During the operation of the World Trade Organization dispute settlement system, compliance, or rather non-compliance, has been described a problem. There has been extensive scholarly examination of the why of non-compliance but there has not been an examination of the how. This article fills that gap by examining in a case study format all of the cases that have gone to retaliation and beyond. A close examination of these eleven disputes reveals that: Member States have manipulated the system to avoid compliance; the Dispute Settlement Understanding has gaps and flaws that enable manipulation; the Dispute Settlement Body (DSB), which oversees compliance, is limited in its ability to report and counteract such manipulation; and retaliation has limits.
Member States manipulate the end stage of disputes through several different techniques. They delay at every phase, litigate every procedural issue, offer up non-compliant fixes as measures to comply thereby inviting follow-up litigation, and try to arrange settlements that allow them to retain WTO violation(s). The DSU lacks a post-retaliation procedure and has inadequate requirements for surveillance of implementation. Both of these flaws allow Member States determined to avoid compliance until the complainant is willing to settle. The DSB does little to encourage compliance in these difficult disputes. The DSB fails to report statistics and information on the actual status of disputes that have gone to retaliation and beyond. The DSB also lacks any real process for engaging in surveillance of implementation.
Retaliation has its limits because of power asymmetries. Large developed countries can take the hit of retaliation and resist complying. Effective retaliation against these countries occurs when it is imposed by other developed countries and used strategically. Meanwhile, the only form of retaliation that might prove valuable for developing countries ― cross retaliation ― has yet to prove useful. While the WTO is unlikely to abandon retaliation as the ultimate remedy, it can and should reform how it handles the end game of disputes by having an effective surveillance process focused on timeliness, transparency in information about compliance efforts, and coordinated naming and shaming of non-compliant Members.
Cherie O’Neal Taylor,
Nw. J. Int'l L. & Bus.