Abstract: The professionalisation thesis argues that the Dispute Settelement Board of the World Trade Organisation permits non-political rational adjudication of international trade disputes. Through a survey of the case law in the field of intellectual property this article explores the validity of the professionalisation thesis. It concludes the professionalisation thesis is tenable but must nevertheless be contextualised by the political controversies which surround contemporary world trade law. Particularly interesting may be the statistical analysis of the cases or reform proposals and conclusion.

INTRODUCTION

0. THE EU

1. THE WTO

1.1 THE PANEL PROCESS

1.2 THE APPELLATE BODY

1.3 IMPLEMENTATION

2. CASES RAISED BEFORE THE DSB.

2.1 Active Panels:

2.2 Completed Cases

2.2.1 Settled Cases

2.2.2 CASE RESOLVED BY THE DSB WITHOUT AMICABLE SETTLEMENT

2.3 CONCLUSION

- STATISTICAL ANALYSIS OF PANEL DECISIONS

REFORM PROPOSALS

NOTES

BIBLIOGRAPHY

This paper argues that the that the DSB of the WTO seeks to transform international trade law from political to juristic models ("the professionalisation thesis*"). It also argues that the legal procedures established by the DSB succeed in effecting this change and as such are a working example of effective functionalist theory. The DSB is also a working example of Weber's theory of ideal rational (1) bureaucratic neutrality.(2) We shall study the EU proceedings according to the Trade Barriers Regulation (TBR) and the proceedings of the Dispute Settlement Mechanism (DSM) of the Dispute Settlement Board (DSB) of the World Trade Organisation (WTO). The procedures and cases litigated thereunder shall be exposed in order to demonstrate the professionalisation and functionalist theses. These these0s then shall be verified by a consideration of empirical practice in the case law of the Panel and Appellate Body.(3)

0. EU Remedies: Proceeding under the Trade Barriers Regulation

Prior to seking a remedy for trade restrictions before the DSB, an aggrieved party can seek relief before European courts under the EU's Trade Barriers Regulation (TBR). The EU procedures are relatively straightforward. Much like any other court., the complainant must first state their allegations. The complaint must identify the plaintiff and defendant, and state the practice which constitutes a barrier to trade.(4) The complaint must be properly served, and should state as clearly and specifically as possible the nature of the practice which constitutes a barrier.

If the claim is procedurally well founded the community will then consider the substance of the complaint. Proceedings under the TBR are more inquisitorial than adversarial and thus more similar to the continental civil law than to the Anglo-American common law.

The complained practice must constitute either an injury or threat of injury to the communities' industry or to the communities' trade (Art 2(3) injury - and 2(4) adverse affects - of the TBR). This "affects" based reasoning can of course be criticized as veiled protectionism - and such a complaint could later be made before the WTOs panel under the Dispute Settlement Mechanism.

Having set out the claim of an actual or potential injury to community trade via an adverse trade practice, the plaintiff must then prove causation - that the behavior in question causes or threatens to cause an injury. Adverse practices are not necessarily trade barriers. Whether a particular practice causes an injury to trade is determined according to EC Council Regulation 3286 /94. That regulation considers both de jure and de facto prohibitions. (5) Statistical evidence as to the volume of trade and prices may be adduced under Art. 10 of the TBR to prove causation.
 

Critique of the TBR:

The behavior which can be complained of under the TBR does not need to actually cause damage. The mere threat of a potential injury to community trade is sufficient to prove causation. Furthermore, the injury does not need to directly affect Europe but can affect third party states. It is thus at least theoretically possible that a contractual agreement between two states or private parties to agree, for example, to a fixed series of installment contracts could constitute a threat to European trade with the one of the states in question. This extreme latitude explains why one can question the neutrality of the TBR. In so far as the TBR acts as a vector for European trade interests, it cannot be seen as a neutral clearinghouse for the WTO. Whether it should or should not be such is a normative question and as such not within the scope of this paper. Because the role of the TBR can be questioned, remedies at the European level are likely to be taken up eventually by the WTO. Understanding the procedures of the WTO is the next step in our analysis.

1. THE WTO

1.1 THE PANEL PROCESS

What are the steps in the process if the case is taken from the European level to the WTO? First, good faith consultations are held (art. 4) to seek an amicable settlement. Third parties may at this time seek to intervene if their interests are implicated (art. 4 §11). If the complaining party is dissatisfied with the outcome of the consultations, they may request the DSB to form a panel to decide the case. The request to form a panel must be made in writing, summarize the complaint, and indicate the parties (art. 6, §1). The Dispute Settlement board may refuse, but only by consensus (art. 6, §2). The panel itself is composed of three "well qualified" arbitrators, whose selection may only be opposed for compelling reasons (Art. 8, §§ 1.6) . The panel may in the alternative, if both parties agree, be composed of 5 persons (Art 8, §5). The panelists act in a personal capacity and are not representative of any government or non governmental organ. (Art. 8, §9). Naturally the panel must make its decisions fairly and equitably (Art. 11). The parties arguments are presented first in writing (Art. 12 § 6). These procedures are similar to any national court procedure and evidence of the validity of the professionalisation thesis. ***???

The panel, like the TRB, can be said to be "inquisitorial" in the sense that it can seek information from the parties and pose questions to them (Art. 13). That is of course not a standard judicial procedure in the Anglo-American common law but is the normal course of events in continental civil law jurisdictions. The panel's deliberations are naturally confidential (Art. 14). The procedure does foresee oral arguments as well as written submissions (15, §1) Prior to final delivery of the decision of the panel to the DSB, the parties are given "one last chance" to raise objections to the interim findings directly before the panel. After this "last chance", any objection either as to the substantive findings or procedural enforcement of those findings must then take place via appeal to the appellate body.

1.2 THE APPELLATE BODY

Upon determination of the judgment of the panel, parties may appeal the decisions of the panel to the appellate body (Art. 16, §4, Art. 17). The appellate process is relatively straightforward. That is not to say there are no limits however. For example, third parties to the dispute may not directly appeal the decision of the panel (Art. 17, §4) though they can intervene once an appeal is initiated by either party to the dispute. The reports of the appellate body are anonymous (Art. 17, §11) and its deliberations confidential. (Art. 17, §10 Understanding on Rules and Procedures Governing the Settlement of Disputes, Annex 2 of the WTO Agreement). However once an appeal has been initiated existing or new third parties may join the appeal. (6) Thus while there are no explicit provisions for briefs filed as amicus curiae,(7) a similar result could be reached by joining the appeal – though third parties are correct in remarking that joinder is more burdensome than merely filing as amicus curiae. Thus some persons, notably NGOs, propose permitting amicus filings which would be one way to increase democratic legitimacy of the WTO.

Naturally the proceedings of the appellate body, like the panel, are guaranteed to be neutral and impartial. The members of the appellate body must be experts in the field of law and commerce(8) but may not be affiliated with any government.(9) All of these procedural requirements of fairness, neutrality, independance, and professional competence, as well as the stringent time limits on enforcement of judgments are further evidence of the professionalisation thesis.

1.3 IMPLEMENTATION

Once the final decision of the panel and/or appellate body have been reached, if the practice has been found to be illegal it must be ended. The party in breach of their treaty obligation must remedy this breach within a reasonable time (Art. 21, §3). What constitutes a "reasonable" time may be determined by the agreement of the parties, through arbitration. A practical guideline for the longest "reasonable" time period is 15 months, though provision here is made for accounting for time of appeal which still may not exceed 18 months (Art 21, §4) . Flexibility in the time required for the remedy is also permitted in cases where the state in breach is a developing country (Art. 21, §8). Every case should, in principle, be decided at the very most two years after initiation, and on average six months to a year after initiation of proceedings. The panel and appellate body seek a rapid and fair resolution of every claim which is further evidence of the validity of the professionalisation thesis.

In cases of continued non compliance either monetary compensation may be demanded by the non breaching party (Art. 22, § 2) or retaliatory trade sanction will be permitted (Art. 22, §3). Though 23, § 3 does not use the terms proportionality or reasonability the escalating series of potential retaliatory measures which it enumerates can best be understood with those two qualifications. Thus the retaliation should be in the same sector of the agreement. If that is not possible the retaliation should within other sectors of the same agreement. If that is also not possible (or impractical) in other agreements betwen the parties. An argument that retaliation must be reasonable and proportional can also be supported in that Art. 22 §3(d)(ii) permits an economic analysis of the remedy. Again arbitration exists as a possible method to resolve the dispute over compensation or retaliation. (Art. 22 §7; Art. 25). The fact that the panel and appellate body are established according to, and enforce, objective procedures for the regular determination of diverse trade disputes is further evidence of the validitiy, at least in theory, of the professionalisation thesis.

We now turn to the practice of the courts in order to determine the validity of the professionalisation thesis in practice.

2. CASES RAISED BEFORE THE DSB.

The cases which we shall study are either not yet resolved, resolved through settlement, or resolved through the decision of the panel or appellate body. They show that the WTO encourages amicable settlement where possible, arbitrated settlement if necessary, and that the WTO can enforce its judgments. These facts are empirical support of the validity of the professionalisation thesis in practice as well as theory. All of the cases involve intellectual proprerty law and all cases but one involve the US and the EU or an EU member state.

These cases shall illustrate that the dispute settlement mechanism is an example of coherent bureaucratic operational efficiency of the type described by Weber. The settlement procedure encourages dispute resolution through hierarchical procedures of trial and enforcement of judgment. Settlement is also encouraged by the fact that the mechanisms of enforcement are efficacious. Enforcement efficacity is guaranteed by the ultimate sanction of economic retaliation (counter-vailing duties, import restrictions and other barriers to trade). Because this mechanism turns the self interest of the state toward enforcement, the WTO and DSB are a working example of effective realist-functionalist state theory. However in so far as these mechanisms remain undemocratic (apart from the virtual representation of appointed governmental ministers) the WTOs DSM has not yet squared the circle by forming a synthesis of the competing thesis of realist and transformationist state theories. That may not be possible. However it may not be necessary. Functionalism provides a means of resolving at least the mundane problems of daily life. Perhaps those are the only problems which can ever be solved. They are in any event the most immediate. If the DSM "only" succeeds in normalizing world trade then it will serve the purpose of encouraging commerce and economic growth thereby reducing the risk of war, at least within the first world.
 
 

2.1 Active Panels:

We have studied the procedural aspects of the DSB in order to understand the theoretical validity of the professionalisation thesis. We now verify the theoretical hypothesis through a material comparison of the actual empirical facts of disputes brought before the panel. This will show that the theoretical validity of the professionalisation thesis is confirmed in the practice. The panel procedure encourages amicable settlement at several levels, is in all cases relatively rapid (particularly when compared to the political system which preceded it) and creates enforcable judgments through a series of ever-stronger remedies for non-compliance.

The cases have been selected for their subject matter, intellectual property, and their parties which in all cases save one are the US against either the EU or an EU member state.

Pending Cases

The following cases are currently pending before the arbitration panel:

United States - Section 211 Omnibus Appropriations Act, complaint by the European Communities and its member States (WT/DS176/1).

Essentially, a US law prohibits the registration of a trademark which has fallen into disuse where the mark had been abandoned following confiscation of the trade mark owner's business assets located in Cuba.. Section 211 of the US Omnibus Appropriations Act is challenged for inconformity with TRIPS Article 2 and by reference the Paris Convention’s articles 3, 4, 15-21, 41, 42, and 62. Canada, Japan and Nicaragua reserved their third-party rights.

The case has not yet been decided however its merits should turn on whether the mark was abandoned because of the seizure of the assets. It may simply be that the US law is overbroad. This cases is thus paradoxical in that ordinarily TRIPs is criticised on the grounds that extends too much protection over intellectual property. Here however TRIPs is being invoked as a defense against such overreaching (if indeed protecting such assets be overreaching). Since this case can be contested on the merits it is very unlikely to be settled, particularly given that there are other challenges to US laws of intellectual property under TRIPS (infra). The result of this case may even set the tone for TRIPs either as shield against intellectual property rights or TRIPs as sword to enforce intellectual property rights.

United States - Section 337 of the Tariff Act of 1930 and amendments thereto, complaint by the European Communities and their member States (WT/DS186/1).

Section 337 of the US Tariff Act (19 U.S.C. § 1337) and the related Rules of Practice and Procedure of the International Trade Commission contained in Chapter II of Title 19 of the US Code of Federal Regulations permits the US to take unilateral action for violation of intellectual property rights. 19 U.S.C. § 1337 is challenged as contravening Article III of GATT 1994 and TRIPS Agreement Articles 2 (in conjunction with Article 2 Paris Convention), 3, 9 (in conjunction with Article 5 Berne Convention), 27, 41, 42, 49, 50 and 51. Since the act in question is prior to the last world war it may well be striken as inconsistent with TRIPs. While unilateral self help was the ordinary remedy in 1930 such is no longer the case.

United States - US Patents Code (WT/DS224/1), request by Brazil. This request concerns the provisions of the United States Patents Code (US Patents Code), in particular those of Chapter 18 [38], "Patent Rights in Inventions Made with Federal Assistance".

Essentially the US law here requires that any patent procured as a result of US federal research aid be manufactured thereafter in the United States. This is another paradoxical example of TRIPS being invoked to limit the extent of intellectual property rights! Brazil has requested consultations with the United States to understand the US position justifying the consistency of its limitation on federal research subventions with the TRIPs and TRIMs agreement (TRIPs, Articles 27 and 28; TRIMs Agreement, Article 2 in particular, and Articles III and XI of GATT 1994"). For this reason it is possible that this case will be settled amicably. This case is also interesting in that it will illustrate the limits of the DSB: while we have already seen the DSB effectively require legislative amendment, it is not likely that the DSB will go so far as to order one state to essentially subsidize another state's research and development costs. In so far as the goals of mutually beneficial trade are to be reached through free trade (and at the outset this paper qualifies a limitation on this principle of liberalism, namely agricultural self sufficiency) we can say: It is one thing to order a state not to subsidize its own industries, even indirectly. It is another to say that the state must subsidize foreign and domestic industries equally. The former is a passive integration wholly appropriate to the WTO. The latter however is an active form of positive integration, more appropriate for regional customs unions such as the EU. Thus this case is not posed in its proper terms: the question should not be whether the US should subsidize the Brazilian industry, but whether it can subsidize its industries at all. Because of these two questions this case could serve as an excellent illustration of the different nature and scope of regional as opposed to global trading regimes.

European Communities - Enforcement of Intellectual Property Rights for Motion Pictures and Television Programs, complaint by the United States (WT/DS124/1).

Essentially this is a case asserting copyright infringement. The US alleges that Greek television stations regularly broadcast copyrighted movies and television programmes without securing permission from their owners. The US argues that the Greek remedies are either unenforced or inadequate and asserts a violation of Articles 41 and 61 of the TRIPS Agreement. On 20 March 2001, the parties to the dispute notified a mutually satisfactory solution on the matter to the DSB.

The cases which have been taken up but which are not yet settled are examples of the first step in the process, seeking a hearing before the panel, and that request is made whilst negotiations occur to settle amciably. Either the case settles, or goes forward. If the case goes forward a decision is issued. Either the decision is appealed or enforced or avoided. If the decision is appealed either the decision may be changed. If however the decision is avoided a series of escalating retaliatory measures are allowed proportional to the injury resulting from breach of the treaty obligations. This is very similar to the process before any other court, and this similarity is further evidence of the validity of the professionalisation thesis.
 
 

2.2 Completed Cases

The following cases have been completed, either through settlement or through binding arbitration. As such they illustrate the efficacity of the DSB. The parties preferred settling in 2 of the 3 cases studied which supports the professionalisation thesis since the efficacity of enforcement is key to the validity of that thesis. Were the enforcement mechanism ineffective, parties would be unlikely to settle. Yet in most cases parties prefer to settle, at least in this small case survey (which does however reach every case involving intellectual property with the US and the EU or an EU member state as parties).
 
 

2.2.1 Settled Cases

Sweden - Measures Affecting the Enforcement of Intellectual Property Rights, complaint by the United States (WT/DS86/1).

Here, in essence, the US argued that the Swedish remedy for infringement of intellectual property rights was inadequate and thus violated Articles 50, 63 and 65 of the TRIPS Agreement. The parties reached a mutally agreed upon settlement. This case is thus another example of the efficacity of the agreement in terms of encouraging settlements.

Portugal - Patent Protection under the Industrial Property Act, complaint by the United States (WT/DS37).

In that case the US argued that Portugese domestic law on (Portugal’s Industrial Property Act) was in violations of Articles 33, 65 and 70 of TRIPS. Both parties notified a mutually agreed solution to the DSB. Again the procedures are effective as the encourage enforcable settlement of disputes.
 
 

2.2.2 CASE RESOLVED BY THE DSB WITHOUT AMICABLE SETTLEMENT

United States - Section 110(5) of the US Copyright Act, complaint by the European Communities (WT/DS160/1).

This case is interesting because it is the first litigation of one of the US "Fair Use" exceptions to copyright protection. It is also the only case considered which neither settled nor is pending. The case demonstrates that even in contentious issues the WTO is able to enforce its judgments even against the United States. Thus this case is very strong proof of the validity of the professionalisation thesis.

Essentially, US copyright law permits display in public places of current (as opposed to recorded) broadcasts without paying royalties provided only that the reciever be of the type ordinarily used in the home and that no charge be imposed for such display. This permits, for example, bus stations, cafes, bars etc. to play a radio and television. This exception to the author’s monopoly right was permitted as being in the public interest and on the merits can be defended (not only because free diffusion of news and entertainment is in the public interest but also because enforcement of the right of the copyright holder would be impossible in practice).

The US law (Section 110(5) of the US Copyright Act, as amended by the Fairness in Music Licensing Act, 27 October 1998) was challenged as being in violation of Article 9(1) of the TRIPS Agreement, which incorporates by reference Articles 1-21 of the Berne Convention. Australia, Japan and Switzerland reserved their third-party rights.

The dispute focused on the business exemption of Section 110(5) of the US Copyright Act and its partial incompatibility with Article 13 of the TRIPS Agreement. TRIPS Art. 13 does permit limits on the rights of copyright holders, provided that those limits do not interfere with their economic rights or prejudice the legitimate interests (in this author’s opinion that would include the moral rights; droit moral) of the author. The business examption of sub-paragraph (B) of Section 110(5), essentially allowed the on site diffusion of music broadcasts, without an authorization and a payment of a fee, by businesses frequented by the public (stores, cafes, bars, restaurants) provided that they do not exceed a certain size limit. The business in question may even use amplification equipment (speakers etc.) provided that such broadcast or amplification equipment be of the kind ordinarily used in private homes under the "homestyle" exemption.

The panel determined that the "business" exemption provided for in sub-paragraph (B) of Section 110(5) of the US Copyright Act did not meet the requirements of Article 13 of the TRIPS Agreement and was thus inconsistent with Articles 11bis(1)(iii) and 11(1)(ii) of the Berne Convention (1971) as incorporated into the TRIPS Agreement by Article 9.1 of that Agreement. At the same time however the panel found that the "homestyle" exemption provided for in sub-paragraph (A) of Section 110(5) of the US Copyright Act met the requirements of Article 13 of the TRIPS Agreement and was thus consistent with Articles 11bis(1)(iii) and 11(1)(ii) of the Berne Convention (1971) as incorporated into the TRIPS Agreement by Article 9.1 of that Agreement. Thus the effective decision of that case is that a patron, employer, or employee may casually use their radio, or even television on the premises but for personal uses only.

This decision is open to critique on the merits. First it will be difficult to enforce. One has difficulty imagining police raids on restaurants for copyright infringement. The decision can also be criticized for it reduces the availabilitity of information to consumers. The decision is even bad for authors since it will reduce the size of the advertising audience and thus reduces the merchantability of author’s works.

Given the nature of the case, which ordered the US to amend its internal law, it is not surprising that it’s implementation was contentious. The US did not seek to overturn the decision but rather sought an extension to the maximum possible time for legislation to correct the inconsistency between US domestic law and its TRIPs treaty obligations. Thus rather than appeal the decision the US sought to negotiate the time frame in which the decision would be implemented under Article 21.3(c). The question of enforcement was heard before binding arbitration, pursuant to the DSM. WT/DS160/12 15 January 2001 (01-0110)

Essentially the US sought at least 15 months and preferably a full congressional term, due to the change in administrations caused by the presidential election. The EU sought to limit the US implementation time to a maximum of 10 months. This decision underscored that the "reasonable period of time" for implementation is the shortest period possible within the legal system of the Member to implement the recommendations and rulings of the DSB. The question then was what exactly is the reasonable time? (10)

In the case the arbitrator found that: "Article 21.3(c) makes clear that the 'reasonable period of time' may be shorter or longer, depending upon the 'particular circumstances". The arbitrator noted that the compliance must be "prompt" and cited previous arbitrators who noted that reasonable period of time" meant the following: "it is clear that the reasonable period of time, as determined under Article 21.3(c), should be the  shortest period possible within the legal system of the Member  to implement the recommendations and rulings of the DSB" (emphasis added).

The arbitrator's citation to the previous decisions of the panel shows that the panel is developing a case-law jurisprudence (Rechtsprechung), one of the features which must occur if world trade is to be normalized, i.e. transformed from a political to a juridical system of governance via international organisations such as the WTO.

In the instance the arbitrator decided that 12 months from the time of the panel decision would be a reasonable time, noting that legislative procedures take longer than administrative ones, and that the panel’s decisions should not oblige extraordinary measures to be taken by member’s of the trading body, but that ordinary legislative procedures should normally be allowed.

This case is very strong evidence in support of the professionalisation thesis. The WTO has effectively ordered the United States to alter its internal legal regime and can enforce that decision.

2.3 CONCLUSION

The statutory and case law analysis supports the argument of the professionalisation thesis. The DSB represents a quasi-judicial model for determining international trade conflicts peacefully. These cases show that in practice the DSB of the WTO is an example of Weberian bureaucratic professionalism and proves the validity of functionalist theory.

Some commentators may not like the loss of sovereignty involved in establishing a multilateral binding trade liberalisation system. However if one is consistent with liberal economic theory that is exactly what is required (110) to ensure global free trade.

The professionalisation thesis, that the WTO is replacing political procedures with juristic ones, is empirically validated by this study which shows that the proceedings work to "filter" and determine at each stage the different issues litigated. This filtering and decision process is less contentious than the political regime which it replaced. This is also shown by the fact that the decisions of the court are even handed and do not arbitarily favor any particular state. This study has also shown the surprising point that TRIPs can serve either to support or deny intellectual property rights, which may be further evidence of the impartiality of the panel and appellate body.

One can critique this system. Commentators have noted the threat to soveriegnty presented by the  jurisdictional expansionism of the Appellate body (12) as well as the inherently undemocratic character of the DSB. However democracy and trade are problematic:  political resolution of trade disputes under GATT led to the constant threat of trade war; and prior to GATT trade disputes in combination with ultra-nationalism were often contributing, or even  determining factors  in causing war. So democratic deficit  while apparently problematic is in fact "a blessing in disguise"! Although the functionalist approach of the DSB and the WTO has not bridged the gap between transformationalism and realism, perhaps that is because that gap is unbridgable. It is clear that closed borders and poverty lead to war and that prosperity brings peace. Theoretically open borders and open trade will lead to prosperity - if it does, and if  that prosperity is shared by all, then it will also lead to peace. While the WTO probably will not meet utopian ideals it may not have too. Democratic deficit will be tolerated in so far as it guaranties peace: it will even be quietly applauded if it generates shared prosperity.
 
 
 

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SOURCE: WTO, http://www.wto.org/

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- STATISTICAL ANALYSIS OF PANEL DECISIONS

explanatory notes:

explanatory notes:

THE EU BEFORE THE WTO:
EU as
COMPLAINANT    DEFENDANT     THIRD PARTY     TOTAL
Request        Request       Request         WTO

Consult Panel  Consult Panel Consult Panel   TOTAL

1995  2     1        8     3       2     1  | 25

1996  7     1        4     3      11     3  | 39

1997  16    6        4     3      11     4  | 50

1998  16    4        9     1       0     2  | 41

1999  6     9        3     1       4     8  | 30

1999  8     4        3     0       5     8  | 39

-------------------------------------------------

TOTAL 55    25       31    11      33    26 | 219

SOURCE WTO

Average and trend in appellate disputes
1995  2    1         8     3       2     1  | 25

1999  8    4         3     0       5     8  | 39

AVG.  9    4         5     1       5     5  | 36

Trend +    +         -     -  &nbssp;    +     +  | +

Source: WTO and Author, Derived from WTO data above
(Average truncated, not rounded)
EU. Multilateral Issues: Dipsute Settlement, Overview
http://europa.eu.int/comm/trade/miti/dispute/overview.htm
 
 

INITIAL DATA             DERIVED DATA

PLAINTIFFS DEFENDANTS    RATIO P. to D.   TOTAL
US      30         25               1,2      55
EU      26         17               1,5      43
 

Conclusions:
US is defendant more often often than Europe
US and Europeean cases together are the majority of WTO DSB cases.
 

INITIAL DATA                DERIVED RATIOS:
US as:
Plaintiff Defendant Total   RATIO Wins to Losses

Wins   13         1    14                   1,7
Draws  10        10    20   RATIO Wins to  Total
Losses 2          6     8                    ,32
Total  25        17    44
US Wins > Losses

Source:
Initial Data: US GAO Briefing Reprt WTO Experience in Dispute Settlement, June 2000 GAO/NSIAD/OG C -00-196BR
Derived Ratios: Author

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About half of EU complaints reach panel stage, whereas only about 1/3 of claims against the EU reach panel stage. However this correlation is not itself a proof of the reasonability of the EU: for example if the EU has „overplayed" its hand, then settlement would be the best choice. More interestingly the number of cases brought against the EU which go to panel has droped in a linear fashion from 1995 (over 1/3) to none in 1999. Again, one could conclude from this mere statistic either that the EU is a sharp negotiator or that it has outright „captured" the DSB. We do not make either conclusion since realistically each case has to be considered on its merits. Thus statistical studies such as this tend not to prove but to corroborate evidence gathered through thorough analysis of concrete cases on their merits. There is a lesser correlation of cases invoking the DSB by the EU going to panel and mixed trend which fluctuates but on average shows greater invocation of the DSB by the EU. At the same time however we can see that the DSB is being more and more regularly used by all members – which tends to support the thesis of normalisation of trade disputes through legal rather than political bodies.

In terms of our substantive analysis of the law, while our representative sample of half a dozen cases is quite small it is sufficiently detailed to permit a tentative conclusion that the proceedings of the DSB are procedurally fair in the sense of being administered by neutral arbitrators. Thus an argument that the EU does well at the WTO because of agency „capture" (regulators effectively acquiring self regulatory power through informal professional ties) seems to that extent ill founded. That does not however allow one to also dismiss that the EU does well at the WTO because it uses good strategy. Indeed to the extent that the game of the WTO represents a subjective zero sum game (the conflict to see who will win or lose the dispute) in the larger positive sum game of trade would imply that the EU must have a winning strategy if it wins. Even in cooperative positive sum games such as trade there are still relative winners and losers and it seems pretty clear that the EU is a relative winner at least globally (particularly in consideration of its favorable position with respect to the third world, (13) or even with respect to eastern Europe).

This thesis of bureaucratic neutrality and fairness can also be supported when we remember that there are similar symmetric cases either pending or resolved which have or may be found in the US favor. While the Brazilian case seems likely to result in an ambigous condemnation of non-tarrif barriers coupled with an affirmation of state sovereignty, the cases involving Europe are rather more clear. Sweden smartly accepted the inadequacy of its laws, and has taken or is taking steps to redress them having settled. Greece may or may not insists on going to panel, but if the facts are as the US claims, then they would also be wiser to settle. These cases demonstrate the the „normalisation" thesis which argues that the formerly political area of trade disputes can be better handled through juridical structures such as the WTO’s DSB. Since we see symmetrical issues and similar outcomes the normalisation thesis is operationally compelling, at least when considered within its own terms.

How then to explain the necessarily costly US intransigence in the field of intellectual property law? The loss of the US before the WTO in the case of 110(5) of the copyright act and Art. 337 (Tariff Act of 1930) demonstrates tactical errors by the US. Strategically the US, longtime advocate of market capitalism and free trade has, as a result of its cold war victory been able to forge a regime for global trade liberalisation. However, in seeking to maintain its own laws even where they are in contravention of the regime that its foreign policy elites created it is not merely behaving unreasonably and overreaching its own power – it is also making tactical errors which if only embarrassing are nonetheless costly at least in economic terms. To put it colloquially: "the US has overplayed its hand".
 

The normalisation thesis seems reasonably well supported through this limited empirical study. However no system, no matter how well concieived, is ever perfect. Thus we can ask ourselves what types of reforms have been requested or proposed for this system?

One proposal has been to permit greater third party participation either in the panel or appellate process or both. Requiring the panel to consider amicus curiae briefs would be one way to increase democratic legitimacy of the panel or appellate body. The amicus curiae is a non-implicated third party. Their brief is simply an argument in favor of what they see as the best resolution of the case or facts. The court is currently free to ignore amicus curiae briefs. However a well founded and properly filed brief will in ordinary practice at least be read though it will probably not be cited. Thus the practice of requiring consideration of amicus curiae briefs would cost the court nothing in terms of obligation but would increase the sense of fairness and democracy since in such a case NGOs, and the people they represent, would be able to have a voice on decisions, if only in theory.

Other reforms are possible. The EU argues for an accelleration of some elements of the process, though others argue that the process is already too rapid. The EU also argues for the creation of professional full time panels. (14) Other reforms have been proposed by the EU permitting the joinder of multiple defendants and facilitating third party intervention. (15)())

The reforms proposed by the EU seem to be only procedural rather than substantive – which is a further support for the „normalisation" thesis that the DSB is succeeding in transforming the uncertain and costly political treatment of trade disputes into a smoother juristic model.

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*) - The professionalisation thesis has been argued, among others, by Cameron and Gray in "Principles of International Law in the World Trade Organisation's Dispute Settlement Body",  International and Comparative Law Quarterly, Vol. 50, No. 2 April 2001.*

1) Sharon Jones, "Bureaucracy" http://management.canberra.edu.au/lectures/adminstudies/sem972/unit4207/Bureaucracy.html

2) R.J. Kilcullen , "Max Weber: On Bureaucracy"
http://www.humanities.mq.edu.au/politics/y64l09.html

3) For a discussion of Trips and the DSB in a global context see, Benedicte Callan, "The Potential for Transatlantic Cooperation on Intellectual Property ", http://bis.berkeley.edu/~briewww/pubs/wp/wp116.html

4) EU, „Trade Policy Instruments"
http://europa.eu.int/comm/trade/policy/traderegul/compl.htm

5) EU, „Trade Policy Instruments"
http://europa.eu.int/comm/trade/policy/traderegul/reg_02.htm

6) WTO, "Art. 23(1), Art. 24 Working procedures for appellate review." http://www.wto.org/english/tratop_e/dispu_e/ab3_e.htm)

7) Note however that the Appellate Body does in practice consider amicus curiae briefs.
Chakravarthi Raghavan "Appellate body asserts right to receive amicus curiae briefs", http://www.twnside.org.sg/title/amicus.htm

8) "Rules of Conduct for the Understanding on Rules and Procedures Governing the Settlement of Disputes World Trade" Organization WT/DSB/RC/ Art. II, Art. III
http://www.wto.org/english/tratop_e/dispu_e/rc_e.htm.

9) WTO "Understanding on Rules and Procedures Governing the Settlement of Disputes", Art. 17 §3.

10) WT/DS160/12 15 January 2001 (01-0110)

11) Jeanne J. Grimmett, "WTO Dispute Settlement"
http://www.iahf.com/usa/20001212a.html

12) Chakravarthi Raghavan, "WTO APPELLATE BODY EXTENDING its JURISDICTION?"
http://www.twnside.org.sg/title/juris-cn.htm

13) For an excellent list of links to third world intellectual property issues under TRIPs see: http://www.cid.harvard.edu/cidtrade/Issues/ipr.html

14) EU: "Trade – Dispute Settlement"
http://europa.eu.int/comm/trade/miti/dispute/overview.htm

^{15) EU: "Multilateral Issues",
http://europa.eu.int/comm/trade/miti/new_dispute/0212dstl.htm}

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Benedicte Callan,
"The Potential for Transatlantic Cooperation on Intellectual Property ", http://bis.berkeley.edu/~briewww/pubs/wp/wp116.html

Jeanne J. Grimmett, "WTO Dispute Settlement"
http://www.iahf.com/usa/20001212a.html

Sharon Jones,
"Bureaucracy" http://management.canberra.edu.au/lectures/adminstudies/sem972/unit4207/Bureaucracy.html
R.J. Kilcullen,

MAX WEBER: ON BUREAUCRACY
http://www.humanities.mq.edu.au/politics/y64l09.html

Chakravarthi Raghavan "Appellate body asserts right to receive amicus curiae briefs", http://www.twnside.org.sg/title/amicus.htm

Chakravarthi Raghavan, "WTO APPELLATE BODY EXTENDING its JURISDICTION?"
http://www.twnside.org.sg/title/juris-cn.htm
 

EU

"Trade Policy Instruments"
http://europa.eu.int/comm/trade/policy/traderegul/compl.htm

"Trade – Dispute Settlement"
http://europa.eu.int/comm/trade/miti/dispute/overview.htm

"Multilateral Issues",
http://europa.eu.int/comm/trade/miti/new_dispute/0212dstl.htm
 
 

WTO:

"Art. 23(1), Art. 24 Working procedures for appellate review." http://www.wto.org/english/tratop_e/dispu_e/ab3_e.htm)

Rules of Conduct for the Understanding on Rules and Procedures Governing the Settlement of Disputes World Trade" Organization WT/DSB/RC/ Art. II, Art. III
http://www.wto.org/english/tratop_e/dispu_e/rc_e.htm.

"Understanding on Rules and Procedures Governing the Settlement of Disputes", Art. 17 §3.
WT/DS160/12 15 January 2001 (01-0110)

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