JAMIA MILLIA ISLAMIA

FACULTY OF LAW

WTO DISPUTE SETTLEMENT

SUBMITTED BY: KHUSHBU GUPTA

B.A.LL.B.(HONS.) SELF-FINANCE 3RD YEAR

SUBMITTED TO:
 ACKNOWLEDGEMENT

I have taken efforts in this project however it would not have been possible without
the kindsupport and help of many individuals, websites and books. I would like to
extend my sincere thanksto all of them.

I am highly indebted for guidance and constant supervision as well as for providing
necessary information regarding the project and also for his support in completing
theproject.

Khushbu Gupta

B. A. LL.B. (Hons.) Self-Finance Class: 2nd yr

 TABLE OF CONTENT

1. Introduction

2. What is WTO

3. Objectives

4. Scope of WTO

5. Functions of WTO

6. Structure of the WTO

7. Status of WTO

8. Dispute settlement process

9. Conclusion

10. Bibliography
 INTRODUCTION

The setting up of the World Trade Organisation was agreed to by 125 countries in
April, 1994 at a conference in Marrakesh which concluded the strenuous Uruguay
Round of GATT organisations after more than 7 years of hard bargaining. The new
World Trade Organisation which replaces General Agreements on Tariffs and Trade
(GATT), had come into effect from January 1, 19951 with the backing of at least 85
founding members, including India and at present there are 144 Members. The WTO
now comes as the third pillar of world-wide dimensions along with the world bank
(IBRD) and the International Monetary Fund (IMF).

WHAT IS WTO

The World Trade Organization (WTO) is the only global international organization
dealing with the rules of trade between nations. An International
organisation established to supervise and liberalize world trade. At its heart are the
WTO agreements,negotiated and signed by the bulk of the world’s trading nations and
ratified in their parliaments. The goal is to ensure that trade flows as smoothly,
predictably and freely as possible.

The WTO has many roles: it operates a global system of trade rules, it acts as a forum
for negotiating trade agreements, it settles trade disputes between its members and it
supports the needs of developing countries.2 

All major decisions are made by the WTO's member governments: either by ministers
(who usually meet at least every two years) or by their ambassadors or delegates (who
meet regularly in Geneva).A number of simple, fundamental principles form the

1
Dispute Settlement in the World Trade Organization (WTO): An Overview  By Jeanne J. Grimmett (Legislative
Attorney) Dated  April 8, 2010
2
WWW.WTO.ORG About World Trade Organisationp
foundation of the multilateral trading system.The primary purpose of the WTO is to
open trade for the benefit of all.

OBJECTIVES

As stated in the preamble of the Agreement Establishing the World

TradeOrganization, the objectives of the WTO Agreements include “raising standards
of living, ensuring full employment and a large and steadily growing volume of real
income and effective demand, and expanding the production of and trade in goods and
services”; in other words, developing the world economy under market-economy
principles. In order to contribute to these objectives, the WTO Agreements are
established for the purpose of entering into reciprocal and mutually
advantageousarrangements designed for “the substantial reduction of tariffs and other
barriers to trade and to the elimination of discriminatory treatment in international
trade relations.”

Such an approach conforms to the traditional spirit of GATT (The General Agreement
on Tariffs and Trade), which was carried over from the preamble of the GATT 1947 to
the new WTO preamble. In light of the subsequent changes, two objectives were
added to the WTO. One is environmental consideration, which entails “allowing for
the optimal use of the world's resources in accordance with the objective of
sustainable development, seeking both to protect and preserve the environment and
enhance the means for doing so in a manner consistent with their respective needs and
concerns at different levels of economic development.” The other is consideration for
developing countries, which seeks to recognize “that there is need for positive efforts
designed to ensure that developing countries, and especially the least developed
among them, secure a share in the growth in international trade commensurate with
the needs of their economic development.” The WTO Agreements also provide more
consideration to the interests of developing countries, because the number of its
members is by far larger than when GATT was established andsingle undertaking was
a condition of entry.Part II Overview of the WTO Agreements

SCOPE OF WTO

The WTO shall provide the common institutional framework for the conduct of trade
relationsamong its Members in matters related to the agreements and associated legal
instruments included inthe Annexes to this Agreement.

The agreements and associated legal instruments included in Annexes 1, 2 and 3

(hereinafterreferred to as "Multilateral Trade Agreements") are integral parts of this
Agreement, binding on allMembers.

The agreements and associated legal instruments included in Annex 4 (hereinafter

referredto as"Plurilateral Trade Agreements") are also part of this Agreement for those
Members that haveaccepted them, and are binding on those Members. The Plurilateral
Trade Agreements do not createeither obligations or rights for Members that have not
accepted them.

The General Agreement on Tariffs and Trade 1994 as specified in Annex 1A

(hereinafter referredto as "GATT 1994") is legally distinct from the General
Agreement on Tariffs and Trade, dated30 October 1947, annexed to the Final Act
Adopted at the Conclusion of the Second Session of thePreparatory Committee of the
United Nations Conference on Trade and Employment, as subsequentlyrectified,
amended or modified (hereinafter referred to as "GATT 1947").

FUNCTIONS OF WTO

The WTO shall facilitate the implementation, administration and operation, and
further theobjectives, of this Agreement and of the Multilateral Trade Agreements,
and shall also provide theframework for the implementation, administration and
operation of the Plurilateral TradeAgreements.

The WTO shall provide the forum for negotiations among its Members concerning
theirmultilateral trade relations in matters dealt with under the agreements in the
Annexes to this Agreement.

The WTO shall administer the Understanding on Rules and Procedures Governing the
Settlementof Disputes (hereinafter referred to as the "Dispute Settlement
Understanding" or "DSU") in Annex 2to this Agreement.

The WTO shall administer the Trade Policy Review Mechanism (hereinafter referred
to as the"TPRM")

With a view to achieving greater coherence in global economic policy-making, the

WTO shallcooperate, as appropriate, with the International Monetary Fund and with
the International Bank forReconstruction and Development and its affiliated agencies.

STRUCTURE OF THE WTO

The WTO consists of the following bodies3:-

1. Ministerial Conference

2. General Council

3. The Dispute Settlement Body

4. Trade Policy Review Body

5. Council for Trade in Goods, a Council for Trade in Services and a Councilfor
Trade-Related Aspects of Intellectual Property Rights (hereinafter referred to as

3
Dr. S.R. Myneni, International Trade Law, p. 47
 the "Council forTRIPS")

6. Subsidiary Bodies

7. A Committee on Trade and Development, a Committeeon Balance-of-Payments

Restrictions and a Committee on Budget, Finance and Administration

8. Bodies provided for under the Plurilateral Trade Agreements

STATUS OF WTO

The WTO shall have legal personality, and shall be accorded by each of its Members
suchlegal capacity as may be necessary for the exercise of its functions.4

The WTO shall be accorded by each of its Members such privileges and immunities
as arenecessary for the exercise of its functions.

The officials of the WTO and the representatives of the Members shall similarly be
accordedby each of its Members such privileges and immunities as are necessary for
the independent exerciseof their functions in connection with the WTO.

DISPUTE SETTLEMENT PROCESS

Consultations (Article 4) 

The DSU permits a WTO Member to consult with another Member regarding
“measures affecting the operation of any covered agreement taken within the
territory” of the latter. If a WTO Member requests consultations with another Member
under a WTO agreement, the latter Member must enter into consultations with the
former within 30 days.

4
Dr. S.R. Myneni, International Trade Law, p. 48
If the dispute is not resolved within 60 days, the complaining party may request a
panel. The complainant may request a panel before this period ends if the other
Member has failed to enter into consultations or if the disputants agree that
consultations have been unsuccessful.[2]

Establishing a Dispute Panel (Articles 6, 8)

A panel request, which must be made in writing, must “identify the specific measures
at issue and provide a brief summary of the legal basis for the complaint sufficient to
present the problem clearly” (Art. 6.2). Under GATT and now WTO dispute
settlement practice, a Member may challenge a measure of another Member “as
such,” “as applied,” or both. An “as such” claim challenges the measure independent
of its application in a specific situation and, as described by the WTO Appellate
Body, seeks to prevent the defending Member from engaging in identified conduct
before the fact.

If a panel is requested, the DSB must establish it at the second DSB meeting at which
the request appears as an agenda item, unless it decides by consensus not to do so.
Thus, while a defending Member may block the establishment of a panel the first time
the complaining Member makes its request at a DSB meeting, the panel will be
established, virtually automatically, the second time such a request is placed on the
DSB’s agenda. While DSB ordinarily meets once a month, the complaining Member
may request that the DSB convene for the sole purpose of considering the panel
request. Any such meeting must be held within 15 days after the complaining Member
requests that the meeting be held.

The panel is ordinarily composed of three persons. The WTO Secretariat proposes the
names of panelists to the disputing parties, who may not oppose them except for
“compelling reasons” (Art. 8.6). If there is no agreement on panelists within 20 days
from the date that the panel is established, either disputing party may request the
WTO Director-General to appoint the panel members.
Good Offices, Conciliation and Mediation

Unlike consultation in which “a complainant has the power to force a respondent to

reply and consult or face a panel,” good offices, conciliation and mediation “are
undertaken voluntarily if the parties to the dispute so agree.” No requirements on
form, time, or procedure for them exist. Any party may initiate or terminate them at
any time. The complaining party may request the formation of panel,” if the parties to
the dispute jointly consider that the good offices, conciliation or mediation process
has failed to settle the dispute.” Thus the DSU recognized that what was important
was that the nations involved in a dispute come to a workable understanding on how
to proceed, and that sometimes the formal WTO dispute resolution process would not
be the best way to find such an accord. Still, no nation could simply ignore its
obligations under international trade agreements without taking the risk that a WTO
panel would take note of its behaviour.5

Panel Proceedings (Articles 12, 15, Appendix 3) 

After considering written and oral arguments, the panel issues the descriptive part of
its report (facts and argument) to the disputing parties. After considering any
comments, the panel submits this portion along with its findings and conclusions to
the disputants as an interim report.

Following a review period, a final report is issued to the disputing parties and later
circulated to all WTO Members. A panel must generally provide its final report to
disputants within six months after the panel is composed, but may take longer if
needed; extensions are usual in complex cases. The period from panel establishment
to circulation of a panel report to WTO Members should not exceed nine months. In
practice, panels have been found to take more than 13 months on average to publicly
circulate reports.

Appellate Body Review

5
Dispute settlement mechanism, www.lawoctopus.com
The DSB establishes a standing Appellate Body that will hear the appeals from panel
cases. The Appellate Body “shall be composed of seven persons, three of whom shall
serve on any one case.” Those persons serving on the Appellate Body are to be
“persons of recognized authority, with demonstrated expertise in law, international
trade and the subject matter of the Covered Agreements generally.” The Body shall
consider only “issues of law covered in the panel report and legal interpretations
developed by the panel.” Its proceedings shall be confidential, and its reports
anonymous.

 This provision is important because, unlike judges in the United States, the members
of the appellate panel do not serve for life. This means that if their decisions were
public, they would be subject to personal retaliation by governments unhappy with
decisions, thus corrupting the fairness of the process. Decisions made by the
Appellate Body “may uphold, modify, or reverse the legal findings and conclusions of
the panel.” The DSB and the parties shall accept the report by the Appellate Body
without amendments “unless the DSB decides by consensus not to adopt the
Appellate Body report within thirty days following its circulation to the members.”

Adoption of Panel Reports/Appellate Review (Articles 16, 17, 20) 

Within 60 days after a panel report is circulated to WTO Members, the report is to be
adopted at a DSB meeting unless a disputing party appeals it or the DSB decides by
consensus not to adopt it. Within 60 days of being notified of an appeal (extendable to
90 days), the Appellate Body (AB) must issue a report that upholds, reverses, or
modifies the panel report. The AB report is to be adopted by the DSB, and
unconditionally accepted by the disputing parties, unless the DSB decides by
consensus not to adopt it within 30 days after circulation to Members. The period of
time from the date the panel is established to the date the DSB considers the panel
report for adoption is not to exceed nine months (12 months where the report is
appealed) unless otherwise agreed by the disputing parties.
Implementation of Panel and Appellate Body Reports (Article 21) 

In the event that the WTO decision finds the defending Member has violated an
obligation under a WTO agreement, the Member must inform the DSB of its
implementation plans within 30 days after the panel report and any AB report are
adopted. If it is “impracticable” for the Member to comply immediately, the Member
will have a “reasonable period of time” to do so. The Member is expected to
implement the WTO decision fully by the end of this period and to act consistently
with the decision after the period expires.10 Compliance may be achieved by
withdrawing the WTO-inconsistent measure or, alternatively, by issuing a revised
measure that modifies or replaces it.

 Under the DSU, the “reasonable period of time” is: (1) that proposed by the Member
and approved by the DSB; (2) absent approval, the period mutually agreed by the
disputants within 45days after the report or reports are adopted by the DSB; or (3)
failing agreement, the period determined by binding arbitration. Arbitration is to be
completed within 90 days after adoption of the reports. To aid the arbitrator in
determining the length of the compliance period, the DSU provides a non-binding
guideline of 15 months from the date of adoption. Arbitrated compliance periods have
ranged from six months to 15 months and one week. The DSU envisions that a
maximum 18 months will elapse from the date a panel is established until the
reasonable period of time is determined.6 

Compliance Panels (Article 21.5) 

Where there is disagreement as to whether a Member has complied—i.e., whether a

compliance measure exists, or whether a measure that has been taken is consistent
with the WTO decision in the case—either disputing party may request that a
compliance panel be convened under Article 21.5. A compliance panel is expected to
issue its report within 90 days after the dispute is referred to it, but it may extend this

6
Dispute Settlement in the World Trade Organization (WTO): An Overview  By Jeanne J. Grimmett (Legislative
Attorney) Dated  April 8, 2010
time period if needed. Compliance panel reports may be appealed to the WTO
Appellate Body and both reports are subject to adoption by the DSB.12 Compensation
and Suspension of Concessions (Article 22)

If the defending Member fails to comply with the WTO decision within the
established compliance period, the prevailing Member may request that the defending
Member negotiate a compensation agreement. If such a request is made and
agreement is not reached within 20 day7.

CONCLUSION

WTO is an organization dealing with the trade between nation. Its main

objective is to improve the standard of living, ensuring enployement and

steadily growing of real income. It acts as a negotiating instrument in

trade agreements. Trade dispute settlement goes through various stages

such as consultation, composition of panels, adoption of panel report,

appellate review.

7
As of the date of this report, there have been 29 compliance panel proceedings, 13 of which involved the
United States. Nineteen of the 29 panel reports were appealed, including 11 appeals by the United Stat
 BIBLIOGRAPHY

1. https://www.wto.org/english/thewto_e/thewto_e.htm

2. https://www.wto.org/english/tratop_e/dispu_e/dsu_e.htm#top

3. https://www.meti.go.jp/english/report/downloadfiles/2011WTO/2-0Overview.pdf

4. https://www.wto.org/english/tratop_e/dispu_e/disp_settlement_cbt_e/c6s1p1_e.ht
m

5. https://www.wto.org/english/docs_e/legal_e/04-wto.pdf

6. https://www.britannica.com/topic/World-Trade-Organization

7. Dr. S.R. Myneni, International Trade Law, Allahabad Law Agency

8. https://www.lawctopus.com/academike/dispute-settlement-mechanism-wto/