WTO DISPUTE SETTLEMENT A STATISTICAL ANALYSIS. Kara Leitner and Simon Lester*

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1 Journal of International Economic Law 14(1), doi: /jiel/jgr007. WTO DISPUTE SETTLEMENT A STATISTICAL ANALYSIS Kara Leitner and Simon Lester* In each of the last few years, we have presented in this Journal a statistical analysis of World Trade Organization (WTO) dispute settlement (DS). This year, we continue that analysis by adding data for The statistical analysis below focuses on several different aspects of the dispute settlement system. First, we will examine the complaints. Specifically, we will look at: the number of complaints brought each year; the number of matters those complaints comprise; which WTO Members have brought the most complaints and which have been subject to the most complaints; the income classification of the Members involved as complainants and respondents; and the WTO agreements that have been subject to complaints. Next, we will examine the decisions that have been made pursuant to the Dispute Settlement Understanding (DSU), that is, the panel and Appellate Body reports and the arbitration awards and decisions. In particular, we will look at the following: the number of each type of decision circulated each year; and the percentage of panel reports appealed. We will then consider separately the issue of complaints and decisions relating to compliance under the special provisions of DSU Article Finally, we include data on the country of origin of WTO panelists. I. WTO COMPLAINTS Generally, a complaint arises under WTO DS when one Member 1 requests consultations with another Member pursuant to the DSU. For each complaint, the WTO Secretariat assigns an individual DS number. As of * The authors are the co-founders of WorldTradeLaw.net LLC. They can be reached via at administrator@worldtradelaw.net or through the Contact Us page on the web site. The statistics presented in this article are taken from their Dispute Settlement Commentary subscription service offered on the law.net web site. 1 In some instances, the request is made by multiple Members acting jointly. Journal of International Economic Law Vol. 14 No. 1 ß Oxford University Press 2011, all rights reserved

2 192 Journal of International Economic Law (JIEL) 14(1) 1 January 2011, there have been WTO complaints filed under the DSU. Over the past 16 years, the number of complaints filed each year has been as follows: Complaints Complaints per year It should be noted that some DS numbers relate to complaints that are very similar in terms of the measures and legal claims at issue, such that they could be considered as part of the same matter. 3 For example, of the 37 complaints brought in 2002, eight related to the US Steel Safeguards dispute, with separate complaints filed by eight different Members. Thus, the number of matters is an important alternative measure of the degree of use of the WTO DS system. Unfortunately, identifying matters is a bit subjective, as it involves a judgment as to the degree of similarity and overlap between complaints, and therefore it is difficult to provide a precise number. Based on our own assessment, the number of matters that have been subject to WTO DS is somewhat less than the number of complaints, with a total of 307 over the period , broken down as follows: Matters Matters per year In terms of the WTO Members that have been involved in disputes, Tables 1 and 2 break down the number of complaints filed by and against some of the more active WTO Members. From Tables 1 and 2, it is clear that the heaviest users of the WTO DS system have been the USA and the European Union. In this regard, we note that 179 complaints have involved either the USA or the European Union as a complaining party, which constitutes 42.7% of the total complaints. Similarly, 2 In our calculation of the number of complaints, we have included five disputes for which no formal consultation request was filed under the DSU: United States Measures Affecting Imports of Women s and Girls Wool Coats (DS32); United States Measures Affecting Imports of Woven Wool Shirts and Blouses (DS33); Colombia Safeguard Measure of Imports of Plain Polyester Filaments from Thailand (DS181); United States Transitional Safeguard Measures on Certain Imports of Woven Fabrics of Cotton and Cotton Mixtures Originating in Brazil (DS190); and United States Transitional Safeguard Measure on Combed Cotton Yarn from Pakistan (DS192). In these disputes, the consultation request was made under the Agreement on Textiles and Clothing, with a subsequent panel request submitted under the DSU. 3 As stated by the Appellate Body in para 72 of Guatemala Cement, [t]he matter referred to the DSB [pursuant to DSU Article 7] consists of two elements: the specific measures at issue and the legal basis of the complaint (or the claims). See WT/DS60/AB/R.

3 WTO Dispute Settlement Table 1. Complaining parties in WTO disputes a Total Brazil Canada Chile China European Union India Japan Korea Mexico USA Other Developed Developing Least developed Total a A number of complaints have been filed by multiple Members acting jointly. In some of these complaints, the Members filing the complaint fall into different income categories. Where this is the case, we have counted the complaint once in each income category in which at least one complainant falls. Therefore, the number of the complaints in this table will add up to more than the total number of complaints under the DSU and also more than the number in the table on respondents. Table 2. Responding parties in WTO disputes Total Brazil Canada Chile China European Union a India Japan Korea Mexico USA Other Developed Developing Least developed Total complaints have involved either the USA or the European Union as the responding party, comprising 43.2% of the total complaints. Furthermore, 50 disputes have been directly between the USA and the European Union. 4 4 Some of these disputes involved other Members as well.

4 194 Journal of International Economic Law (JIEL) 14(1) However, the statistics also show that the number of complaints brought by the USA and the European Union has declined in recent years, and that other WTO Members have been consistently active in WTO disputes. The heavy use of the system by the USA and the European Union highlights the fact that high-income countries are the primary users of the DS system. However, countries with lower incomes do use the system as well, and this usage has increased in recent years. Table 3 shows the use of the system based on the income classification level of the Members: 5 Table 3. Income classification: a Number of complaints High income Upper middle income Lower middle income Low income Complainants Respondents a The explanation provided in the footnote of Table 1 applies here as well. Over the period , the annual number of complaints by and against each type of country was as shown in Table 4. In terms of the subject-matter of the complaints, a wide range of WTO agreements has been invoked. The breakdown of the agreements invoked over the period is as shown in Table 5. 6 Table 5 shows that in terms of the total number of complaints, the GATT has, by far, been invoked the most frequently. The frequent invocation of the GATT is because many complaints refer to the provisions of other, more specific substantive agreements, as well as to the more general provisions of the GATT. The trend of complaints over the years shows a generally high level of trade remedy complaints brought pursuant to the AD, Safeguards and SCM Agreements. With regard to some of the new areas of regulation such as services, intellectual property and SPS measures the number of complaints has been limited, but fairly steady, over this period, although there has been a decline in recent years. 5 These income classifications are based on the World Bank s classification methodology, as detailed on the World Bank s web site, class.html (visited 13 January 2011). 6 Note that because many complaints involve more than one agreement, the totals in Table 5 will add up to more than the total number of complaints.

5 Table 4. Complainants a and Respondents, by Income Classification High income Upper middle income Lower middle income Low income Year Complaints Year Complaints Year Complaints Year Complaints Complainants Respondents a The explanation provided in the footnote of Table 1 applies here as well. Table 5. Breakdown of the agreements invoked over the period Agreement Total AD Agriculture ATC Customs GATS GATT GPA Licensing Rules of origin Safeguards SCM SPS TBT TRIMs TRIPS

6 196 Journal of International Economic Law (JIEL) 14(1) II. WTO DECISIONS We turn now to an examination of the Decisions reached through WTO DS proceedings. In particular, we will look at the following: Panel reports, Appellate Body reports, DSU Article 22.6 arbitration decisions, DSU Article 21.3(c) arbitration awards, DSU Article 25 arbitration awards and other arbitrations. Except where explicitly indicated, this section does not include panel and Appellate Body reports resulting from DSU Article 21.5 compliance disputes, which are considered separately in the next section. A. Panel reports The number of panel reports circulated each year since the establishment of the WTO is as follows: 7 Panel reports Panel reports per year B. Appellate Body reports One of the most important aspects of the DSU is the opportunity for appellate review, a possibility that did not exist under the GATT Appellate review has been used quite heavily at the WTO. As of 1 January 2011, the 7 There have been four panel reports circulated in which the report does not contain any findings, but simply notes that a mutually agreed solution was reached (two reports in the EC Scallops (1996) dispute, one in EC Butter (1999) and one in Japan Laver Quotas (2006)). We have not included these reports in the table. There have been a number of closely related disputes in which multiple panel reports, in separate documents, were issued in relation to complaints brought by different complainants: four panel reports in EC Bananas (1997), two in EC Hormones (1997), two in US 1916 Act (2000), three in EC Sugar Subsidies (2004), two in EC Trademarks/Geographical Indications (2005), two in EC Chicken Classification (2005) and two in Canada/US Hormones Suspension (2008). For these disputes, we have counted each separate panel report circulated as an individual report. Finally, in the US Steel Safeguards (2003) dispute, the Panel issued eight separate panel reports in one single document. We have counted these reports as a single report. (See para :...the Panel decides to issue its Reports in the form of one document constituting eight Panel Reports. For WTO purposes, this document is deemed to be eight separate reports, each of the reports relating to each one of the eight complainants in this dispute....this single document...contains a common set of Findings in relation to each of the claims that the Panel has decided to address. WT/DS248, 249, 251, 252, 253, 254, 258, 259/R.) Similarly, in the Canada Wheat (2004) case, the Panel issued two separate panel reports in a single document. We have counted these reports as one single report. (See para 6.2. WT/DS276/R.) This approach was also taken in the EC Biotech Products (2006) case, where the Panel issued three separate panel reports in a single document. We have counted these reports as one single report. (See para 7.6. WT/DS291, 292, 293/R.) It also occurred in China Auto Parts (2008), where three separate reports were issued in a single document. We have counted these reports as one single report. (See para 2.7. WT/DS339, 340, 342/R.)

7 WTO Dispute Settlement total number of circulated panel reports, as set out in the previous section, which were later appealed is as follows: 8 Year Total panel reports circulated Circulated panel reports that were appealed a 3 Total a There were nine panel reports circulated in 2010, as noted in the previous table, but at the time of this writing an appeal decision was still pending in three of those. Based on figures presented in the above table, the percentage of panel reports appealed to date is 68%. An appeal of a panel report occurs when one of the parties to the dispute files a notice of appeal. In addition, though, other parties to the dispute may file a notice of other appeal. 9 As of 1 January 2011, 56.70% of completed appellate proceedings have involved an other appeal of this type. The number of Appellate Body reports circulated has been as follows: 10 Appellate Body reports Appellate Body reports per year C. Reasonable period of time arbitrations DSU Article 21.3 provides that where immediate compliance with an adverse panel or Appellate Body report is impracticable, implementation must 8 We note that an appeal was filed in the 2001 India Autos dispute, but the appeal was later withdrawn. We have not counted this report as having been appealed. 9 Working Procedures for Appellate Review, Rule 23(1), WT/AB/WP/6. 10 In Canada/US Hormones Suspension (2008), the Appellate Body issued two separate, identical reports, one for the complaint against Canada and one for the complaint against the USA. We have counted each report separately in this table. In China Auto Parts (2008), the Appellate Body issued three separate reports in a single document. We have counted these reports as one single report.

8 198 Journal of International Economic Law (JIEL) 14(1) be completed within a reasonable period of time. Where the parties to the dispute cannot agree on the length of this period, Article 21.3(c) establishes an arbitration process. In practice, the arbitrator in all such proceedings has been a past or present Appellate Body Member, although the rules do not require that this be the case. 11 The number of Article 21.3(c) arbitration awards circulated over the past 16 years is as follows: 12 Article 21.3(c) arbitrations D. Arbitrations on the level of suspension of concessions or other obligations DSU Article 22.6 provides for the possibility of arbitration in situations where there is a disagreement regarding the proposed level of suspension of concessions or other obligations. Article 22.6 arbitrations are normally conducted by the original panel hearing the dispute. SCM Agreement Articles 4.11 and 7.10 provide special and additional rules for Article 22.6 arbitration proceedings that relate to certain types of subsidies. The number of Article 22.6 arbitration decisions circulated by year is as follows: a 2010 Article 22.6 arbitrations a In the US Cotton Subsidies (2009) dispute, the arbitrator issued two separate decisions, one for the SCM Agreement Article 4.11 arbitration and one for the SCM Agreement Article 7.10 arbitration. We have counted these decisions separately in the table. E. Article 25 arbitrations DSU Article 25 sets forth a general provision for arbitration. Only one arbitration has been conducted under this provision. This arbitration 11 In the arbitration in the EC Hormones case in 1998, initially two people were appointed as arbitrators, one who was not an Appellate Body Member. However, the non-appellate Body Member was unable to accept the nomination. See WT/DS26/15, WT/DS48/13, para In 2002, 2004, 2005 and 2007, reports were circulated pursuant to an Article 21.3(c) arbitration in which the arbitrator noted that the parties had reached a bilateral agreement. Therefore, the arbitrator in each case said that there was no need to issue an award. See WT/DS202/17, WT/DS264/13, WT/DS302/17 and WT/DS322/21. We have not included these reports in the table. 13 In the US Offset Act ( Byrd Amendment ) (2004) dispute, the arbitrator issued eight separate decisions, one for each complainant that had proposed the suspension of concessions or other obligations. Since the substantive findings in each decision were essentially the same, we have counted these decisions as one single decision in the table.

9 WTO Dispute Settlement occurred in the US Copyright dispute and it related to the level of nullification or impairment resulting from the findings of violation by the panel in that case. F. Other arbitrations In 2005, an arbitration was carried out pursuant to the procedures in the Annex to the ACP-EC Partnership Agreement ( Doha Waiver ). 14 The issue was whether the European Union s envisaged rebinding of its tariff on bananas would result in at least maintaining total market access for MFN banana suppliers, taking into account the relevant European Union commitments, as required by the Waiver. A second arbitration was later carried out to determine whether the European Union had rectified the matter based on the first arbitration decision. III. IMPLEMENTATION DISPUTES UNDER DSU ARTICLE 21.5 A significant improvement to WTO DS rules agreed to during the Uruguay Round was the inclusion of special DS provisions that may be invoked [w]here there is disagreement as to the existence or consistency with a covered agreement of measures taken to comply with the recommendations and rulings... In this situation, DSU Article 21.5 allows for a complaint under procedures that use a shortened time frame. Since the start of the WTO, 41 of these disputes have been initiated, sometimes with a formal request for consultations and sometimes going straight to a panel request. The number of these complaints over the years is as follows: Complaints With regard to Article 21.5 panel reports, the following table shows the number of panel reports circulated: 15 Panel reports WT/MIN(01)/15, 14 November There has been one Article 21.5 panel report circulated, in US DRAMS (2000), in which the report does not contain any findings, but simply notes that a mutually agreed solution was reached. We have not included this report in the table.

10 200 Journal of International Economic Law (JIEL) 14(1) As to appellate review of Article 21.5 disputes, the total number of circulated Article 21.5 panel reports that were later appealed is as follows: 16 Year Total Article 21.5 panel reports circulated Circulated Article 21.5 panel reports that were appealed Total To date, the percentage of Article 21.5 panel reports appealed is 67.9%. The trend in circulation of Article 21.5 Appellate Body reports is as follows: 17 Appellate Body reports IV. PANELISTS As noted above, the USA and the European Union are far and away the biggest users of the WTO DS system. With regard to the appointment of panelists, DSU Article 8.3 provides: Citizens of Members whose governments 6 are parties to the dispute or third parties as defined in paragraph 2 of Article 10 shall not serve on a panel concerned with that dispute, unless the parties to the dispute agree otherwise. 6 In the case where customs unions or common markets are parties to a dispute, this provision applies to citizens of all member countries of the customs unions or common markets. As a result of the additional hurdle for prospective panelists who are citizens of one of the parties to the dispute, citizens of the USA and of European 16 This table does not include the US DRAMS panel report referred to in above n In the EC Bananas, Article 21.5 dispute in 2008, the Appellate Body issued its reports for the first recourse to Article 21.5 by the USA and the second recourse to Article 21.5 by Ecuador in one single document. In this table, we have counted these reports as one single report.

11 WTO Dispute Settlement Table 6. The top 10 of countries represented in terms of panelist positions since 1995 Rank Country Number of panelist positions a 1 New Zealand 42 2 Australia 39 3 Switzerland 38 4 Canada 25 5 Brazil 23 6 Hong Kong 19 7 Chile 18 7 South Africa 18 9 India Mexico Poland 14 a In a number of disputes, separate panel reports were issued, in separate documents, for disputes that involved essentially the same matter, with the same panelists authoring each panel report for the dispute. These disputes are: EC Scallops (1996), EC Bananas (1997), EC Hormones (1997), US 1916 Act (2000), EC Sugar Subsidies (2004), EC Trademarks/GIs (2005), EC Chicken Classification (2005) and Canada/US Hormones Suspension (2008). Thus, in order to avoid double counting of panelist positions, the table counts only one of the panel reports in each of these disputes. Union Member countries play a relatively small role as panelists, in comparison to these Members participation in disputes, since they are unlikely to serve as panelists in disputes where these Members are parties. The consequence is that WTO panelists tend to come from countries that are active in WTO affairs but not the main users of the DS mechanism. Since 1995, the top 10 countries represented in terms of panelist positions, taking into account circulated panel reports only, has been as shown in Table 6. Out of the 471 total panelist positions, 186 were from six countries/customs territories: New Zealand, Australia, Switzerland, Canada, Brazil and Hong Kong. In contrast, only 12 positions were taken by US citizens. The situation of the European Union is more complicated, as many countries have joined the European Union only recently. For example, note that in the above table, Poland has 14 panelist positions. However, all of these were prior to 2004, the year Poland joined the European Union. The total number of panelist positions held by citizens of WTO Members that are now part of the European Union is 70.