Rights of action for private non-state actors in the WTO dispute settlement system.

• Author: Catbagan, Aaron

1. INTRODUCTION

   The WTO's Dispute Settlement Understanding (DSU), (1) and the multi-tiered dispute settlement system it governs have been heralded as lasting triumphs of the Uruguay Round. (2) Indeed, the WTO's dispute settlement system avoids many of the political pitfalls that weakened the dispute settlement system under the original GATT. (3) The WTO's dispute settlement system has also been praised as an innovation in the ability of member states, whether economic key players or much less influential members, to challenge violations of international trade law in ways that may not be practicable through pure negotiation and consultation. (4)

   In spite of many positive qualities attributed to the contemporary dispute settlement system, commentators argue that developing countries find themselves at a disadvantage when it comes to effectively litigating trade disputes before dispute settlement panels and securing remedies against developed WTO member states. This article proposes and examines an alternative method of resolving disputes under the DSU. The alternative method is a proposal to give non-state actors in developing member states opportunities to initiate complaints against WTO member states. The WTO dispute settlement system would provide the framework to enable non-state actors to seek remedies for violations of international trade law through arbitration with WTO member states. The heart of the proposal is simple: private non-state actors such as firms, industrial associations, and organizations comprised of business entities of various sizes would play an important role in ensuring greater equality in the WTO dispute settlement system.

   The alternative method proposed in this article deviates from dispute settlement procedures in the DSU in that, at present, only member states may initiate complaints against other member states. This proposal has the potential to radically alter the landscape of jurisprudence relating to international trade disputes, not to mention the commonplace operation of the WTO dispute settlement system. It is also an opportunity to bolster the credibility of the WTO following the collapse of the Doha Round and improve benefits available to developing countries in the global trading system.

   This article will provide a brief overview of the current dispute settlement system of the WTO in Part II. The proposal allowing non-state actors to arbitrate alleged violations of international trade law under the WTO dispute settlement system will be explained in Part III. In Part IV, a case study involving the garment export industry in Vietnam will be examined to demonstrate why rights of action for non-state actors would improve the contemporary dispute settlement system and help the WTO promote international trade between developed and developing countries. (5) Benefits of the proposal and counterarguments are discussed in Part V, with brief concluding statements in Part VI.

2. CURRENT METHODS FOR SETTLING TRADE DISPUTES UNDER THE DSU

   1. Contemporary dispute settlement by WTO member states

      The current system for resolving trade disputes between WTO member states constitutes an improvement over the dispute settlement system originally devised under the 1947 GATT. (6) In the early years of the GATT system, consensus among member states was required to establish a dispute settlement panel and to adopt final panel decisions. (7) This was particularly problematic for developing member states, which often lacked the political and economic clout necessary to initiate dispute proceedings on the basis of consensus among member states. (8)

      The contemporary system of formal dispute settlement provides appellate review following consultations between the complaining member state and member states accused of violating obligations arising from the agreements listed in Annex 1 of the DSU. (9) The purpose of consultations is to encourage member states to voluntarily withdraw problematic trade measures without the need for formal dispute settlement proceedings. Consultation is a preferred method for resolving trade disputes because the process is more efficient and less time-consuming than litigation before a dispute settlement panel. (10) If consultations prove to be unsuccessful, the member state raising the complaint may request the establishment of a dispute settlement panel after sixty days of the request for consultations, or within the sixty-day period if the parties jointly determine that consultations are unsuccessful. (11) The first level of review is conducted by panels established by the Dispute Settlement Body (DSB), (12) with a final level of review conducted by the Appellate Body. (13) Consensus among member states is not required to adopt decisions by the Appellate Body or DSB. Consensus is only necessary in case the DSB vetoes panel formation, rejects adoption of panel findings, or rejects judgments of the Appellate Body. (14) Under the contemporary system, only member states may raise dispute claims or defend against claims raised by other complaining member states. (15)

      Remedies available to complainants may be found in Article 22 of the DSU. (16) Compensation and suspension of concessions are the chief remedies for successful complainants if respondents fail to implement panel findings after a reasonable time. However, these remedies are also described as last resorts. (17) Additionally, monetary damages are not specifically contemplated. Exclusion of monetary damages precludes damages for anticipated failures by respondents to comply with Appellate Body decisions, and eliminates the possibility of attorneys' fees. (18)

   2. Roles for non-state actors in the WTO Dispute Settlement System

      Although the DSU only provides for dispute settlement among member states, non-state actors such as firms and industry lobbying groups already play a significant role in the way that member states initiate and resolve trade disputes under the DSU. (19) As Gregory Shaffer has stated, "public and private actors depend on each other's resources ... [and] have also adapted public-private collaborative governance modes to enforce WTO law and otherwise advance their interests...." (20) These "collaborative governance modes," also labeled public-private networks by Gregory Shaffer, serve an important function in successful dispute settlement for developed countries. (21)

      1. Private Actors in the United States and the European Union

         Public-private networks integrate the interests of private actors and government authorities. Public-private networks are an important tool that non-state actors in the United States wield in addressing international trade disputes. Unlike other developed countries, the "approach to public-private networks [in the United States] tends to be more 'bottom-up,' with firms and trade associations playing a proactive role." (22) Public-private networks in the United States center around formal and informal channels for lobbying and consultation. Domestic firms, industry associations, and trade groups directly petition representatives of the U.S. government to combat perceived trade barriers and discriminatory policies enacted by foreign governments. (23) For some time, the WTO dispute settlement system has been acknowledged as an option that U.S. companies might use to combat trade-restricting policies enacted by foreign governments. WTO litigation has been touted as "a powerful tool in opening foreign markets to U.S. companies" which could "add significant value for companies seeking to penetrate promising new markets." (24) Over time, collaborative public-private networks have become a critical part of WTO dispute settlement strategy in the United States.

         Non-state actors in the United States used formal and informal channels to influence trade dispute settlement even before the United States joined the WTO. For example, a meeting between U.S. Trade Representative Mickey Kantor, the president of the Chiquita Brands banana company, and former Senator Robert Dole significantly impacted United States policy on the decision to join the WTO and to initiate a long-running trade complaint against the European Communities (EC). (25) The meeting serves as an example of informal collaboration between senior members of the U.S. government and industry leaders where both public and private decision-makers influenced the course of United States trade policy and trade dispute settlement. (26) As a result of the informal agreement that arose among participants of the meeting, political objectives of the Clinton Administration regarding the WTO were advanced by Republican leaders in Congress. This outcome was achieved because U.S. Trade Representative Kantor, as a senior official in the Clinton Administration, agreed to take up a trade dispute case against the European Communities on behalf of Chiquita. (27)

         Formal methods that were intended to foster public-private cooperation have also resulted in "collaborative arrangements" between non-state actors, the U.S. Department of Commerce, and the Office of the U.S. Trade Representative over trade dispute claims. (28) A significant legal mechanism was established as part of the U.S. Trade Act of 1974. Under the Trade Act, the U.S. Trade Representative is responsible for investigating and combating foreign trade barriers "in response to petitions filed by private firms and trade associations...." (29)Non-state actors in the United States may draw attention to purported violations of trade law by other WTO member states. As a result, those actors influence the types of complaints that the Office of the U.S. Trade Representative eventually raises under the DSU. (30) Under Section 302 of the 1974 Trade Act, "[a]ny interested person may file a petition ... requesting that action be taken ... and setting forth the allegations in support of the request." (31) As such, non-state actors in the United States have several ways to influence the course...