Article: Considering Development in the Implementation of Panel and Appellate Body Reports, 4(1) TRADE L. & DEV. 150 (2012) [available here]
Article Author: Sonia E. Rolland
Comment by Cherise M. Valles
The issue of “special and differential treatment” for developing countries has long been one of the most difficult systemic issues faced in the WTO. The “S & D” pro visions were extensively negotiated – and heavily qualified – during the Uruguay Round, to the continuing frustration of many developing countries that have sought to give substantive meaning to such text.
Professor Sonia Rolland’s article focuses on one aspect of this debate, i.e., the application of S & D provisions in the context of implementation of panel and Appellate Body rulings. She examines the extent to which developmental considerations have or could play a role in specific aspects of Articles 21 and 22 of the WTO Dispute Settlement Understanding (DSU). Her article discusses in particular three key stages of the implementation process: (i) the determination of the “reasonable period of time” (RPT) for compliance under DSU Article 21.3(c); (ii) the compliance panel process under DSU Article 21.5; and (iii) retaliation proceedings under DSU Article 22. She supplements her analysis by examining both the Uruguay Round negotiating history and the current proposals related to Articles 21 and 22 under the DSU Review process.
Professor Rolland’s article is carefully-reasoned and thoughtful. While I agree with her analysis under Article 21.3, I find her conclusions on Article 21.5 and Article 22.6 to be too far-reaching.
Professor Rolland provides a useful review of which countries can rely on Article 21.2 in Article 21.3(c) proceedings, in particular whether a developed country can request more time for implementation where the beneficiaries of its WTO-inconsistent measures are developing countries. To date, arbitrators have found that the requesting parties had not provided sufficient evidence to substantiate this request. In my view, it would be difficult to justify taking into account the interests of non-party developing countries especially where the complainants are themselves developing countries.
Professor Rolland notes that the RPT for implementation has come to mean the shortest period of time in which implementation can be achieved. In the light of this standard, she notes that the fact that the opposing party is a developing country that has invoked Article 21.2 will be of “no import”. However, the shortest period of time standard is based on the Member using its ordinary procedures to implement. It must be read in the light of the other factors arbitrators have taken into consideration as “particular circumstances” in determining the RPT. Arbitrators have noted that recourse to “extraordinary” means of compliance is not required. In a case involving a developing country seeking implementation by a developed country, the developing country could submit that the developed country should employ “extraordinary” means to implement.
Professor Rolland is correct to point out the difficulties that arise when both the complaining and implementing parties are developing countries. In the cases to date, the arbitrators have held that is such cases the interests of the parties offset each other and it would be necessary for a party to succeed “in demonstrating that it was more affected by the problems related to its developing country status than the other party”. In practical terms, it may be difficult to adduce such evidence and therefore, it is likely that Article 21.2 will continue not to be applied in cases where both the complainant and respondent are developing countries.
In addition, I would note that in the few cases where Article 21.2 has been applied, it is hard to escape the conclusion that it has introduced unpredictability into the process. In Indonesia – Autos (Article 21.3(c)), the Arbitrator found that:
Indonesia is not only a developing country; it is a developing country that is currently in a dire economic and financial situation. Indonesia itself states that its economy is "near collapse". In these very particular circumstances, I consider it appropriate to give full weight to matters affecting the interests of Indonesia as a developing country pursuant to the provisions of Article 21.2 of the DSU. I, therefore, conclude that an additional period of six months over and above the six-month period required for the completion of Indonesia's domestic rule-making process constitutes a reasonable period of time for implementation of the recommendations and rulings of the DSB in this case.
No reasoning is given as to why a developing country in a “dire economic and financial situation” and “near collapse” should be given an additional six months, as opposed to any other time period – this number seems to have been chosen rather arbitrarily.
I cannot share Professor Rolland’s view that “[w]hile Article 21.5 itself does not mention development or SDT for developing members, it may be argued that other SDT provisions of Article 21 could, or possibly must, infuse Article 21.5 proceedings” and that therefore Article 21.2 “could apply to Article 21.5 proceedings”. One cannot read into the DSU a cross-reference between DSU Article 21.2 and 21.5 where none exists. Moreover, the function of an Article 21.5 panel is to determine whether a measure taken to comply is in compliance with a Member’s obligations. To suggest that SDT provisions should apply to Article 21.5 proceedings is tantamount to saying that they should apply to panel and Appellate Body proceedings as well, which would have the unfortunate effect of creating a two-tier system of obligations between developing and developed countries.
Professor Rolland suggests that in Article 22.6 arbitrations, “arbitrators have been relatively open to developmental concerns in their interpretation of the terms of Article 22.3(d), despite the lack of an express SDT mandate”. In my view, it is not that arbitrators have been open to developmental concerns as such, but that Article 22.3(d) mandates arbitrators to take into consideration a number of trade and economic considerations, which would of course take into account the development status of a country in considering the sectors, agreements and level of retaliation. It is not clear that the decisions of the arbitrators mean that developmental considerations have been “mainstreamed” into DSU Article 22.3.
I do not agree that recasting the S & D provisions as “best efforts obligations”, as asserted in this paper, would render them much more meaningful compared to the current hortatory language.
The section on the drafting history of DSU Article 21 and 22 in comparison with the DSU Review proposals contains some interesting insights. One noteworthy point is that many of the proposals tabled in DSU Review are similar to proposals tabled (but not implemented) in the Uruguay Round, including that of collective retaliation.
Professor Rolland’s useful paper highlights the exceptional difficulties that have been faced by developing countries in seeking to operationalize the weak, hortatory language that emerged from the Uruguay Round negotiations.