The World Trade Organization (WTO) is the most important development in the
history of international trade. Its dispute settlement system, codified in the DSU
and featured by a permanent DSB and a binding dispute resolution, is touted as
the crown jewels of the WTO system. At the core of the WTO dispute settlement
system lie its implementation and enforcement mechanisms.
The WTO dispute settlement process is generally divided into four stages, namely
consultations, the panel process, the appellate body process, and the
implementation and enforcement process. With the adoption of the panel or
Appellate Body report by the DSB, the losing party is required to implement the
DSB's recommendations or rulings promptly or within a reasonable period of
time (RPT). Non-compliance by the losing party entitles the winning party to
request compensation or, upon authorization of the DSB, to retaliate by
suspending to the losing party concessions or other obligations under the WTO
Agreement.
Although most of the cases brought to the WTO have eventually been
implemented, this does not mean that the implementation and enforcement
mechanisms of the WTO dispute settlement system are lack of any problem. On
the contrary, they are rather ineffective in the sense that they fail to solve the
problems existing thereof, namely the delay in implementation and the
impracticability of enforcement. To be specific, the delay in implementation can
be attributed to the DSU provisions on the RPT as well as to the self-contradictory
provisions of Article 21.5 (compliance panel process) and Article 22.6 (level of
suspension arbitration process). The theoretical nature of enforcement, which is
manifested by the voluntary and prospective nature of compensation or retaliation,
also gives the losing party more incentive of non-compliance or implementation
delay. In this sense, the enforcement mechanism fails to achieve the intended
purpose of inducing or 'forcing' compliance. In view of the irreparable damages
caused to the winning party's industries by the losing party's delayed compliance,
there is an overgrowing concern that the current problematic implementation and enforcement mechanisms of the WTO dispute settlement system may in the long
run undermine the objective of the WTO system and may even threaten its
existence. A definite signal of such menace has appeared with the popping up like
mushrooms of bilateral or regional free trade agreements (FTAs), which might
impair, if not substitute, the rationale of the WTO multilateral trading system.
Criticism over the current implementation and enforcement mechanisms as well
as proposals thereof come from academic scholars, legal practitioners as well as
from the WTO Members. This thesis discusses and analyzes, at great length, the
legal problems existed in the implementation and enforcement mechanisms of the
WTO dispute settlement system as well as the various proposals and suggestions
thereof. Focus is made on the issues of the reasonable period of time, the Article
21.5 compliance proceedings (including the sequence problem concerning the
relationship between Articles 21.5 and 22.6), and the two countermeasures of
compensation and retaliation.
Having made legal analysis on the implementation and enforcement issues, this
thesis moves on to explore, from economic as well as political perspectives, the
underlying reasons for the problems thereof. While a failing Member is legally
bound to comply with the DSB decisions, whether, how and when it will choose
to comply depend on the game of domestic economic as well as political powers.
Such is also the case with the winning Member's enforcing the DSB decisions. In
this sense, the WTO Members, winning or failing, should keep a certain degree of
self-restraint. The failing Members, although pressured by domestic political
forces, should try their best to fulfill their international obligations as quickly as
possible; while the winning parties, also faced with domestic economic and political pressures, should try their best not to impose trade sanctions since
retaliation can also shoot itself in the foot.
With more cooperation and less confrontation, the parties to a dispute will be in a
more harmonious situation, which will in turn help promote the speedy settlement
of their disputes. Thus, the world will be operating in harmony. In this respect, the
traditional Chinese culture of harmony may help to achieve this aim. Under the
traditional Confucianism, benevolence and rites are the two most important
virtues to be advocated by the Confucians. While benevolence refers to the moral
ethics of the rulers who must be benevolent to their subordinates, rites aim to set
up the social moral order for the general public so that they can be fully aware of
their social status. Thus, the society members will lack the necessity or
consciousness for rebellion or insurrection, and the society will maintain peace
and stability. The Confucian idea of 'harmony is invaluable' is reflected in
practice by the society members' showing mutual tolerance in daily interactions,
and by their settling disputes in private through friendly consultation or mediation.
In addition to its influence over Chinese people, the traditional Chinese culture of
harmony also coincides with the consultation system in the WTO dispute
settlement system, which can help prevent abuse of litigation right and save
judicial resources, in conformity with the overall goal of the WTO dispute
settlement system.
| Date of Award | 15 Jul 2014 |
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| Original language | English |
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| Awarding Institution | - City University of Hong Kong
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| Supervisor | Guiguo WANG (Supervisor) & Peter MALANCZUK (Supervisor) |
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