REINVIGORATED DSU REVIEW FOCUSES ON THREE NEW SUBMISSIONS

The Special (negotiating) Session of the WTO Dispute Settlement Body (DSB) met on 21 March to discuss three new contributions to the ongoing review of the functioning of the Dispute Settlement Understanding (DSU Review). They came from Canada, the US and the so-called "G-7" comprised of Argentina, Brazil, Canada, India, New Zealand, Norway and Mexico (Mexico is not a full sponsor of this proposal but is working with the group; see BRIDGES Weekly, 5 May 2004).

Delegates report that though short, the meeting was positive. Others indicate that the flurry of revised contributions since the Hong Kong Ministerial Conference indicates Members' enthusiasm to engage in the DSU Review negotiations in spite of the fact that it is outside the Doha Round single undertaking. Nonetheless, some developing country members are concerned that attention to development concerns may be lost amidst the revived discussions on systemic issues.

US seeks to provide additional guidance to WTO adjudicative bodies

The US contribution (TN/DS/W/82/Add.2) sought to provide direction on how panels and the Appellate Body should order their analysis of a "measure under review," i.e., a disputed measure. The paper emphasised that the purpose of the dispute settlement system was to help Members resolve trade disputes among themselves, not to produce reports or make law.

The paper noted that there was no clear definition of a "measure" under WTO rules, as the content of this term could vary from case to case. The US noted that under GATT 1947 practice a "measure" could constitute any act of a Member whether or not legally binding, and could even refer to non-binding administrative guidance by a government. Even be an omission or failure to act could be taken to be a 'measure.'

The contribution further elaborates on the issue of "mandatory and discretionary legislation," which refers to domestic laws permitting a range of actions, some of which may contravene WTO rules. The US argues that WTO adjudicative bodies should not be permitted to presume that a Member will choose to breach a WTO agreement, even if its domestic law might allow for it. The US contended that the most appropriate means to implement this would not be through an amendment of the DSU but by a more flexible means such as an authoritative interpretation or a decision by the DSB.

The proposal, which elaborated on the US' previous contribution on "additional guidance to WTO adjudicative bodies" (see BRIDGES Weekly, 2 March 2005) drew a mixed response from Members. A number of delegates were of the view that the issues presented were too complex and challenging to be dealt with in the review. Others disagreed with the US on the purpose of the dispute settlement system, arguing that although the purpose of the system was indeed the resolution of specific disputes, dispute settlement could also serve to clarify Members' rights and obligations. One delegate expressed concern that the US' proposal might unduly restrict the ability of adjudicating bodies to rule on challenged measures.

G-7 contribution on enhanced third party rights

The G-7 contribution on third party rights is a revision of an earlier "package deal" on various aspects of the DSU (see BRIDGES Weekly, 2 March 2005). It is also the product of recent informal work in the so-called "off-campus Mexican group" involving all willing Members and coordinated by Mexico.

The proposal seeks to strike an appropriate balance between the enhancement of third party rights and the preservation of the interests of the main parties to a dispute. With respect to requests to join in consultations, the G-7 explained that upon reflection, it had decided to maintain its proposed "all or nothing" approach -- according to which the responding Member would have the option of accepting or rejecting all such requests, but would not have the option to discriminate among Members.

Several members expressed reservations about the "all or nothing" approach, noting that it could be prejudicial to those who had a genuine interest in the consultations. In justifying its proposal to allow countries to join a dispute as a third party at the appellate stage, Canada argued that the current requirement for countries to seek third party status at the panel stage -- long before any systemic issues arising from the case became clear -- places a heavy burden on resource-constrained Member countries.

Canada revisits the protection of confidential information in disputes

Canada introduced a revised proposal on the protection of confidential information in panel and Appellate Body proceedings. While the original January 2003 proposal (TN/DS/W/41) narrowly addressed "business confidential information" this proposal broadly addresses "strictly" confidential information. It also covers requests for information in disputes over subsidies outlined under Annex 5 of the Agreement on Subsidies and Countervailing Measures -- the so-called 'Annex 5' procedures require governments to disclose data about grants to companies -- and the destruction or return of such information. According to the proposal, a party that introduces as evidence proprietary or commercially sensitive information not in the public domain would be be permitted to designate it as confidential, provided that it acts in good faith and exercises restraint. Access to strictly confidential information would be limited to persons who have signed a declaration of non-disclosure and who are representatives of the disputing parties, members of the panel, WTO Secretariat staff or experts appointed by the panel. In introducing this proposal, Canada noted the potential link between this issue and that of transparency and suggested that both issues would be integrated as work progressed.

While a number of delegates welcomed the Canadian contribution as a good basis for further work, one delegate noted some concerns about the potential for abuse of the procedure if it is inserted into the DSU.

In the Canada-Aircraft case, where Brazil challenged Canadian subsidies on aircrafts, both parties had requested the Appellate body to adopt additional procedures for the protection of business confidential information -- only to have them rejected by the Appellate Body. Trade commentators speculate that this proposal and its predecessor stem from Canada's experience in this case.

The EU indicated that it was working towards a text on "post-retaliation" to be submitted to the Special Session. The next meeting of the DSB Special Session is scheduled for 24-25 April.

ICTSD reporting.