Using dispute settlement partnerships for capacity building. Bangladesh’s triumphant experience at WTO DSU

• Published date: 18 March 2019
• Date: 18 March 2019
• DOI: https://doi.org/10.1108/JITLP-07-2018-0028
• Pages: 19-38
• Author: Amrita Bahri,Toufiq Ali
• Subject Matter: Strategy,International business,International business law,Economics,International economics,International trade

Using dispute settlement

partnerships for capacity building

Bangladesh’s triumphant experience at

WTO DSU

Amrita Bahri

ITAM University, Mexico City, Mexico and WTO Chair Program, and

Toufiq Ali

Bangaldesh Permanent Mission to WTO and

Bangladesh Foreign Service Academy, Dhaka, Bangladesh

Abstract

Purpose –World Trade Organisation grants rights to its members, and WTO Dispute Settlement

Understanding (DSU) providesa rule-oriented consultative and judicial mechanism to protect these rights in

cases of WTO-incompatible trade infringements. However, the DSU participation benefits come at a cost.

These costs are acutely formidable for least developingcountries (LDCs) which have small market size and

trading stakes.No LDC has ever filed a WTO compliant, with the only exception of India-Batterydispute filed

by Bangladesh against India.This paper aims to look at the experience of how Bangladesh –so far the only

LDC member that has filed a formal WTO complaint –persuaded India to withdraw anti-dumping duties

India had imposedon the import of acid battery from Bangladesh.

Design/methodology/approach –The investigation is grounded on practically informed findings

gathered throughauthors’work experience and several semi-structuredinterviews and discussions which the

authors have conducted with government representatives from Bangladesh, government and industry

representatives from other developing countries, trade lawyers and officials based in Geneva and Brussels,

and civil societyorganisations.

Findings –The discussion provides a sound indication of the participation impediments that LDCs

can face at WTO DSU and the ways in which such challenges can be overcome with the help of

resources available at the domestic level. It also exemplifies how domestic laws and practices can

respond to international legal instruments and impact the performance of an LDC at an international

adjudicatory forum.

Originality/value –Except one book chapter and a workingpaper, there is no literature available on this

matter. This investigation is grounded on practically informed findings gathered with the help of original

empiricalresearch conducted by the authors.

Keywords Bangladesh, Capacity building, Least developed countries, Dispute settlement,

World trade organization

Paper type Research paper

1. Introduction

The World Trade Organisation Dispute Settlement Understanding (WTO DSU) is seen as

the central pillar of the multilateral trading system. Trade disputes are filed by member

governments if they have reasonsto believe that another member government is violating a

WTO agreement or a commitment it has undertaken as part of the WTO. Since1995, WTO

Members have filed over500 complaints with the cause of actions arising from severalWTO

Agreements. Dispute Settlement Body (DSB) has issued rulings in over 350 of these

Dispute

settlement

partnerships

19

Received16 July 2018

Revised21 September 2018

Accepted26 October 2018

Journalof International Trade

Lawand Policy

Vol.18 No. 1, 2019

pp. 19-38

© Emerald Publishing Limited

1477-0024

DOI 10.1108/JITLP-07-2018-0028

The current issue and full text archive of this journal is available on Emerald Insight at:

www.emeraldinsight.com/1477-0024.htm

complaints, while most of the others were resolved bilaterally between the complainant(s)

and respondent(s)[1]. The average time taken by the Panels to issue reports has centred

around 14 months. From January 1995 to January 2018, Appellate Body has issued 144

Reports within an average time-span of three months, which together with Panel Reports

have contributed to the significant development of jurisprudence, clarification of issues and

interpretation oflaws. This makes the WTO dispute settlement system the most active and

the fastest international adjudicatory authority with an appellate jurisdiction in the world.

However, resolving trade disputes through the DSU provisions have significant cost

repercussions,and these costs maynot be equally affordableby all WTO members.

With the complex and rule-oriented system of WTO DSU, and with its ever-increasing

jurisprudence, the Member States require higher relative capacity to use the adjudicatory

mechanism than they required under the previous trading regime, i.e. they require more

resources to monitor and enforce their international trade rights. Busch and Reinhardt observe

that, to participate effectively at WTO DSU, WTO Member States require “experienced trade

lawyers to litigate a case”,“seasoned politicians and bureaucrats to decide whether it is worth

litigating a case”,“staff to monitor trade practices abroad”,“domesticinstitutions necessary to

participate in international negotiations”and sufficient market power to ensure compliance

and threaten retaliation in cases of non-compliance (Busch and Reinhardt, 2004). This demand

for greater resources has impeded developing countries’access to WTO DSM.

In the words of Shaffer, the impediments that developing countries face at WTO DSU

can broadly be categorised as “[...] constraints of legal knowledge, financial endowment,

and political power, or,more simply, of law, money, and politics”(Shaffer et al.,2009). These

impediments become acutely formidable for least developing countries (LDC) which have

small market size and absolute trading stakes[2]. This is because they generally face a

significant cost of mobilising resources for strengthening their DSU participation[3]

(Bossche and Gathii, 2013;Shaffer,2009). Their low volumes of trade and low profit margins

may not justify the non-economic (i.e. litigation) costs they are required to incur for

“maintaining or enforcing market accessrights”, mainly because the WTO litigation cost is

insensitive to the economic stakes involved in a dispute (Shaffer, 2006). The high cost of

WTO litigation can significantly reduce the anticipated economic benefits which an

industry can receive from the removal of a trade barrier. Moreover, low retaliation capacity

and negotiating clout can further dilute the benefitsan affected industry based in LDCs can

attain from WTO litigation[4].

With low level of development, small market size, low aggregate trading stakes and

poor institutional capacity to litigate and defend trade interests at WTO, LDCs are less

likely to file complaints at WTO against trade infringements. Due to low DSU

participation rate and high cost of DSU participation (which may be even higher for

LDCs due to poor economies of scale), these countries generally have little future

incentive to develop their dispute settlement capacity or resort to DSU provisions for

resolving their trade problems.

No LDC has ever filed a WTO compliant, with the only exception of India-Battery

dispute filed by Bangladesh against India[5]. This article looks at the experience of how

Bangladesh –the first and so far the only LDC member that has filed a formal WTO

complaint –persuaded India to withdraw the anti-dumping duties India had imposed

on the import of all lead acid battery from Bangladesh. A close look at Bangladesh’s

unique experiment of resolving a trade dispute with India is important for several

reasons. As LDC with small volume of exports and imports in absolute terms, it has

experienced high rates of economic growth and social transformations over the past

few decades. It has gone through rapid integration into the global economy, with trade

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