of legitimacy of AB decisions that demonstrates the high degree of compliance with them.
The new Dispute Settlement System introduced in the Uruguay Round through the Annex II (the so-called DSU) of the Marrakech Agreement signed in 1995 introduced a series of changes that become effective to the detriment of the previous mechanism, which was very vulnerable to the sovereignty of Member States.
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In 1947, when the GATT entered into force, there was provision for the settlement of disputes in arts. XXII and XXIII. Some of the principles and practices involved in this system were codified into decisions and understandings of the contracting parties to GATT 1947. The current WTO system builds on, and adheres to, the principles for the management of disputes applied under Articles XXII and XXIII of GATT 1947 (Article 3.1 of the DSu), with important modifications brought about by the Uruguay Round. The GATT 1947 contained rudimentary rules in Article XXIII:2, which provided that the contracting parties themselves, acting jointly, had to deal with any dispute between individual contracting parties. In the beginning the disputes were decided by rulings of the Chairman of the GATT Council, but later, they were referred to working parties composed of representatives from all interested contracting parties, including the parties to the dispute. The reports of these working parties were adopted by consensus decisions, which were soon replaced by panels made up of three or five independent experts who were unrelated to the disputing parties. The panel’s reports were independent and made recommendations and rulings for solving the dispute. After that they were referred to the GATT Council. Only upon approval by the GATT Council did these reports become legally binding on the parties to the dispute. The GATT panels thus built up a body of jurisprudence, which remains important today, and followed an increasingly rules-based approach and juridical style of reasoning in their reports.
The GATT 1947 was modified many times progressively through the decisions and understandings of the contracting parties. The most important were: The decision of April 5, 1966 which modified some procedures under article XXIII; The Understanding on Notification, Consultation, Dispute Settlement and Surveillance, adopted on 28 November 1979; The Decision on Dispute Settlement, contained in the Ministerial Declaration of 29 November 1982; The Decision on Dispute Settlement of 30 November 1984.
The GATT Dispute Settlement System presented some weaknesses that after the Uruguay Round needed to be modified. One of these is the rule of positive consensus which meant that there had to be no objection from any Member state to the panel’s report. This means that the respondent could block the establishment of a panel. Moreover, the adoption of the panel report also required a positive consensus, and so did the authorization of countermeasures against a non-implementing respondent. Such actions could also be blocked by the respondent. From a practical standpoint, we can conclude that despite this fact the GATT dispute settlement system brought about solutions satisfying the parties in a large majority of the cases. The only problem was that many disputes were never brought before the GATT because the complainant suspected that the respondent would exercise its veto. And such vetoes actually occurred, especially in economically important or politically sensitive areas such as anti-dumping. Finally, there was a deterioration of the system in the 1980s as contracting parties increasingly blocked the establishment of panels and the adoption of panel reports.
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Another difficult moment for the Dispute Settlement System of the GATT was the Tokyo Round, when a number of plurilateral agreements (which was known as gaTT à la carte) were introduced, creating specific codes, such as one for Anti- Dumping Measures, containing code-specific dispute settlement procedures. Each of these specific codes were applicable only to the signatories of the codes, and only with regard to the specific subject matter. It hugely compromised the multilateral Dispute Settlement System of GATT 1947. It created a real situation of “forum-shopping” and “forum-duplication”, allowing the contracting parties to choose the agreement and the dispute settlement mechanism that promised to be the most beneficial to its interests.
In 1986 the 8th and last Round under the GATT began. This Round finished in 1994 with the signature of the Marrakech Agreement. This agreement brought several important changes for the international, multilateral trade system, transforming the GATT into a real International Organization (with juridical personality under International Law) and increasing the spectrum of control beyond the agreement of goods to other areas such as agriculture, intellectual property and services, and above all, improving hugely the Dispute Settlement System, embodied in the Annex II of the Marrakesh Agreement (The Dispute Settlement Understanding – DSU). The new Dispute Settlement System created the right to a panel and strict time-frames for panel proceedings. As part of the results, the DSU introduced a significantly strengthened dispute settlement system, providing more detailed procedures for the various stages of a dispute, including specific time-frames. As a result, the DSU contains many deadlines, so as to ensure prompt settlement of disputes. The new dispute settlement system is also an integrated framework that applies to all covered agreements with only minor variations. Arguably, its most important innovation is that the DSU eliminated the right of individual parties to block the establishment of panels or the adoption of a report.
Now, the DSB automatically establishes panels and adopts panel and Appellate Body reports unless there is a consensus not to do so. This “negative” consensus rule contrasts sharply with the practice under the GATT 1947 and also applies, in addition to the establishment of panels and the adoption of panel and Appellate Body...
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