Asturia Seeks Justice
By requesting the DSB to create a panel at its next meeting, Asturia is not acting in accordance with the DSU. There are pre-defined steps that a government must ensure to follow when asking the Dispute Settlement Body to intervene in case of a trade dispute. This first step that the DSB recommend is consultation. This regulation requires the two governments in dispute to first hold consultative meetings over a period of 60 days before the DSU can take any step. It is required that the two countries hold meetings to help come up with ways to settle their differences by themselves. Therefore, requesting the DSU to set up a panel immediately will not be a good option at this point. Asturia representatives must ensure to provide evidence that the government of Nordlandia is not willing to negotiate.
The most appropriate step to take at this stage, therefore, is to request the WTO director-general to mediate in a meeting to help solve the dispute while still in the consultation stage. These are specific steps and regulations that the DSB expects all its member countries to adhere and, therefore, Asturia should first move to request Nordlandia to initiate consultative meetings. In order to request immediate audience in the creation of a panel, the complaining party must ensure to show that the issue needs urgent concern or provide proof that the other party is not willing to enter into consultations.
In order to expedite the establishment of a panel in the next DSB meeting, Asturia needs to file a “Request for Consultations” as this marks the official beginning of the dispute resolution process within WTO. This will show Asturia’s intention to settle the matter without resorting to the litigation process. It will also provide the two countries an opportunity to settle the dispute in good faith. The government of Asturia will only be free to request for establishment of a panel in the next DSB meeting after Nordlandia refuses to abide by the request of entering into consultations.
The rules and regulations of DSB allow all member states the freedom to request a panel not be established. The rules of WTO will allow Nordlandia to block the creation of a panel during the first meeting of the DSB. However, during the second meeting, Nordlandia will not be allowed to block the appointment of the panel unless the board agrees on a consensus not to appoint panel members. In order to ensure that a panel is created, it is the responsibility of the minister to indicate that Nordlandia is going against regulations and standards governing international trade. As a minister it will be advisable to quote the following regulation which states, “Members shall ensure that in respect of technical regulations, products imported from the territory of any Member shall be accorded treatment no less favorable than that accorded to like products of national origin and to like products originating in any other country.” By introducing trade quotas on steel imported from Asturia, Nordlandia is according steel from our country less favorable treatment compared to the steel produced by companies in the country. This is against rules and regulations and, therefore, a panel should be established as soon as possible to try and resolve this issue. Additionally, it is important to note that Nordlandia is not intending to enter into any negotiation plans with Asturia and plans to uphold this discriminative policy against a product that has the same quality as the products they are intending to protect.
It is important to note that it is impossible for the DSB to reach a consensus against establishment of a panel. It is the responsibility of the DSB to select panelists that will help resolve the dispute as fast as possible. First, to expedite the establishment of a panel, Asturia can request the DSB to hold a special meeting within 15 days after the first meeting in order to facilitate the creation of a panel. It is important to understand that citizens of member countries whose countries are parties to the dispute cannot serve in the panel unless the two countries sit and agree to such a consensus.
The DSB rules states that members of the panel shall include well-qualified government and non-government individuals. The panel can also include individuals that have served on or presented a case to the panel. People that have also served as policy officials of a WTO member state or published and taught on policies and law of international trade can qualify to be members of the panel. Therefore, while arguing for inclusion of two economists and a metallurgical engineer into the team, Nordlandia must ensure that the individuals have the qualifications listed above, failure to which their demands will not be met.
The laws and regulations of establishing a panel will not allow Nordlandia to have one of its nationals to be a member of the panel. According to Article 8 on establishment of a panel, “citizens of members whose governments are parties to the dispute or third parties as defined in Article 10 shall not serve on a panel concerned with that dispute, unless the parties to the dispute agree otherwise. “ Therefore, unless Asturia agrees to this demand, a citizen of Nordlandia will not be allowed to serve in the established panel. As a representative, Ambassador Nieves must argue against this proposal by Nordlandia, stating that such a step will hinder the independence of the panel with one member put in place to deliberately obstruct justice.
Asturia also have a role to play in the establishment of a panel. Therefore, the laws and regulations will bar Nordlandia’s attempts to control the exercise independently. For example, paragraph five of Article 8 on the functions of DSB states that “Panels shall be composed of three panelists unless the parties to the dispute agree, within 10 days from the establishment of the panel, to a panel composed of five panelists.” Therefore, without consent from Asturia, Nordlandia cannot be allowed to try and force a panel composed of five panelists. Lastly, Nordlandia is attempting to deny Asturia its constitutional right of requesting for a panelist from a developing country. Nordlandia is making attempts to ensure that no member from a developing country will be allowed to sit in the panel. Asturia must argue against this proposal by quoting paragraph 10 of Article 8 on the composition of the panel which states that “When a dispute is between a developing country Member and a developed country Member the panel shall, if the developing country Member so requests, include at least one panelist from a developing country Member.”
Asturia does not have an obligation to come up with economic evidence to show that the import quota introduced by Nordlandia is affecting its steel exports. Although necessary, such evidence is not necessary in showing that the regulation by Nordlandia is contrary to its international obligations. What Asturia needs to show is proof that the regulations are discriminatory against its steel industry and, thus, should be rebuked to avoid harm in the future.
In its rebuttal, Asturia should seek to know whether certain member states of WTO are allowed to go against WTO rules and regulations. Nordlandia is attempting to show that its introduction of quotas does not hurt Asturia’s exports in any way and, therefore, the regulations will not affect our steel industry at all. From this argument, it is apparently clear that though the regulations might not affect current exports of steel, there is an intention to hurt and control future exports, which is contrary to the obligations of all member states. WTO requires its Member States to implement their national economic policies and regulations in accordance with their commitments and obligations under the WTO agreement. However, by introducing export quotas to Asturia steel, Nordlandia is acting in complete disregard of its obligations.
Further, the economic regulatory decision by Nordlandia is in conflict with the mechanisms for international cooperation. Introducing the trade quota on steel import is an indication that Nordlandia does not want to comply with its obligations under international institutions. For a state to effectively cooperate in international trade, it must be willing to concede some of its sovereign decisions. By accepting to sign the WTO treaty, Nordlandia’s freedom to make such a decision was reduced as such an action is inconsistent with its agreement not to discriminate against similar products from another country. Being a member state of WTO, Nordlandia’s rights to control the quantity of steel exported to the country are constrained because it agreed to confer some of its rights to the WTO to achieve critical policy results. Ruling against Asturia will be a great step towards allowing Nordlandia to violate international law.
To protect the interests of developing countries, the DSU offers special and differential treatment in implementation for these members when involved in a dispute. Basically, Asturia can invoke this clause and request the panel to compel Nordlandia to lift the import quota immediately. However, it is important to note that all members must be given reasonable time period to implement the proposals of the final DSB report. According to article 21.3 of the DSB, the reasonable period of time is:
- The period of time proposed by the Member concerned, provided that such a period is approved by the DSB
- A period of time mutually agreed by both parties to the dispute; this period must be agreed to within 45 days after the date that the final report on rulings and recommendations was adopted.
- A period of time determined through binding arbitration within 90 days after the date of adoption of the rulings and recommendations.
The DSB requires Members states to correct their discriminatory policies almost immediately after a ruling has been made. However, such immediate decisions cannot be made after the first ruling as the loosing member state against a complaint is given time to state its intention to comply with the decision. Usually, the loosing state is given a period of 30 days to report to the DSB its intention of complying with the recommendations of the report. In this case, Nordlandia will have up to 30 days to present a plan of how it intends to adopt the report. It is after the 30 days that the country can determine whether it needs more time to implement the recommendations. The DSB is responsible for providing the country with a reasonable time period to implement the report. Therefore, Asturia cannot be allowed to take any measures that will force Nordlandia to comply with the decision almost immediately.
Lastly, being a developing country, Asturia can work to provide enough proof that the decision by Nordlandia to introduce import quotas is negatively affecting its development and, consequently, should be revoked immediately. Article 21.8 of the DSB states that, “If the case is one brought by a developing country Member, in considering what appropriate action might be taken, the DSB shall take into account not only the trade coverage of measures complained of, but also their impact on the economy of developing country Members concerned”. Therefore, Asturia needs to bring forth information to show that the import quota is affecting its steel industry in order to compel Nordlandia to implement the recommendations of the DSB within the shortest time possible.
The dispute settlement agreement requires swift compliance with all the recommendations of the DSB. This is necessary to ensure effective dispute resolution that benefits all the involved members. According to the WTO regulations, the priority at this important stage is to ensure that the losing party brings the contested policy into line with the rulings and recommendations given. When a member fails to adopt the stated recommendations, the complainant is allowed to take retaliatory measures. However, even with this implementation, there is more that Asturia needs to do before taking retaliatory measures of calling for trade sanctions. There are specific steps that Asturia must ensure to follow.
According to DSB regulations, if Nordlandia fails to respect the decision of the DSB, the first step should be to enter into negotiations to determine a mutually-acceptable compensation. Asturia can decide to negotiate with Nordlandia to offer alternative measures, such as tariff reduction in some particular areas as it provides more time for the import quota to be lifted. However, if Nordlandia disagrees to offer satisfactory compensation on the issue or refuses to enter into negotiations, Asturia can move to request the DSB for permission to impose limited trade sanctions against Nordlandia. Normally, the DSB will grant Asturia this authorization within 30 days of the expiry of the 6 month period that Nordlandia was given to implement the changes.
Asturia should also suggest the different sectors where it intends to impose its retaliatory measures. These sectors must be submitted to and approved by the DSB. Normally, all the retaliatory measures to be imposed by Asturia should be within the same sector or industry under dispute. A retaliatory measure can only be instigated on another sector if the DSB proves that it is impractical to impose it in the same sector. In order to minimize the chances of spilling the effects of this dispute to other sectors, Asturia should ensure to employ retaliatory measures within the steel industry.