Evaluation of the constraint

The potential shortcomings of WTO retaliation for developing countries have been

demonstrated.559 The inadequacies of the WTO retaliation rules for developing countries

should not significantly affect developing countries’ decisions to operate in the WTO dispute

settlement system. However, the enforcement measures by ‘retaliation rules’, via the

‘suspension of trade concessions or obligations’, of the WTO dispute settlement system

556 _Ibid.

557_{Ibid. A huge multinational enterprise (MNE).}

558 _{Hoda, A., (2012), ‘Dispute Settlement in the WTO, Developing Countries and India’.} 559

146

might be considered “virtually meaningless”560 that may as a result of no effectively

influence against developed countries561.

Pascal Lamy562, the previous WTO Director General, has mentioned the effectiveness of the

WTO sanctions for developing countries and he states that “the WTO system has no

sanctions” 563

. Regarding developing countries, it has been argued that one of the most

significant constraints limiting the participation of developing countries in the WTO dispute

settlement system is the structural inflexibility of the remedies presented to poor nations to

enforce a favourable decision564. The LDC565 Group, in the context of the DSU review

negotiations, has attributed the limit on the participation of developing countries in the WTO

dispute settlement system to “the inadequacies and structural rigidities of the remedies

available to poor countries”566

. Moreover, the African Group suggested that the main

dilemma of the WTO dispute settlement system is that “the means provided for enforcement of findings and recommendations [trade retaliation] are skewed against and disadvantage

African Members”567

. Therefore, there are many proposals from developing countries to

560 _Ibid.

561 _{See, Article 22 of the DSU. See also, Articles 4.10 and 7.9 of the Subsidies and Countervailing Measures}

Agreement which refers DSU enforcement.

562

Pascal Lamy was Director-General of the WTO from September 2005 to August 2013.

563 _{See, Al Bashar 2009. See also, Footer, 2001.,p.98. See, Schwartz, W.F., & Sykes, A.O., (2002) ‘The}

Economic Structure of Renegotiation and Dispute Resolution in the World Trade Organization’, 31 Journal of

Legal Studies 179, p. 204.

564

Al Bashar 2009.

565 _{Less Developing countries.}

566 _{The LDC Group proposal, TN/DS/W/17, at 1 (Sept. 19, 2002).See, also, Abbott, R.,(2007), ‘Are Developing}

Countries Deterred from Using the WTO Dispute Settlement System? Participation of Developing Countries in the DSM in the years 1995-2005’, at p.8. See also, W. Davey, (2005) 'The WTO Dispute Settlement System: The First Ten Years'.“the higher ratio for the most recent period 2001-2005 suggests that developing members, after a slow start within a new system, are beginning to find it more familiar and learning it can be used to best advantage”.

567

147

reform the retaliation rules, including collective retaliation,568 tradable retaliation rights569

and the use of compensation570.

Regarding the WTO, there were a number of Members with a reputation for non-compliance

with the DSU. The example of the high profile dispute is cases brought against the EU

regarding its banana import policy571. It has been considered that the current method for

enforcement of a DSU ruling may generate an inducement for the United States and the EC to

delay the duration of the dispute for several years. For example, the United States disputes

with Costa Rica and Pakistan in the textile safeguard measures lasted for almost three

years572. The United States blocked its market to access to those developing countries’

imports for about three years without any negative consequences for it trade573.

The DSU has to work more for developing countries because developing countries cannot

effectively enforce WTO rulings, for example in 574 the Banana dispute575. Therefore, it has

568

Communication from India on behalf of Cuba, Dominican Republic, Egypt, Honduras, Jamaica and

Malaysia, Negotiations on the Dispute Settlement Understanding, TN/DS/W/47, at 2 (Feb. 11, 2003).

569 _{Proposal from Mexico, Negotiations on Improvements and Clarifications of the Dispute Settlement}

Understanding, TN/DS/W/23, at 3 (Nov. 4, 2002).

570

Communication from Ecuador, Contribution of Ecuador to the Improvement of the Dispute Settlement Understanding of the WTO, TN/DS/W/9, at 3 (July 8, 2002); Haiti Proposal, TN/DS/W/37, at 3 (Jan. 22, 2003); the African Group Proposal, TN/DS/W/15, at 2 (Sept. 25 2002) and Kenya Proposal, Communication from Kenya, Text for the African Group Proposals on Dispute Settlement Understanding Negotiations, TN/DS/W/42, at 2,5 (Jan. 24, 2003).

571 _{Brewer, T.L., & Young, S., (1999) ‘WTO Disputes and Developing Countries’, 33(5) Journal of World}

Trade p l69-182. A similar position states by Das, B, L,. (1999) ‘The World Trade Organisation: a guide to the framework for international trade’, Third World Network, p. 397.

572

See Report of the Appellate Body, United States-Restrictions on Imports, WT/DS24/AB/R (Feb. 10, 1997) (complaint by Costa Rica).

573 _{Shaffer, G., (2003), ‘How to Make the WTO Dispute Settlement System Work for Developing Countries:}

Some Proactive Developing Country Strategies’.

574

Ierley, D., (2002) ‘Defining the factors that influence developing country compliance with and participation in the WTO dispute settlement system: Another look at the dispute over bananas’, p 626.

575_{European Communities-Regime for the Importation, Sale and Distribution of Bananas, panel report,}

WT/DS27/ECU, adopted on 22 May 1997; appellate body report, WT/DS27/AB/R, adopted on 5 September 1997.

148

been observed that it is a waste of money and time for developing countries to invoke the

WTO’s dispute settlement procedures against developed country WTO Members576

. So, the

‘suspension of trade concessions’ may be more favourable to developed country Members more than to developing countries as a means of ensuring compliance.

There is a high compliance with dispute settlement rulings by developing countries577.

However, if retaliation is the only factor for compliance with adverse rulings that would lead

to low rates of compliance particularly in those disputes where smaller or developing

countries were complainants578. Whereas in sixty disputes, it was possible to retaliate,

Members “only requested the right to retaliate in seventeen disputes”579

. In the following

parts, I will analyse constraints that lead to the limitation of participation of developing

countries in WTO dispute settlement system.