WTO Dispute Settlement and the Missing Developing

WTODisputeSettlementandtheMissingDevelopingCountryCases:EngagingthePrivateSectorChadP.Bown†TheBrookingsInstitution&BrandeisUniversityBernardM.Hoekman‡SciencesPo,ParisWorldBank&CEPRMay2005AbstractThepoorestWTOmembercountriesalmostuniversallyfailtoengageaseithercomplainantsorinterestedthirdpartiesinformaldisputesettlementactivityrelatedtotheirmarketaccessinterests.ThispaperfocusesoncostsoftheWTO’sextendedlitigationprocessasanexplanationforthepotentialbut“missing”developingcountryengagement.Weprovideapositiveexaminationofthecurrentsystem,andwecatalogueandanalyzeasetofproposalsencouragingtheprivatesectortoprovideDSU-specificlegalassistancetopoorcountries.Weinvestigatetheroleoflegalservicecentres,non-governmentalorganizations,developmentorganizations,internationaltradelitigators,economists,consumerorganizations,andevenlawschoolstoprovidepoorcountrieswiththemissingservicesneededatcriticalstagesoftheWTO’sextendedlitigationprocess.Intheabsenceofsystemicrulesreform,thepublic-privatepartnershipmodelimposesasubstantialcooperationburdenonsuchgroupsastheyorganizeexportinterests,estimatethesizeofimprovedmarketaccesspayoffs,prioritizeacrosspotentialcases,engagedomesticgovernments,preparelegalbriefs,assistinevidentiarydiscovery,andpursuethepublicrelationseffortrequiredtoinduceforeignpoliticalcompliance.JELNo.F13Keywords:WTO,DisputeSettlement,DevelopingCountries________________†Bown(correspondingauthor):Okun-ModelFellowinEconomicStudies(TheBrookingsInstitution)andDepartmentofEconomicsandInternationalBusinessSchool(BrandeisUniversity).Correspondence:TheBrookingsInstitution,1775MassachusettsAvenue,NW,Washington,DC20036USAtel:202-797-6304,fax:[phone],email:[e-mail],web:~cbown/.‡Hoekman:Grouped’EconomieMondiale,Institutd’EtudesPolitiques,Paris;WorldBankandCEPR,London.Correspondence:TheWorldBank,1818HSt.,N.W.,Washington,DC20433USA.Tel:[phone].E-mail:[e-mail]iscussionswethankPetrosMavroidis,JoelTrachtman,GregShaffer,JaneBradley,SteveCharnovitz,RachelMcCulloch,EricReinhardt,DavidPalmeter,AmyPorges,HåkanNordström,HenrikHorn,RobertStaiger,GiovanniMaggi,RobertLawrence,KimElliott,RebeccaRoss,JohnWhalley,DonaldBreanandseminarparticipantsattheBrookingsInstitution,theCentreforInternationalGovernanceInnovation,andtheWTODisputeSettlementandDevelopingCountriesConferenceattheUniversityofWisconsin.BownthankstheWorldBankforfinancialsupport.TheopinionsexpressedinthispaperareourownandshouldnotbeattributedtotheWorldBankortheBrookingsInstitution.Allremainingerrorsareourown.1.INTRODUCTIONThepoorestcountriesintheWTOsystemarealmostcompletelydisengagedfromenforcementoftheirmarketaccessrightsthroughformaldisputesettlementlitigation.AlthoughmoreadvancedandlargerdevelopingcountrieshavestartedtousetheDisputeSettlementUnderstanding(DSU)—e.g.,CentralAmericancountrieshaveinitiatedcasesagainsteachother;IndiahaschallengedtheEuropeanUnion,BrazilhastakenontheUnitedStates—theleastdevelopedcountries(LDCs)aremostlyabsent,whetherascomplainants,respondentsorthirdparties.Itissomewhatsurprisingthatmoregroupshavenotbeenwillingtoworkwithpoordevelopingcountriestoinvokedisputesettlementontheirbehalf,giventhatWTOpanelsandAppellateBodydecisionshaveindicatedapotentialopeningforcomplainantswiththeirpro-tradeemphasis,callingintoquestionsomeelementofmosteveryrespondenttraderestrictiononwhichtheyhaveruled.Withverylimitedexception,thelikelycandidategroupsofnon-governmentalorganizations(NGOs)andprivatesectorattorneyshavenottakentheleadtoprovidelegalworkonbehalfofpoorcountries.ThisisparticularlystrikinggiventheimportantandsubstantialroleinWTOlitigationundertakenbythesegroupsinmoredevelopedcountries.AneffectiveWTOdisputesettlementsystemisimportantfromaninstitutionalperspectiveasithaspublicgoodcharacteristics.AppropriateMembershipparticipationinthesystemcanalsogeneratepositiveexternalities.TheWTOdisputesettlementsystemactsasapublicgoodifitimprovespropertyrights—inthiscontextmarketaccessrights–andthuseachMembercountry’sownershipstakeinthesystem.1Improvedsecurityoftheserightsreducesuncertainty,increasingthelikelihoodthatfirmsandindividualsincountriesonboththeexport1Bagwell,MavroidisandStaiger(2002)provideanon-technicaleconomicdescriptionoftheGATT/WTOsystemmoregenerallyasonedesignedtoreducetheuncertaintyovermarketaccessrights.2andimportsidesofinternationaltransactionsmakemutuallybeneficial,relationship-specificinvestments.ActiveparticipationindisputesettlementactivitybyWTOmembercountriescanalsohavepositiveexternalitiesifonecountry’slitigationeffortscontributetotheremovalofatradebarrierthatadverselyaffectedthemarketaccessrightsofotherWTOmembers.Thepresenceofthesetwopotentialmarketfailuresrequiremonitoring,vigilance,andpossiblyinterventionbymarketnon-participantssoasnottomissopportunitiesforfullyexploitingtheglobalbenefitsofafunctioningdisputesettlementsystem.WhileenforcementofexistingmarketaccessrightsisofconsiderableconcernforallWTOmembers,itisespeciallyimportantfordevelopingcountriesthatarenotyetfullyintegrat