Review of dispute settlement understanding: Operation of panels

Stewart, Terence P

REVIEW OF THE DISPUTE SETTLEMENT UNDERSTANDING: OPERATION OF PANELS*

I. INTRODUCTION

Addressing perceived shortcomings in the General Agreement on Tariffs and Trade (GATT) 1 dispute settlement system was a major objective of the United States and many other nations during the Uruguay Round of trade negotiations between 1986 and 1993.2 Although major members of the GATT had used dispute settlement on many occasions during the GATT's existence, few disputes were brought by developing countries. The process was subject to substantial time delays through actions of the parties, and losing parties could block adoption of panel reports, rendering the process uncertain, even for victors. Although a review of GATT panel reports will show that most were ultimately adopted, the total timelines were typically measured in years. Agricultural disputes in particular seemed to be intractable between the United States and the European Union (EU). A perceived inability to get the EU to conform to panel reports was an ongoing concern, not only to the U.S. agricultural industry, but also to Congress. Moreover, after the Tokyo Round Agreements, concerns arose about the ability of some countries to engage in forum shopping when bringing challenges before the GATT At the same time, a number of substantive areas were not covered by the GATT and were pursued by the United States through unilateral action under Section 301 and its permutations, Special and Super. Countries who found themselves the object of these U.S. actions were anxious to obtain controls on the ability of the United States to pursue unilateral actions, at least where such actions involved retaliation, or the threat thereof, on market access to the United States.

Starting with the mid-term review in 1988, GATT Contracting Parties implemented changes in the dispute settlement system to streamline the panel process and reduce the overall time until panel reports were available. When the Uruguay Round concluded and the World Trade Organization (WTO) was agreed to, a new dispute settlement agreement was considered by most countries to be a very important accomplishment.3 Annex 2 to the Marrakesh Agreement Establishing the World Trade Organization consists of the Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU).4 This agreement folds in the timeline improvements which had been used on an interim basis since 1988,5 sets up an Appellate Bodys and ensures the adoption of panel reports, as reviewed and modified by the Appellate Body, absent a unanimous decision by all parties, including the winning party, not to adopt.7 The agreement also sets up procedures for monitoring the implementation of panel recommendations and evaluating the permissible amount of compensation or level of retaliation.8 It also encouraged Members to use the DSU to settle disputes rather than resorting to unilateral action.9

It has now been slightly more than five years since the WTO launch. The dispute settlement system of the WTO has generally received favorable reviews by commentators for accomplishing most of what it was designed to do, although it has also raised concerns, particularly amongst "civil society," about whether the dispute settlement system may be too powerful and undemocratic. It is certainly the case that WTO Members have been active users of the DSU and participants in the Dispute Settlement Body (DSB). Users have been not only developed countries, but also developing countries, including cases by developing countries against other developing countries. The timelines on the panel process are substantially better than under the GATT process, albeit, in most cases, longer than the timeframes specified within the DSU.

The majority of disputes continue to be settled without a final panel report. This is important as the current structure of the WTO Secretariat and the DSB does not really permit huge numbers of disputes to flow through the system each year. Although the WTO is much more legalistic than the GATT ever was, the emphasis continues to be on finding solutions that are mutually acceptable among the disputing parties. Panels are the last resort, not the first. Between January l, 1995, and January 13, 2000, 144 distinct requests for consultations were filed with the WTO. Of these requests, fifty three were resolved in consultations or arbitration, or simply not pursued; thirty-three were resolved by dispute settlement panels; nineteen were still pending before a panel; and forty one were still pending consultation.10 Twenty six of the panel reports were appealed to the Appellate Body.11 This is a relatively high percentage, but it is not surprising, considering the relatively new process, the political cover for losing governments that the Appellate Body provides, and the early tendency of the Appellate Body to reverse a significant number of issues decided by the panel.

Similarly, most panel decisions, as modified by Appellate Body decisions, have not only been adopted, but also implemented in a manner deemed acceptable by the disputing parties. The length of time before implementation is required has been problematic to businesses in many countries. Yet, the timelines, often fifteen months and occasionally shorter, are dramatically shorter than under GATT.

Under the GATT, it was relatively easy for losing parties to avoid implementing unfavorable panel decisions; they could simply block adoption of the reports. Under the current system, however, this is no longer a possibility Instead countries intent on not changing their laws or practices to conform to panel or Appellate Body rulings, have found a variety of ways, sometimes using the language of the DSU as justification, to avoid or delay implementation. Therefore, it is not surprising that there has been a fair amount of confusion on how winning countries, dissatisfied with a losing country's compliance, or lack thereof, can move forward to seek compensation or retaliation. -The United States and the EU have squared off twice, in European Communities Regime for the Importation, Sale and Distribution of Bananas (ECBananas) and European Communities-Measures Concerning Meat and Meat Products (EC-Hormones), over apparent ambiguities in Articles 21 and 22 of the DSU. The tension over these issues has dissipated somewhat after the various decisions in the EC-Bananas dispute, but may surface again when the timeframe for U.S. implementation of the U.S.-Tax Treatment for `Foreign Sales Corporations" ( U.S. FSC) decision draws to an end.

Transparency improvements were also an objective of the United States in the Uruguay Round. The DSU partially embodies this objective. Specifically, a country can request other parties to make public versions of their submissions available. The DSU, however, does not address many of the transparency improvements the United States advocated in the Uruguay Round. As a result, the DSU has come under heavy attack as inconsistent with a democratic society particularly as the panels and Appellate Body make decisions that require modification of laws, regulations or practices in areas where national sensitivities run high: Calls for greater transparency and for rights of non-governmental entities to participate in the process by obtaining information, submitting views, hearing arguments, or being heard, have been raised and aggressively pursued by those who perceive that matters of great concern are being handled in a secretive manner.

Not surprisingly, there are also many practical issues in how rights can be protected, and obligations respected, that have been identified in the disputes brought before the WTO. How to gather or compel information has been a question of importance in some cases. Issues have included the use of experts, receipt of unsolicited non-governmental organization submissions, refusal to supply information by Member governments, and the safeguards needed if one of the parties submits confidential information. In addition, whether disputes can be initiated on the basis of notice pleadings has been a repeated issue, as has the question of the standing of Member governments to be a party Whether governments can be restricted in their choice of counsel has been addressed at both the panel and Appellate Body level and appears to be resolved, at least after the consultation phase.

In short, the system for resolving disputes has proven to be good at doing just that. Member governments during the Uruguay Round did not want a system that would require change in all cases. Although the objective was conformance, obviously that could prove to be impossible in certain circumstances. Therefore, the need for compensation or retaliation arose. The United States made this point repeatedly during the congressional consideration of the Uruguay Round Agreements Act in 1994. The United States and others are less happy with that structure of the DSU after the failure of the EU to bring itself into conformity in EC-Bananas and EC-Hormones. Yet, the system has not failed in that regard. It has delivered what the United States and others insisted be the limitations of the process. The United States is correct that the system cannot survive if obligations are routinely flouted. The EU, in particular, bears the burden of showing it can honor its obligations in the vast majority of situations. Just as certainly, no country, including the United States, is immune from having an adverse determination on a matter too politically sensitive to address at home. The EU challenge to the Helms-Burton Act and the U.S. reaction is a good reminder of the occasional sensitivities of all nations.

First and foremost of the challenges that lie ahead for the DSU is whether the system can be modified sufficiently to satisfy the demands of the public for better access and greater participation. Members are deeply divided with few supporting what the private sector wants. Most other issues present workable solutions.

The focus of the remainder of this article will be on the procedural matters identified above.

II. BACKGROUND ON WTO DISPUTE SETTLEMENT

The founding Members of the WTO created the organization's dispute settlement system with the goal of providing an established mechanism and forum for the mutual resolution of disputes. In keeping with this goal, the WTO dispute settlement system was designed to ensure that Members attempt a mutually agreed upon solution before resorting to the services of a dispute settlement panel. Article 4 of the DSU provides that a request for the formation of a panel may only be made after consultations between the complaining party and the party allegedly in violation of its WTO obligations have failed to produce a mutually acceptable solution.12 In addition, Article 5 of the DSU provides that disputing Members may agree to enter into "good offices, conciliation and mediation" at any time during the dispute settlement process.13 Although the DSU envisioned that such communications would normally take place prior to the establishment of a panel, it does allow for the continuation of good offices, conciliation, and mediation throughout the panel process, so long as both parties to the dispute agree to do so.14

Should consultations or mediation fail to produce a solution, the complaining party may then request the establishment of a panel. Upon receipt of a request, the DSB will determine the "terms of reference."15 Shortly thereafter, the DSB will select three16 individuals to serve as panelists in the dispute. Individuals belonging to Member countries that are parties or third parties to the dispute may not serve as panelists,17 and developing country parties to the dispute have the right to ensure that at least one of the panelists is also from a developing country.l8 Given a "compelling reason," parties to the dispute may object to the selection of a particular panelist.19 If no agreement can be reached on the selection of panelists within twenty days of the request for establishment of the panel, the WTO DirectorGeneral, in consultation with the DSB Chairman and the disputing parties, will determine the composition of the panel.20

Within a week of when the panel is composed, the DSU instructs the panel to set up a timetable for the panel process, including "precise deadlines" for written submissions, dates of meetings with the panel, and dates for the release of the panel's interim and final reports.21 After reviewing the submissions of parties and third parties, as well as any other information and advice the panel deems relevant,22 the panel issues its interim decision. The interim decision lays out each factual argument of the parties and third parties and presents the panel's decision.23 The interim report is released only to parties and third parties, with the request that such parties keep the contents of the report confidential until the panel issues its final report. Parties are permitted to comment on the interim report,24 and the panel considers these comments before its final decision. Final decisions are first released to the parties and third parties and then, upon translation into the official WTO languages,25 to all WTO Members and the public.

Parties26 to the dispute may appeal the panel report to the Appellate Body within sixty days of its circulation to the public.27 Panel reports that are not appealed within sixty days will be adopted by the DSB, unless there is consensus against adoption.28 Appellate Body review is limited to issues of law and legal interpretation of the panel,29 and should be completed within sixty days from the notice of appeal.30

As required by the Uruguay Round Agreements, Members have undertaken a review of the DSU beginning in 1998 to explore and suggest possible amendments to the DSU. Although this review was to be concluded by the end of 1998,31 strong differences among Members, particularly the United States and EU, and the feeling that three years of dispute settlement was insufficient experience on which to base changes, prevented an agreement on DSU amendments.32 Going into the Seattle Ministerial, hopes were raised that Members could reach agreement on DSU Review proposals.33 Differences between the United States and other WTO Members, however, largely on the issue of transparency and retaliation, could not be breached, and, consequently, no changes were made. Table 9 summarizes some of the key areas of debate that have arisen over the course of the DSU review At present, the DSU Review is on going.34

III. TYMELINES OF THE PANEL PROCESS

A. Length of Time Before Issuance of Panel Reports

The DSU states that "prompt settlement" of disputes is "essential to the effective functioning of the WTO."35 In keeping with this statement, Article 12 of the DSU provides that panel reports shall be issued to the parties "as a general rule" within six months from the date the composition and terms of reference of the panel have been agreed upon or, at the latest, circulated to the parties nine months from the date of the establishment of the panel.36

Although the issuance of panel reports within the six-month timeframe has become the exception rather than the rule, panels have generally come within two to three months of the DSU's timetable. Six of the thirty three panel decisions issued to date have met the sixmonth rule;37 five of the decisions to miss the six-month rule met the nine-month rule.38 In the last two years,39 four of twenty two panel reports have been issued within the six-month rule,44 and none of the reports to miss the six-month deadline met the nine-month rule.41 The majority of panel reports in the last two years have been issued to the parties between eight and ten months after agreement on the terms of reference and composition of the panel. Most panel reports were circulated to Members between ten and thirteen months after establishment of a panel. The tables in the Appendix show the timeframes for the resolution of WTO disputes from 1995 to 1999.

Although panels have not been able, in most cases, to meet DSU identified timelines, the overall process is nonetheless a major improvement over the GATT process. Still, Member nations are advocating further time reductions in the DSU schedule.42 Possible solutions are to relieve some of the burden and time constraints on the panelists and WTO staff by eliminating the practice of summarizing every party and third-party argument;43 moving to a semi-permanent panelist system;` eliminating certain delays in the existing system, such as the right to block first requests for a panel;45 or devoting greater resources to the WTO Secretariat.

B. Factors Contributing to the Time Required for Issuance of Panel Decisions 1. Length of Panel Decisions

It is not uncommon for a panel report to exceed 200 pages in length. Several have exceeded 400 pages.46 The EG-Hormones dispute is contained in two separate panel reports, one for the U.S. complaint and one for the Canadian complaint, each over 400 pages. The reports in the EG-Bananas dispute, four in all, totaled over 1000 pages. Fortunately, parsing out the "findings" of any given panel report requires only a review of somewhere between thirty to sixty pages.

The bulk of panel reports is attributable to the summation of each party and third-party argument made and expert opinion given in the course of the dispute. The panels have considered it an obligation to include these summaries because of the insistence of parties and third parties that panel reports reflect their views. As authority for this task, panels have interpreted Article 12.7 of the DSU to oblige the panel to provide a summary of each party and third-party argument and expert opinion submitted in the case.47 In addition, panels recognize that if they omit these summaries, public access to parties' arguments and expert opinions would be largely obstructed, given the fact that parties' and experts' submissions are often not made publicly available.48

2. Issuance of Separate Reports in Multi-Party Disputes

The length of panel reports is undoubtedly confounded by Article 9, which states that upon request from one of the parties to the dispute, the panel shall issue separate panel reports for each complaining party.49 The result can be multiple panel reports, totaling several hundred pages that contain largely duplicated factual summaries and often nearly identical party arguments and panel conclusions.

The administrative burden of Article 9 was seen in EC-Bananas. In this dispute, although the panel was sympathetic to the administrative burden of issuing separate reports for the four separate complainants, it found that the language of Article 9 was clear in its requirement that a panel must issue separate reports upon request. Article 9's requirement served to ensure that responding parties were not "later faced with a demand for compensation or threatened by retaliation under Article 22 of the DSU in respect of uncured inconsistencies with WTO rules that were not complained of by one of the complaining parties participating in a panel proceeding."50 This concern of the panel over parties' rights could just as easily be handled, however, by creating a matrix at the front or back of panel reports identifying which parts or decisions apply to which country.

IV TRANSPARENCY OF THE PANEL PROCESS

The lack of transparency in the panel process has received much attention over the last few years. The DSU expressly provides that panel proceedings shall be confidential, that opinions expressed by the individual panelists shall be anonymous, and that parties shall respect the confidentiality of any document marked as such.51 Individuals who are not parties or third parties are not permitted to attend panel proceedings and no transcripts of proceedings are available. The only elements of the panel process required to be public are the panels' final reports and public versions of requested, confidential party submissions,52 which, as discussed in more detail below,53 are often unavailable in a timely manner. As a result, much of the panel process remains obscured from public view.

A. Presence of Observers at Meetings with the Panel

The issue of transparency was recently pushed to the fore in a dispute between the United States and the EU over U.S. imposition of countervailing duties on lead and steel products.54 A day before the first meeting of the panel, the United States requested that observers be permitted to attend the panel proceedings. The panel denied the U.S. request. After noting the lateness of the request, the panel gave its reasons for the denial: (1) the Working Procedures of Annex 3 provide that the "panel shall meet in closed session;" (2) although DSU Article 12 allows the panel to design its own working procedures without agreement from the parties,55 in this case such agreement was appropriate because of possible confidential information contained in the parties' oral statements; (3) the EU and third parties had expressed their objection to the presence of observers; and (4) the Working Procedures of Annex 3 provide that written submissions to the panel are confidential and information from these written submissions may be reiterated during the course of oral proceedings.56 In short, the panel believed that parties' oral statements to the panel were confidential and that only the party making the statement had the authority to disclose its contents.57

B. Public Access to Dispute Settlement Documents

As mentioned above, the only elements of the panel process required to be released to the public are the final panel and Appellate Body reports, as well as non-confidential summaries, which are provided only upon request and often in an untimely manner. Consequently, public access to many of the documents submitted in the course of disputes is limited. A proposal, advocated by the United States in the DSU Review, which would increase public access to party submissions, as well as cut down on the length of panel reports, would be the creation of a public record of all documents submitted in a dispute.58 This proposal would relieve panels of the burden of summarizing lengthy party submissions, and shift the responsibility for inquiries as to the content of parties' arguments and experts' statements to interested individuals who, under the proposal, would have public access to these submissions. This proposal would necessarily need to be implemented in conjunction with stricter rules on the submission of public versions of documents containing confidential information.59

The burden of administering such a proposal, however, will be a challenge to its implementation. In general, the records submitted to a panel in the course of a dispute are not unmanageably large. In the Japan Film case, however, the records submitted to the panel totaled somewhere between 20,000 and 40,000 pages. Developing a system to make such a large number of documents publicly available in a timely manner will be crucial to the proposal's success.

A scaled back alternative to the creation of a public record, proposed in the Draft Agreement on the DSU, would replace the lengthy summaries of parties' arguments with attachment of parties' briefs to the panel reports.60 Such an approach was adopted by the panel in U.S. Lead-Bismuth.61 In this case, the panel refrained from summarizing the parties' arguments and noted that the parties' submissions to the panel could be found in an appendix.62 The appendix included the parties' first and second written submissions to the panel, excluding exhibits, the first and second oral statements to the panel, and the parties' responses to questions presented to them by the panel and the opposing party.63 Confidentiality appears not to have been a concern, as parties' submissions appear to be attached without indication that certain data or portions of text had been omitted.

The panel did not explain its decision to attach the parties' submissions in lieu of lengthy summaries, and the parties did not make objections to the panel's decision. Sources reveal, however, that the decision to attach the parties' submissions was a joint agreement among the parties and the panel, who saw a practical and substantive advantage in doing so. The decision could also be viewed as an effort by the two major players in the WTO, the United States and the EU, to demonstrate that the panel process could work equally as well by replacing lengthy summaries of parties' arguments with attachment of parties' submissions. The only portions that were summarized were those of two third parties, Brazil and Mexico.64

C. Availability of Public Versions of Business Confidential Documents

The DSU provides that, upon request, a party to a dispute shall "provide a non-confidential summary of the information contained in its written submission that could be disclosed to the public."65 As noted above, however, in practice the availability of public versions has been limited. In many instances, public versions have not been provided as requested, or have been provided only after proceedings have concluded. Providing public versions after proceedings have concluded provides for public access, but does so at a time when access to such submissions is less valuable. The usefulness of public versions is at its height during the actual proceeding, when parties could use them to seek outside advise. This shortcoming warrants consideration of imposing stricter rules and timelines on parties' obligation to submit public versions.

D. Efforts to Improve Transparency

1. Attendance of Private Parties at Panel Proceedings

The United States has offered a proposal, in the course of the DSU Review, to make panel proceedings more transparent: permit private parties such as non-governmental organizations (NGOs) and real parties in interest (individuals and companies of the Member countries who will actually bear the consequences of a panel's decision) to attend oral proceedings before the panel. As it did in U.S. Lead-Bismuth,66 the EU has repeatedly opposed this proposal, as have Japan and other WTO Members. The EU most recently voiced its objection to opening panel proceedings to the public at the December 17, 1999 summit in Washington.67 However, there is a growing public sentiment that the dispute settlement process and the WTO in general are too secretive. Opening panel proceedings to the public would provide an effective way to help combat this sentiment and could be done in a way that would not jeopardise confidential information.

2. Transcripts of Panel Proceedings and a Public Record

Two other areas are also possibilities for increased transparency. First, transcripts of oral proceedings could be made publicly available, with provisions for the protection of confidential information revealed during panel proceedings. Second, as discussed above, a public record of all documents submitted in the course of a dispute could be created.

The United States has expressly stated support for the second of these proposals, in the DSU Review process and at the Seattle Ministerial.69 Documents in a public record would be available upon submission, or, if such documents contained proprietary information, available in the form of a non-confidential summary submitted within a set time-period.70 The EU, Japan, and other Members71 have rejected this proposal as well.72 These Members have, however, advocated changing the DSU to require parties to provide, upon request, a non-confidential summary of information contained in a party or third-party submission not later than fifteen days after the request or the submission, whichever is later.73 Whether these changes or other means to increase transparency should be implemented is a question that has presented itself with more urgency in the last few years, as critics of the WTO have become more vocal.

V. PANELISTS

A. Selection of Panelists

1. Agreement On or Appointment of Panelists

As mentioned above, Article 8 of the DSU provides that, after the establishment of a panel, the WTO Secretariat shall propose nominations of individuals to serve as panelists and that "parties to the dispute shall not oppose nominations except for compelling reasons. "74 There is no record of whether parties have generally accepted the Secretariat's nominations. Over the last five years, however, parties have often been unable to reach agreement on panelists. As a result, the DirectorGeneral has resorted to his power under Article 8.7 of the DSU to appoint panelists in those cases where parties cannot agree within twenty days of the date of the establishment of the panel.75 Table 1 in the Appendix inidicates the cases where the Director-General is identified as having used his appointment power.

Over the last two years, in at least half of the cases, the DirectorGeneral has used his power to appoint the panelists to serve in a given dispute. The question arises, however with the Director General increasingly resorting to his or her appointment power, whether DSU practice in this area is still acceptable to Members who envisioned having a more active role in the selection of the panelists to hear their disputes. In addition, objections to the Secretariat's nominations lengthen the panel process by an additional twenty days.

2. Limitation on Eligibility of Panelists

The DSU provides that "[p] anels shall be composed of wellqualified" individuals with a "sufficiently diverse background and a wide spectrum of experience."76 These individuals are selected from missions in Geneva, ministries at home, or from a list maintained by the WTO Secretariat.77 Panelists have tended to be Geneva-based, government individuals, or academics.

A major limitation on the eligibility of panelists to serve is Article 8.3 of the DSU, which provides that individuals who are nationals of the countries party to the dispute may not serve as panelists in that dispute, unless the parties agree otherwise.78 As the United States and the EU have been the most active participants of the system, this provision limits the number of disputes for which nationals from these countries are eligible to serve. Only 19 of the 101 different panelists selected have been from the United States or the EU.

B. Time Constraints on the Ability of Panelists to Handle Complex Cases

1. Complexity of WTO Disputes

Panel disputes often involve complex factual and legal issues. The laws and regulations of Member countries can be enormously intricate and analysis of their compatibility with WTO obligations can require vast amounts of factual information. In addition, it is not uncommon for a panel request to cite numerous violations, identifying a number of measures and multiple WTO agreements. U.S. FSC, for example, involved alleged violations of the Agreement on Subsidies and Countervailing Measures (SCM Agreement) 79 and the Agreement on Agriculture,80 and required examination of various provisions of the U.S. tax regime.81 India-Quantitative Restrictions on Agricultural, Textile and Industrial Products (India-QRs) cited violations of the Agreement on Agriculture, the GATT, and the Agreement on Import Licensing Procedures and demanded assessment of India's tariff system and balance-of payments.82 In, japan Film, the United States cited twenty-one separate measures that it believed were violations of various GATT provisions.83 Records in these some of these cases totaled tens of thousands of pages.

2. Time Demands

Given the enormity of the records in many disputes, questions have surfaced regarding the workload placed on the panelists and whether panelists have the time to devote to thorough resolution of the disputes before them. Since the first panel was established on April 10, 1995, 101 different individuals have been selected to serve as panelists. Although several have sat in multiple disputes, as is indicated in Table 2 of the appendix, a majority of the panelists have served in only one dispute. Panelists, therefore, are often only in the role of panelist once, reducing learning curves and possibly the uniformity of decisions. Moreover, because panel proceedings are time intensive once briefing starts, serving on a panel has typically required substantial time commitments from the panelists, making it difficult for non-Geneva-based, or at least non-EU-based, individuals to serve.84 In at least one case, a concern has been raised about the ability of panelists to shoulder the responsibilities. Specifically, in Japan Film, a case citing twenty-one measures in violation of Japan's WTO obligations, the attorneys for Kodak, one of the private parties actively assisting the U.S. government, accused the panelists of being "largely absent from the process" and allowing Secretariat staff to take responsibility for a majority of decisions reached in the case.85

Time constraints placed on panelists have also undoubtedly contributed to the time delays associated with the issuance of panel reports, as discussed in more detail in Part III above.

C: Should the WTO Move Toward a Permanent Panelists System?

Concerns regarding the selection of panelists and the ability of those selected to handle the increasing complexity of WTO disputes have provoked some86 to ask whether it makes sense to move toward a more permanent system of panelists, similar to the Appellate Body. 87 Proponents argue that a more permanent system would bring greater consistency and experience to panel decisions.88 In addition, it would eliminate the disputes and time delays associated with parties' objections to the Secretariat's selection of panelists under the current system.89 Some have maintained that a more permanent system would lead to a lower number of reversals by the Appellate Body.90

The suggestion of a semi-permanent panel system, however, raises several questions. In particular, how should the individuals comprising a semi-permanent panel be selected? Article 17 of the DSU instructs the DSB to appoint Appellate Body members. In addition, there is no recusal of nationals in the Appellate Body.91 Would WTO Members agree to the same system for the selection of panelists? Could parties still raise objections to a particular panelist or could developing countries still require that at least one panelist be from a developing country? Is there money in the WTO budget to finance a permanent set of panelists?

VI. NOTICE AND PARTICIPATION IN DISPUTE SETTLEMENT

A. Request for the Establishment of a Panel and Terms of Reference

1. Consecutive Requests for Establishment of a Panel

When making a request for the establishment of a panel, the complaining party usually asks that its request be placed on the agenda for the next DSB meeting.92 Once placed on the agenda, the DSB has granted these requests, generally establishing a panel at its next meeting or the meeting thereafter, depending on whether establishment was blocked by a WTO Member.93 If a request is blocked, a party must ask a second time that it request for a panel be placed on the DSB agenda. The DSU requires a panel to be established the second time a request appears on the DSB's agenda.94

Questions have arisen, however, concerning whether a party must renew its initial request for establishment of a panel if too much time lapses from the date of its initial and second requests. This ambiguity was raised, although not resolved, in the context of a dispute between the United States and the European Union regarding imports of grain and barley. In this case, the United States' first request was dated September 28,1995.95 Its second request was dated February 14,1997.96 The United States avoided resolution of whether it had to renew its September 1995 request before making a second request, by "unilaterally decid[ing] to treat its [February 1997) request as its first, not second [request] ."97

Not only does the practice of waiting until a party's second request before establishing a panel leave confusion over the timing and sequential nature of such requests, but it also needlessly slows the dispute settlement process.98 As articulated in the draft agreement on amendments to the DSU, and as supported by the United States, the practice of waiting until the second request to establish a panel should formally be eliminated in any amendments to the DSU.99

2. Adequacy of a Party's Request for Establishment of a Panel

The specificity required of a party's request for establishment of a panel and the need for identity between the request for the establishment of a panel and the request for consultations have been the subjects of much debate among WTO Members. Much of the debate stems from the ambiguity within the DSU over what is required of a party's request for the establishment of a panel. The DSU merely instructs Members to indicate in writing "the specific measures at issue and provide a brief summary of the legal basis of the complaint sufficient to present the problem clearly "100 Nowhere does it require the language of the request for a panel to mirror that of the request for consultations or the terms of reference. As a consequence, panels have grappled to set a more precise requirement.

a. Specificity of a Request for the Establishment of a Panel

The specificity required of a request for a panel was considered in EC-Bananas. In this case, the EU argued that a panel request must identify the "specific measure" at issue and the "specific agreement allegedly infringed."101 The EU expressed concern that, without such a requirement, responding parties and prospective third parties would be unable to gain a clear understanding of claims against them.102

The panel and Appellate Body interpreted Article 6's specificity requirement broadly. The panel concluded that the DSU only established "minimum standards" of specificity and that the panel request in the case before it was "sufficiently specific" to comply with these minimum standards.103 The Appellate Body armed the panel's decision and noted that it was "sufficient for the complaining parties to list the provisions of the specific agreements alleged to have been violated without setting out detailed arguments as to which specific aspects of the measures at issue relate to which specific provisions of those agreements."104 The Appellate Body stated that the request for a panel need only be "sufficiently precise" as to form the basis for the terms of reference and inform the defending party and third parties of the claims at issue.105

Despite the relatively clear language of the EG-Bananas case, the specificity required of a party's request for establishment of a panel continues to be debated, having been argued in four of the thirteen panel decisions circulated in 1999: Turkey-Restrictions on Imports of Textile and Clothing Products (Turkey-Textiles),106 Korea Definitive Safeguard Measures on Imports of Certain Dairy Products (Korea Dairy Products),107 Argentina-Safeguard Measures on Imports of Footwear (ArgentinaFootwear),108 and U.S. FSC.109 In Turkey-Textiles, Turkey argued that the complaining party's request for a panel did not meet the requirements of Article 6 because the request failed to identify specifically the measures at issue and the products subject to those measures.110 The panel, in line with EG-Bananas, decided that the criteria for determining the adequacy of a request for a panel should be whether the request informs the defending party and potential third parties of the measures at issue, including the products covered, and the legal basis of the complaint. Accordingly, the panel ruled that identifying a measure by type, such as quantitative restrictions, effective date of entry into force, and products covered, such as textiles and clothing, was sufficient to meet these criteria.111

The panels held similarly in Korea Dairy Products, ArgentinaFootwear and U.S. FSC. In Korea-Dairy Products the panel ruled that a "detailed statement" of the challenged measure was not required and that "a description of the measure at issue and the claims, i.e., the violations alleged" would since.112 The Appellate Body refined the panel's analysis by concluding that the identified measures and WTO provisions allegedly violated constituted a clear statement of the "problem."113 In Argentina-Footwear, the panel found that a "legal act not explicitly listed in a panel request but which has a direct relationship to a measure that is specifically described therein" can properly be considered by the panel.114 The panel reasoned that the substance of the measure referenced, not the particular law or regulation specified, was the most important aspect of a request for a panel. In U.S. FSC, the panel found that a party did not need to list specifically the products subject to the measure in dispute. Instead, the panel concluded that, by identifying the specific WTO agreements allegedly violated, the complaining party had put the United States on sufficient notice as to the products subject to the dispute.115

Taken together, these reports and earlier one116 indicate that the panels have tended to interpret Article 6 broadly, requiring that the request for the establishment of a panel merely put the responding party on notice of the dispute at issue.

b. Identity Between the Request for the Establishment of a Panel and the Request for Consultations

Whether there must be identity among the language in a party's request for consultations, its request for establishment of a panel, and the terms of reference has also been disputed among WTO Members. In Brazil Export Financing Programme for Aircraft (Brazil-Aircraft), for example, Brazil argued that a measure listed in Canada's request for the establishment of a panel was not properly before the panel because the same measure had not been specified in its request for consultations.117 Canada disagreed, arguing that new information is often revealed in the course of consultations, which allows the complaining party to focus its complaint in its subsequent request for a panel.118 The panel sided with Canada, noting that an important function of consultations is to "clarify the facts of the matter" before the parties and to narrow the focus of a party's complaint.ll9 The panel concluded that what was essential was that the allegations contained in a party's request for establishment of a panel were actually consulted upon; whether the specific allegations made in the request for establishment of a panel mirrored those in the request for consultations was not the deciding factor. 120

This issue also arose in Australia-Subsidies Provided to Producers and Exporters of Automotive Leather (Australia-Automotive Leather).121 Again, the panel pointed out that the purpose of consultations was to clarify the facts of the dispute for the parties.122 In this case, the panel ruled that it would not limit its review of the dispute to only those allegations that were the subject of the request for consultations.

c. Other ssues Related to the Request for Establishment of a Panel

Related to the issues of the specificity of the request for the establishment of a panel and its identity to the request for consultations, is whether the panel may consider measures not specified in either the terms of reference or the request for a panel. Resolution of this issue has essentially come down to the relatedness of the measure to those in the panel request and terms of reference.

Panels confronted this issue in both Australia-Measures Affecting Importation of Salmon (Australia-Salmon) 123 and India-QRs.124 In Australia-Salmon, the panel found a 1996 ruling not explicitly stated in the terms of reference to be a measure within the scope of the panel's review because the ruling was made pursuant to authority granted under the measure specified in the request for a panel.125 In IndiaQRs, the panel found that it could properly consider arguments regarding provisions of WTO agreements not raised in the request for a panel or the terms of reference, if these arguments were raised by the defending party or were part of the context of the WTO provision cited in the terms of reference.126

In contrast to the panels in Australia-Salmon and India-QRs, the panel in Brazil-Measures Affecting Desiccated Coconuts (Brazil-Coconuts) concluded that one of the claims presented by the Philippines was not within the panel's terms of reference. In this case, the terms of reference stated that the measures to be examined were those measures identified in the panel request and the minutes of the February 21, 1996 DSB meeting. In its panel request, the Philippines maintained that Brazil's countervailing duty on desiccated coconuts was in violation of GATT Article VI.127 As recorded in the DSB minutes, the Philippines stated that the basis on which it sought establishment of a panel was explained in its written panel request and pointed out that, because Brazil had refused to consult on the matter, it had requested establishment of a panel pursuant to Article 4.3 of the DSU.128 When the dispute came before the panel, the Philippines argued that the panel should examine whether Brazil's refusal to hold consultations was inconsistent the provisions of the DSU requiring parties to consult prior to requesting the establishment of a panel.129 The panel declined to review this claim. The panel found that "at a minimum, it should have been possible, based on a reasonable reading of the documents determining the scope of the terms of reference, to conclude that this Panel would be asked to make findings regarding Brazil's failure to consult"131 and concluded that "there is nothing in the request for establishment of a panel that would lead to the conclusion that the requested panel would be asked to make any finding regarding Brazil's failure to consult."131 The Appellate Body did not decide this issue.132

These three panel reports taken together seem to suggest that so long as the measure before the panel relates in some way to those identified in the terms of reference, a panel will find jurisdiction to review the measure. It is when a complaining party presents a claim before the panel regarding a measure or alleged WTO violation not mentioned in the terms of reference and not related in any way to the measure or violation specified in the terms of reference, that a panel may refuse to consider the issues presented to it.

3. The Use of Special Terms of Reference

Article 7 of the DSU gives parties the option of agreeing upon special terms of reference.133 Parties, however, have generally not pursued this option and, instead, in all but two cases,134 have been content to use the

"standard terms of reference" specified in Article 7.1 of the DSU.135 Standard terms of reference are as follows:

To examine, in the light of the relevant provisions in (name of the covered agreements) cited by the parties to the dispute), the matter referred to the DSB by (name of party) in document . . . and to make such findings as will assist the DSB in making the recommendations or in giving the rulings provided for in that/those agreement(s) 136

B. Right to Participate in Dispute Settlement

1. Legal and Economic Interest Requirement

Unlike the developed standing requirements found in U.S. courts,137 there is no provision in the DSU that requires parties to have a legal or economic interest in the dispute and panels have declined to read such a requirement into the DSU. In EG-Bananas, the EU contended that the United States lacked a legal or economic interest in the dispute because it was not an exporter of bananas and, therefore, lacked standing to bring its claim. The panel and Appellate Body rejected this argument, finding that there was not, and should not be, a legal or economic interest test under the DSU.138 The panel maintained, however, that even if some type of interest requirement existed,139 the United States would have met the requirement. The Appellate Body pointed out that the United States had "a potential export interest" in bananas and that the "internal market of the United States for bananas could be affected by the EC banana regime, in particular, by the effects of that regime on world supplies and world prices of bananas."140

The panel in Korea-Dairy Products found similarly to the panel in EC-Bananas. In this case, the panel explicitly rejected Korea's argument that having a panel decide a case where the complaining party had no legal or economic interest would frustrate the purpose of the DSU, which is to settle actual disputes.141 A violation of a Member's WTO obligations alone was sufficient to impair the benefits accruing to another Member and thus, warrant a complaint. The expense of pursuing a case and a Member's good faith obligation to exercise reasonable judgement when bringing a case would prevent excessive use of the panel process.142 This issue was not appealed to the Appellate Body, presumably because the Appellate Body had already decided the issue in EG-Bananas.

2. Participation of Third Parties

Articles 4 and 10 of the DSU afford third parties the right to participate in panel disputes.143 Specifically, Article 10 states that "any Member having a substantial interest in a matter before a panel and having notified its interest to the DSB . . . shall have an opportunity to be heard by the panel . . . make written submissions to the panel," and receive submissions of the parties after the first meeting with the panel.14 Article 4 provides that a Member with a "substantial trade interest" in an on-going dispute among other Members may request to be joined in consultations. If the present parties to the dispute do not object, the party shall be joined.145 WTO Members have actively been exercising their third-party rights. In ten of the thirteen cases decided in 1999, at least one WTO Member has exercised its third parties rights.146

Theoretically, Members' ability to participate in panel disputes as third parties turns on the interpretation of "substantial interest." In practice, however, little debate has arisen over what constitutes a "substantial interest." Members regularly request third-party status pursuant to Article 4 or 10, and third-party status is routinely granted. No dispute has arisen as to whether a Member has met the requirements to participate as a third party Given that a Member may be a party to a dispute, despite the fact that it may have no legal or economic interest in the dispute,147 it would perhaps be inconsistent with the DSU to interpret the substantial interest requirement for third parties with particular vigor.

Under the GATT's dispute settlement mechanism, third parties with a "substantial interest in the matter before the panel" had the opportunity to be heard by and make submissions to the panels.148 Under the GATT system, the parties to the dispute judged whether the third party met the substantial interest requirement. This decision was generally made based on the impact resolution of the dispute would have on the third party. For example, in a dispute concerning citrus products, the parties agreed to allow the European Communities and certain Mediterranean countries to participate as third parties " [g] iven that the special nature of this matter . . . is an element of Agreements entered into by the European Communities with certain Mediterranean countries."149 In a dispute involving semiconductors from Japan, the United States was permitted to be a third party because the measure to be examined by the panel was a semiconductor arrangement entered into by Japan and the United States.150

In addition to the inquiry over whether a third-party may participate in a dispute is the question of the remedy available to Members denied participation for lack of a substantial interest. Not being a party to the dispute would prevent the Member from appealing to the Appellate Body for reconsideration. As Article 10.4 suggests,151 presumably the Member's only recourse would be to bring a separate case before the panel. Under Article 9, it is likely that the two cases would then be joined.152

Once a Member has been joined in a dispute as a third party, the question as to the extent of that Members' right to participate arises. Article 10 of the DSU states that third parties "shall have an opportunity to be heard by the panel and to make written submissions to the panel," as well as "receive the submissions of the parties to the dispute to the first meeting of the panel."153 Appendix 3 provides that third parties shall be invited "to present their views during a session of the first substantive meeting of the panel set aside for that purpose."154 In EG--Bananas, the third parties to the dispute"55 requested rights beyond those delineated in Article 10 and Appendix 3.156 The panel, after consulting with the parties and under its authority to design its own working procedures for the dispute before it, granted the third parties' requests with one exception. The third parties were allowed to: (1) observe the second substantive meeting of the panel with the parties; (2) make a brief statement during the second meeting; and (3) submit additional written information regarding questions posed to them in the first substantive meeting.157 In granting these forms of participation, the panel expressly articulated that it was affording the third parties "broader participatory rights than are granted to third parties under the DSU."158 The panel, however, denied the third parties' request to participate in the interim review process, noting that to do so would "blur the distinction drawn in the DSU between parties and third parties."159

Given the low standing hurdle panels have imposed on the substantial interest requirement and the broad rights of participation they have afforded third parties, the practical difference between participat ing in a dispute as a party or third party may, indeed, seem blurred. However, clear differences between the rights of parties and third parties do in fact remain. Most importantly, the rights to appeal panel decisions and seek compensation or retaliation belong to parties, not third parties.160 In addition, though parties may participate fully in every stage of the panel process; third parties have more limited rights of participation under the DSU. As they did in EG-Bananas, third parties must rely on the decisions of individual panels to acquire broader rights.

The fact that third parties enjoy significantly less rights than parties, particularly the right to see favorable decisions implemented, leads to the question of why any Member would forego the opportunity to participate as a party in lieu of third-party status. There are two probable answers. First, participation as a third party affords Members the right to contribute to, and receive information regarding, the settlement process, but in a manner that requires less financial resources and time commitments.161 Second, it is often the case that Members join a dispute as third parties on the defending party's side.62 These third parties have a stake in the outcome of the case, and hence want a chance to present their views to the panel, but have not been chosen by the complaining party as the targets of its suit.

Another point of issue which arises in the discussion of third parties is the respective rights Members have as third parties verse the "rights," if any, of non-governmental organizations (NGOs). As discussed more fully below, NGOs may be permitted to participate in panel disputes through the submission of amici briefs. There is no provision in the DSU specifically concerning NGOs, and panels have not sought to read a substantial interest requirement into the limited ability of NGOs to participate in disputes. Essentially, as the present Appellate Body view stands,lss NGOs may submit amici briefs to the panels without a showing of substantial interest and without being a party or third party to the dispute. The lack of any standing requirement for NGOs and the requirement that Members must be either joined as parties or third parties to make panel submissions, has caused some, particularly in developing countries, to voice concerns that NGOs are being afforded greater opportunities to participate than Members.

3. Opportunity for Participation as Co-Respondents or Co-Claimants

When a Member believes it has an interest in a dispute already initiated by another Member, it can request third-party status in that dispute. The views of third parties will generally support either the claimant or respondent in the already initiated dispute. Additionally, Article 10.4 of the DSU provides that "if a third party considers that a measure already the subject of a panel proceeding nullifies or impairs benefits accruing to it under any covered agreement, that Member may have recourse to normal dispute settlement procedures under this Understanding."'164

In the course of the DSU Review, some Members have advocated amending the DSU explicitly to allow for Members to be joined, not merely as third parties, but as co-respondents or co-complainants. Specifically concerning co-respondents, the EU pointed out that "the absence of co-respondent status can cause problems where a measure complained of had been agreed between several WTO Members,"165 but the complainant may not have named certain parties to this agreement in its claim. These unnamed Members rights, however, could be impaired if ultimate resolution of the dispute lead to the respondent's withdrawal from the agreement. In its DSU Review comments,Japan mentioned Turkey-Textiles, where Turkey claimed the EU should be joined as a party to the dispute given the fact that Turkey had undertaken the measure complained of as part of its membership in a customs union with the EU.166

Regarding co-complainants, Members have suggested that explicitly providing for co-complainant status would improve the efficiency of the panel process by encouraging Members to join as co-complainants, rather than file the same or similar claims against the same party, but in separate disputes.167 Members called attention to the limited rights of third parties in comparison to those of parties. If third parties were joined as co-complainants, they would garner rights to participation and information that they would normally be denied under third party status.

These issues may or may not be resolved as part of the DSU Review process. The draft texts on the DSU have not addressed the issues of co-respondents or co-plaintiffs.

4. Participation of Non-Governmental Organizations

Access to the dispute settlement system is presently limited to WTO Member governments. Other entities or organizations are not eligible to be WTO Members and, consequently, are denied formal participation in the dispute settlement process. NGOs have, however, been afforded a limited opportunity to express their views through the submission of amici curiae briefs.

The question of NGOs ability to participate in the panel process came to the fore in United States Import Prohibition of Certain Shrimp and Shrimp Products (Shrimp-Turtle).168 In Shrimp-Turtle, the Center for Marine Conservation and World Wide Fund for Nature submitted amici briefs.169 The panel refused to consider the content of these briefs concluding that, although it had the authority to seek information from "any relevant source," it would be "incompatible" with the DSU to accept unsolicited information from a non-governmental source.170 Instead, the panel permitted the parties to the dispute to attach the NGOs' briefs as an appendix to their own submissions.

The United States appealed the issue in Shrimp-Turtle to the Appellate Body and the Appellate Body reversed the panel's holding.171 The Appellate Body determined that, although NGOs have no right under the DSU to have a panel consider the contents of their amid briefs, a panel did have broad authority to consider such briefs if it so chose.172

The status of NGOs resurfaced in United States-Imposition of Countervailing Duties on Certain Hot Rolled Lead and Bismuth Carbon Steel Products Originating in the United Kingdom ( U. -Lead Bismuth) .173 In this case, the panel rejected an amicus brief submitted by the American Iron and Steel Institute (AISI). The reason for the panel's rejection rested, however, on the late submission of the AISI brief. The brief was submitted after the deadline for the parties' rebuttal submissions and after the second substantive meeting of the panel with the parties. The panel believed that acceptance of the submission after the parties' last statements to the panel would prejudice the parties' due process rights. However, in rejecting the submission, the panel was careful to reiterate the words of the Appellate Body in Shrimp-Turtle, affirming its authority under Article 13 of the DSU to accept or reject any submissions made to it.174

In realms outside of dispute settlement, the WTO has made efforts to clarify and further its relationship with NGOs.175 At the 1998 Geneva Ministerial, Members agreed to work toward improving the WTO's relationship with NGOs. As part of this effort, beginning in October 1998, the WTO has posted monthly lists of NGO position papers received by the Secretariat. Between October 1998 and November 23, 1999, the Secretariat received 128 position papers from NGOs, including papers from the International Chamber of Commerce, the American Farm Bureau Federation, the European Apparel and Textile Organization, Greenpeace and the Center for International Environmental Law.176 Over 800 NGOs attended the recent Ministerial in Seattle.177

As part of its proposal to modify the DSU, the United States argued for an amendment that would expressly permit the panels and Appellate Body to accept submissions of amici briefs from NGOs.178 The U.S. proposal, however, was not included in a Draft Agreement on the DSU cosponsored by the EU and fourteen other countries, excluding the United States. 179

5. Right to Counsel

Outside the WTO panel room, it is generally accepted that Member countries may hire whomever they chose to assist them in the preparation of their cases and written submissions to the panels. The rights of parties to do the same inside the panel room, however, has not met with similar agreement. Some Members have argued that individuals who are not full-time government employees, such as private attorneys, may not participate in oral hearings before a panel. In EG-Bananas, for example, the EU maintained, and the panel agreed, that San Lucia, a third party to the dispute, was not entitled to have an individual who was not a full-time government employee represent it in an oral proceeding before the panel.180 The panel cited the following as authority for its decision: (1) past GATT and WTO practice not to admit private lawyers to panel meetings if any party objected; (2) working procedures the panel adopted specifically for the case before it, which "expressed [the panel's] expectation" that only Member governments be present; (3) the unfairness that would result due to parties' and third parties' reliance on the panel's expectation that private attorneys could not be present; (4) concerns for confidentiality and the inability to discipline private attorneys for breaches; and (5) fear that the presence of private attorneys would "change the intergovernmental character of the INTO dispute settlement proceedings."181

Although the panel's decision on this issue could not be appealed to the Appellate Body because of San Lucia's status as a third party, the Appellate Body did rule on San Lucia's request to have someone who was not a full-time government employee represent it in oral proceedings before the Appellate Body. In its report, the Appellate Body approved San Lucia's request and stated that it found "nothing in the Marrakesh Agreement Establishing the World Trade Organization ( WTO Agreement , the DSU or the Working Procedures, nor in customary international law or the prevailing practice of international tribunals, which prevents a WTO Member from determining the composition of its delegation in the Appellate Body proceedings."182

The view taken by the Appellate Body in EC-Bananas has been accepted by subsequent panels. In Indonesia-Certain Measures Affecting the Automobile Industry (Indonesia Autos) the panel found "no provision in the WTO Agreement or the DSU . . . which prevents a WTO Member from determining the composition of its delegation to WTO panel meetings."188 In Korea-Taxes on Alcoholic Beverages, the panel held similarly, allowing Korea to be represented by private counsel.184 The panel noted that its decision was needed to ensure that Korea had "every opportunity to fully defend its interests."185

The issue of whether private counsel may appear before a panel has not been the subject of a dispute reported in a panel decision since Korea-Alcohol,186 This suggests that perhaps the issue has been settled,187 despite the absence of clear rules in either the DSU or the panel's Working Procedures.188

C. Authority of the Panel to Compel a Member's Participation

Whether a panel has authority to compel a non-party to participate in a dispute recently appeared as an issue in Turkey-Textiles.189 In this case Turkey argued that the EU should be brought in as a party, as co-respondent, because Turkey had implemented the measure at issue as part of its participation in a customs union with the EU.190 The panel rejected Turkey's argument. The panel maintained that there was "no WTO concept of `essential parties' " in the dispute settlement system191 and that panels had no authority to compel another Member's participation in a dispute, even if that Member may have a legal and economic interest in the dispute or has also adopted the disputed measure.192 As discussed below, however, while a panel cannot compel a Member to be party to a dispute, it can compel it to submit information to the panel, even as a non-party.

VII. INFORMATION GATHERING

A. Authority of Panels to Compel Parties to Submit Information

Panels have broad authority under the DSU to require Members to provide them with any requested information.193 The panel in TurkeyTextiles availed itself of this authority by submitting a series of questions to the EU, a WTO Member neither a party nor third party to the dispute.194 In Canada-Measures Affecting the Export of Civilian Aircraft, the panel concluded that the DSU permitted it to seek information from Canada with regard to defenses it had not raised and information from Brazil with regard to matters on which it had not established a prima facie case or raised in its complaint.195 Most recently, in U.S. LeadBismuth, the panel concluded it had the authority to compel submission of parties' business confidential data from the Department of Commerce.196

Although the DSU grants panels broad authority to seek information, it is silent on what to do if a party fails to provide the panel with requested information. It was suggested in Canada Aircraft that, in the situation where a party fails to comply with a panel's request for information, the panel should draw adverse inferences with regard to the missing information.197 For example, in an effort to determine whether Canada was engaging in export subsidies, the panel requested that Canada submit information on transactions involving certain loan guarantees.198 Canada refused,199 and Brazil "asserted that the panel should adopt `adverse inferences' where Canada ha[d] expressly refused to provide documentary information specifically requested" by the panel.200 The panel declined to draw such inferences on the basis that Brazil had not made out a prima facie case that Canada had granted subsidies in the form of loan guarantees. The panel stated, however, that in "certain circumstances we consider that a panel may be required to make inferences on the basis of relevant facts when direct evidence is not available. This is especially true when direct evidence is not available because it is withheld by a party with sole possession of that evidence."201

Brazil appealed the panel's refusal to draw adverse inference to the Appellate Body. The Appellate Body declined to reverse the panel's decision, reasoning the record was insufficient to conclude that the panel "erred in law, or abused its discretionary authority," in concluding that Brazil had not done enough to compel the panel to make the inferences requested by Brazil.202 The Appellate Body, did, however, make two findings with regard to the drawing of inferences. First, the Appellate Body rejected the panel's statement that a party must establish a prima facie case in order to request that a panel draw inferences. The Appellate Body maintained that the establishment of a prima facie case was an issue of the allocation of the burden of proof and was "not to be confused, with the drawing of inferences from fact."203 The drawing of inferences was an "inherent and unavoidable aspect of a panel's basic task of finding and characterizing the facts making up a dispute."204 Second, the Appellate Body agreed with the panel's statement that, under certain circumstances, the drawing of inferences was appropriate. It noted that the drawing of an adverse inference was not properly considered a punitive inference, but rather "merely an inference which in certain circumstances could be logically or reasonably derived by a panel from the facts before it."205 The Appellate Body concluded that the drawing of inferences was "an ordinary task" of the panels and in accordance with "general practice and usage of international tribunals."206

In addition, the Appellate Body cited Part III207 and Annex V208 of the SCM Agreement, which specifically address the drawing of adverse inferences in "actionable subsidies" cases when a party refuses to provide the panel with requested information. Although CanadaAircraft was a "prohibited subsidy" case,209 the Appellate Body reasoned that the procedures set forth for drawing adverse inferences in actionable subsidies cases were equally applicable to cases involving prohibited subsidies, finding that " [t] here is no logical reason why the Members of the WTO would, in conceiving and concluding the SCM Agreement, have granted panels the authority to draw adverse inferences in cases involving actionable subsidies that may be illegal if they have certain trade effects, but not in cases that involve prohibited export subsidies for which the adverse effects are presumed."210

Finally, the Appellate Body warned that parties' refusal to comply with panel and Appellate Body requests for information had the "potential to undermine the functioning of the dispute settlement system" and instructed future panels to take "all steps open to them to induce the parties to the dispute to comply with their duty to provide information deemed necessary for dispute settlement."211

After Canada Aircraft, a panel's authority to seek information from Members and its responsibility to assess the matter before has been clearly articulated. Yet, whether refusal to comply with a request will be a frequent occurrence is uncertain. For some countries, the issue may be legal authority to release certain confidential information to the WTO, even if done in confidence. Presumably, Member nations will want to review their national laws and provide clarifications or revisions of those laws, if and when the DSU is amended.

B. Role of Experts

1. Authority to Seek Expert Opinions

Article 13 of the DSU provides panels with the authority to seek the advice of experts to assist them in the determinations of disputes. Two mechanisms for obtaining expert advise are authorized by Article 13: ad hoc advice from individual experts and expert review groups. Appendix 4 lays out the procedures for the establishment of expert review groups.212 The guidance on the use of ad hoc experts is limited to the language of Article 13.2, which provides that panels may seek informa tion from "any relevant source and may consult experts to obtain their opinion."213 Largely due to time constraints, panels have not to date availed themselves of the opportunity to employ an expert review group and, instead, have opted to obtain advice from individual experts on an ad hoc basis.214

2. Parties' Access to Information Supplied by Experts

As the Appellate Body concluded in EC-Hormones, when a panel decides to seek expert advice on an ad hoc basis, it is not obligated to follow the procedures set out in Appendix 4.215 Rather, in using experts on an ad hoc basis, the panel may draw up its own procedures for the selection and use of expert information.216 To date, the issue of the panels' obligation to share information received from experts has not been the subject of dispute. Panels have made information supplied to the panels by experts available to the parties for both review and comment. In addition, they have included detailed summaries of their expert advisors' opinions, as well as any party arguments concerning the use of experts, in their reports.217

3. Selection of Experts

Article 13 only speaks of the panels' authority to seek information; it does not specify the manner in which the panels are to seek this information. Consequently, panels have been left to design their own procedures for the selection of experts.218 In EG-Hor ones, for example, the panel compiled a list of experts in the field based on information provided to it by two international research organizations: the Codex Commission and the International Agency for Research on Cancer.219 This list was then given to the parties for comment. Parties could state objections to any particular individual on the list and were entitled to nominate one individual each, not necessarily from the list, to serve as an expert in the case.220 The panel selected three additional experts from the list to serve in the case.221 The panel stated it was interested in the individual opinions of the selected experts and was not seeking a consensus view.222

The panels in Shrimp-Turtle and Australia-Salmon designed similar procedures for the selection of experts. In these cases, the panels invited the parties to submit names and curricula vitae of individual experts.22s Parties were allowed to comment on the lists and voice any objection they might have. The panels then selected the individuals,224 who served in "their personal capacities as individual advisors to the [p] anel."225

The similarity of the procedures designed by the panels in the various disputes indicates that, despite the lack of DSU guidance on the issue, panel practice has succeeded in developing a workable system for the selection of experts. They are also procedures that work within the timelines prescribed by the DSU.

4. Value and Weight Afforded Expert Opinions

The weight panels should afford expert opinions is unclear. Although Article 13 provides authority to seek information from experts, it remains silent concerning the value to be attributed to this information.226 Looking at the panel reports, it is difficult to determine the relative weight a panel has given to any one expert opinion or the views of experts collectively. In Shrimp-Turtle, for example, the panel obscured its reliance on the views of experts by drafting its opinion without reference to its experts' opinions.227 In Australia-Salmon, on the other hand, the panel appears to have afforded the views of its expert advisors a great deal of significance, citing the views of its experts throughout its report.228

A slightly different question regarding the weight of expert opinions arose in India-QRs. The issue in this case concerned not so much the weight to attribute to an expert opinion, but whether or not the panel must accept as determinative information provided by an expert. In India-QRs, the panel sought information from the IMF concerning the status of Turkey's balance-of payments.229 The United States, the complaining party in this case, argued that the panel must accept as dispositive IMF determinations on matters of fact specified in Article XV:2 of GATT 1994.230 India rejected this argument and contended that acceptance of the U.S. argument would allow the legal status of the matters specified in Article XV:2 to be determined by the IMF.231

The panel declined to decide the issue of whether it was obliged to consult with the IMF, or to what extent it must accept IMF information as dispositive.232 Rather, the panel chose to accept the IMF's information, citing its authority under Article 13 of the DSU to seek information from experts. The panel noted that, in conformity with GATT 1994, it had the responsibility of making an objective assessment of this information.233

The Appellate Body similarly declined to address the issue. Instead, the Appellate Body agreed with the panel's authority to consult with experts and stated the panel had performed its duty to make an objective assessment of the facts.234

Taken together, the disputes decided so far seem to indicate that the panel has broad discretion to decide the weight it shall afford any particular expert opinion. As the Appellate Body concluded in Shrimp Turtle.

The comprehensive nature of the authority of a panel to "seek" information and technical advice from "any individual or body" it may consider appropriate, or from "any relevant source", should be underscored. . . . A panel's authority includes the authority to decide not to seek such information or advice at all. We consider that a panel also has the authority to accept or reject any information or advice which it may have sought and received, or to make some other appropriate disposition thereof. It is particularly within the province and the authority of a panel to determine the need for information and advice in a specific case, to ascertain the acceptability and relevancy of information or advice received, and to decide what weight to ascribe to that information or advice or to conclude that no weight at all should be given to what has been received.235

It is important to keep in mind the reason panels resort to the use of experts. Much like a court of law in the United States, panels use expert opinions because they need assistance in understanding complex scientific or technical information. The role of experts is not to decide any particular issue, such as the health risks of hormone treated beef, but rather to assist the panel in applying the facts submitted to it.

C. Protection ofBusiness Confidential Information

Although the DSU instructs parties to protect the confidential nature of information revealed in the course of a dispute,"236 it does not provide a mechanism for the protection of such information. Under its authority to establish working procedures for the dispute at hand,237 panels have devised ad hoc procedures for the protection of business confidential information (BCI). Such procedures were the subject of two separate disputes between Canada and Brazil over each country's subsidization of its civilian aircraft industry.238

In these cases, the panel adopted a set of BCI procedures proposed by Canada and modified by Brazil. These procedures limited access to BCI to decision makers and parties in the case and required such information to be kept in locked, monitored facilities at both the WTO Secretariat and the parties' respective Geneva missions.239 Canada protested the procedures as modified, claiming that only at the WTO Secretariat could BCI be adequately monitored.240 The panel dismissed Canada's protest.

Protection of BCI arose again in proceedings before the Appellate Body. Unlike the panel, the Appellate Body declined to adopt additional procedures for the protection of BCI, finding that the language of the DSU instructing parties to respect confidential information afforded parties sufficient protection.241 The Appellate Body concluded, " [w] a are confident that the participants and the third participants in this appeal will fully respect their obligations to maintain the confidentiality of these proceedings."242

As Canada pointed out in the aircraft disputes, the protection of BCI raises a "significant challenge to the WTO dispute settlement process."243 The issue requires a panel to balance the fairness and due process concerns regarding parties' access to information and rights to defend themselves, against parties' needs to protect business proprietary information.244 Although the DSU charges parties to use the "utmost circumspection and discretion" in protecting BCI,245 it is understandable that parties are concerned that good faith alone will not provide adequate protection. One area that should be explored is how national laws governing the protection of BCI may be applied to protect WTO dispute settlement submissions. U.S. administrative protective order procedures, for example, provide strict guidelines on access to and the handling and destruction of BCI in submissions to the International Trade Administration of the Department of Commerce and the International Trade Commission.246 Canada and Mexico also have protective order systems.

D. Timelines and Veracity of Evidence

Although Article 13 of the DSU provides panels the authority to request information from "any individual or body," it does not provide for the manner in which such information must be presented or even include provisions to provide for the accuracy or truthfulness of the information submitted.247 In the course of the DSU Review, Argentina has drawn attention to the fact that there are no timelines in the DSU for the submission of factual evidence. Argentina has supported including a provision in the DSU that would create timelines for the submission of evidence and has suggested that submission of evidence should only be allowed up to the time of the first substantive meeting with the panel.248 Japan has advocated as the time limit for the submission of evidence the date of the rebuttal submissions, while Korea has proposed as the time limit the date of the second written submission to the panel.249

Timelines for the submission of evidence, at least for non-governmental entities, have, for the most part, been taken care of by panel decisions. It is not clear if panels have allowed the submission of evidence after the date of the first substantive meeting with the panel or if submission of evidence thereafter would be inappropriate if requested by a panel. Fixing of timelines may be better left for the panels.

As far as the veracity is concerned, it is unclear how the process could be altered to ensure the accuracy and truthfulness of submitted evidence. Verification is part of other WTO agreements, such as the SCM Agreement. However, considering the time constraints on the panel process, whether verification would be possible without expanding the process' timelines is questionable.250 Given Members obligation to cooperate with the panels and their interest in .the integrity of the system, it is hoped that Members would make efforts to ensure that information submitted by their nationals was both truthful and accurate. In the aircraft cases, the Appellate Body reminded Members that their duty to submit necessary information to the panel was crucial to the functioning of the dispute settlement process.251 Ultimately, the panels have to weigh the evidence submitted to them and make their own judgments as to its veracity.

VIII. INTERIM STAGE

Per Article 15 of the DSU, panels are directed to issue interim reports that include both a summation of the factual aspects of the case, such as parties' arguments and experts' opinions, and the panel's findings.252 The interim report is distributed only to parties, who may comment on "precise aspects" of the report. If the panel receives no comments on the interim report, the interim report is treated as the final report and is circulated to Members.253

A couple of issues has arisen concerning the interim reports. First is the failure of parties to observe the requirement that parties treat the interim report as confidential until the final report is circulated to Members. Often the "winners" or "losers" of a dispute have the desire to let the outcome be known. For example, the U.S. Trade Representative (USTR) announced the U.S. victory and other details of the panel's report in Indonesia Autos shortly after release of the interim report.254 In its final report, the panel reprimanded the parties for this breach of confidentiality and expressed its concern that failure to observe the confidential nature of the interim report could affect the rights of parties and the integrity of the dispute settlement process.255 There are many other cases where this has also been a problem.

The idea behind keeping the interim report confidential is to give parties one last chance, after having seen how the panel would resolve the issue, to settle. Such was the case in European Communities-Trade Description of Scallops, where the EU and Canada reached a mutually agreed upon solution after issuance of the interim report, but before issuance of the panel's final report.256.

The second issue concerning the interim report is the utility of the report itself. As mentioned in the preceding paragraph, the public often becomes aware of a dispute's outcome at the interim stage. Consequently, the chances of settlement at this stage, already low to begin with, decrease even further. In addition, although panels do consider the comments submitted by parties at the interim stage, these comments rarely prompt the panels to change any significant aspect of their reports.

Taken together, the failure to keep interim reports confidential and the rarity with which the panels alter their reports suggest that the interim review's utility is minimal and that it could perhaps be eliminated.257 Given the time pressures faced by the panels, elimination of the interim review period may help shorten the time needed for issuance of final panel report. In the alternative, the requirement that the interim report be kept confidential could be disposed of, allowing Members and the public earlier access to panel decisions.

IX. JURISDICTIONAL PANEL PROCESS ISSUES

A. Authority of the Panel to Resolve Issues Addressed by WTO Committees

The DSU instructs the panels to assess the facts of the dispute before it, apply those facts to the covered agreements, and make findings that will assist the DSB in making recommendations for the resolution of the dispute.258 The DSU does not limit the types of disputes the panels may address, nor the subject matter of such disputes, save that the disputes must concern WTO Members and fall under one of the covered agreements. The question of whether there are implicit limits on the panels' authority to review certain types of cases or issues surfaced in India-QRs. In this case, India argued that the panel lacked authority to make decisions regarding India's balance-of payments and that sole authority to decide issues regarding a Member's balance-of payments resided in the WTO Balance-of Payments Committee.259 Both the panel and the Appellate Body rejected this argument. Both concluded that there was no principle of "institutional balance" within the WTO, or within general principles of international law, and that the panel did have the authority to review issues concerning India's balanceof payments.260 The Appellate Body noted .that the panel made a careful review of its authority to review balance-of payment issues, recognizing that the panels did not have unlimited authority to decide balance-of payments restrictions and paying deference to the jurisdiction of the Balance-of Payments Committee.261

B. Panels' Resolution of Secondary Issues in Light of the Appellate Body's Lack of Remand Authority

The role of the Appellate Body is to decide on the validity of panel interpretation of legal issues.262 The Appellate Body may "uphold, modify or reverse the legal findings and conclusions of the panel." Notably absent from this grant of authority is the power to remand decisions to a panel for further factual findings.

The absence of remand authority has been problematic in cases of multiple violations.263 In these cases, it has been accepted practice for a panel, once it has found a measure to be incompatible with one provision of the WTO agreements, to decline to decide the measure's compatibility with a second provision.264 problems have arisen, how ever, when the Appellate Body has reversed a panel's finding of incompatibility on the first WTO provision. In these cases, a measure may have still constituted a violation of the second provision, but because the panel declined to assess the measure's consistency with this second provision, no factual conclusions or a legal interpretation existed for the Appellate Body to review regarding the second provision. Following a strict interpretation, the Appellate Body could be forced to reverse a panel's finding on the first provision, yet be unable to make a determination on the second due to the DSU's instruction that the Appellate Body "shall be limited to issues of law covered in the panel reports."265

This predicament became the subject of contention in Canada-Split Run Periodicals.266 In this case, the United States alleged Canada's law on "split-run" periodicals violated the first and second sentence of GATT Article III:2.67 The panel determined that the measure violated Article III:2, first sentence.268 The panel declined to address the measure's consistency with the second sentence of the same article. The Appellate Body reversed the panel's finding that the measure was in violation of Article III:2, first sentence and then proceeded to find the measure inconsistent with Article III:2, second sentence, despite the fact that the panel had not reviewed the measure's consistency with this provision.269 The Appellate Body acknowledged that the DSU limited its review to legal interpretations contained in the panel's report, but stated that it would be "remiss" if it did not "complete" the Article III analysis by examining the measure's compatibility with Article III:2, second sentence.270 In other words, the Appellate Body chose to follow its obligation to resolve disputes efciently271 over its mandate to review only legal interpretations contained in the panel reports.272

The Appellate Body in Australia-Salmon would have liked to have made the same choice in favor of the efficient settlement of a dispute as it made in Canada-Split-Run Periodicals, but found itself unable to do so. The predicament in Australia-Salmon was slightly different from that in Canada-Split Run Periodicals. Australia-Salmon did not involve a reversal of a decision of the panel; instead, there was a finding that the panel erred for not making factual findings and providing a legal interpretation of one of the violations cited in the terms of reference. The Appellate Body was particularly concerned that this error would impede Australia's "prompt compliance" with any recommendations made by the DSB and, in turn, disrupt the DSU's goal of "effective resolution of disputes."273 In its report, the panel stated that a finding on the measure's consistency with Article 2.3 of the Agreement on the Application of Sanitary and Phytosanitary Measures (SPS Agreement) would be superfluous, after having already found the measure incompatible with Article 5.5 of the same agreement.274 The panel reasoned that any measure inconsistent with Article 5.5 must also be inconsistent with Article 2.3. But, as the Appellate Body pointed out, the panel failed to consider that Article 2.3 might have contained obligations independent of those in Article 5.5 and that findings with regard to both articles might have been necessary for the Appellate Body to make "sufficiently precise recommendations and rulings so as to allow for prompt compliance by a Member with those recommendations and rulings."275 Unfortunately, the Appellate Body was not able to correct the panel's error because the panel had not provided the Appellate Body with factual findings on which to assess the measure's consistency with Article 2.3 of the SPS Agreement.276

Panels have attempted to avoid situations where the Appellate Body needs to make factual conclusions to decide issues not addressed by the panels' findings. In Canada Measures Affecting the Importation of Milk and the Exportation of Dairy Products (Canada Milk), the United States alleged that the measure at issue constituted an export subsidy in violation of Articles 9 and 10 of the Agreement on Agriculture.277 Although the panel recognized that finding a violation of only one of the articles was sufficient to declare the measure inconsistent with WTO obligations, the panel went on to find a violation of Article 10 as well.278 The panel explained that, although it understood the DSU's direction to resolve disputes efficiently, suggesting that a panel should consider one violation sufficient to declare a measure inconsistent, it was also aware that the Appellate Body might reverse its decision on Article 9 and be faced with the need to examine the measure's consistency with Article 10. This was something the Appellate Body could do only if the panel had drawn factual conclusions and given a legal interpretation of that article.279 To avoid confusion, the panel was clear in stating that the grounds for its decision were the measure's violation of Article 9 and that its assessment of Article 10 was made merely to account for the chance that the Appellate Body would reverse the panel on its Article 9 conclusions.280

The Appellate Body in this case did not have a need for the panels' "alternative finding."281 It also found the measure to violate Article 9 and therefore to be inconsistent with Canada's WTO obligations. The Appellate Body did not discuss the panel's decision to provide an alternative finding except to note that alternative findings have "no legal effect."282

The Canada Milk panel's decision to provide an alternative finding presents a potential means to deal with the Appellate Body's lack of remand authority. It provides grounds, within the bounds of the DSU, for the Appellate Body to examine a measure's consistency with WTO obligations when it reverses a panel's finding. The approach taken in Canada Milk, however, presents its own challenges as well. In particular, including alternative findings will undoubtedly increase the length of the already voluminous panel reports and further strain the resources and time required to prepare and translate these reports. In addition, it is questionable whether the employment of alternative findings adheres to the dictates of the DSU for panels to provide "prompt" and "efficient" resolutions to the disputes before it.283

X. CONCLUSION

As reviewed above, the first five years of dispute settlement under the DSU have seen substantial improvements in operation of the panel process. Some ambiguities in existing DSU provisions have been clarified through cases. By and large, disputes have been completed in reasonably quick time periods, with adopted decisions being implemented within the timeframes permitted by the DSU. Members have submitted a large laundry list in furtherance of strengthening the process, resolving some ambiguities and otherwise improving the operation of the DSU. Proposals, however, were not finalized prior to or during the Seattle Ministerial. Whatever changes are eventually made will likely improve the process, but the real challenge will be whether WTO Members effectively respond to civil society's request for greater transparency.

TERENCE P. STEWART** & AMY ANN KARPEL***

* Copyright 2000 by Terence P Stewart, Washington, D.C., USA. All lights reserved. No part of this publication may be reproduced, stored in retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, or otherwise, without prior written permission of the author.

** Terence P. Stewart is the Managing Partner of Stewart and Stewart, Washington, D.C.

*** Amy A. Karpel is an Associate with Stewart and Stewart, Washington, D.C.

Copyright Georgetown University Law Center Spring 2000
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