INDEX

SR. NO SUBJECT PAGE NO

1 INTRODUCTION WTO 1-10

2 WORKING OF WTO 11-15

3 DISPUTE SETTLEMENT MECHANISM 16-23

4 DISPUTE SETTLEMENT CASES 24-29

5 CONCLUSION 30-31

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CHAPTER 1:- WTO INTRODUCTION

Location: Geneva, Switzerland

Established: 1 January 1995

Created by: Uruguay Round negotiations (1986-94)

Membership: 159 countries on 2 March 2013

Budget: 196 million Swiss francs for 2011

SecretariatStaff: 640

Head: Roberto Azevedo (Director-General)

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The World Trade Organization came into being in 1995. One of the youngest of the international

organizations, the WTO is the successor to the General Agreement on Tariffs and Trade (GATT)

established in the wake of the Second World War.

So while the WTO is still young, the multilateral trading system that was originally set up under

GATT is well over 50 years old.

The past 50 years have seen an exceptional growth in world trade. Merchandise exports grew on

average by 6% annually. Total trade in 2000 was 22-times the level of 1950. GATT and the

WTO have helped to create a strong and prosperous trading system contributing to

unprecedented growth.

The system was developed through a series of trade negotiations, or rounds, held under GATT.

The first rounds dealt mainly with tariff reductions but later negotiations included other areas

such as anti-dumping and non-tariff measures. The last round the 1986-94 Uruguay Round led to

the WTO’s creation.

The negotiations did not end there. Some continued after the end of the Uruguay Round. In

February 1997 agreement was reached on telecommunications services, with 69 governments

agreeing to wide-ranging liberalization measures that went beyond those agreed in the Uruguay

Round.

In the same year 40 governments successfully concluded negotiations for tariff-free trade in

information technology products, and 70 members concluded a financial services deal covering

more than 95% of trade in banking, insurance, securities and financial information.

In 2000, new talks started on agriculture and services. These have now been incorporated into a

broader agenda launched at the fourth WTO Ministerial Conference in Doha, Qatar, in

November 2001.

The negotiations did not end there. Some continued after the end of the Uruguay Round. In

February 1997 agreement was reached on telecommunications services, with 69 governments

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agreeing to wide-ranging liberalization measures that went beyond those agreed in the Uruguay

Round.

In the same year 40 governments successfully concluded negotiations for tariff-free trade in

information technology products, and 70 members concluded a financial services deal covering

more than 95% of trade in banking, insurance, securities and financial information.

In 2000, new talks started on agriculture and services. These have now been incorporated into a

broader agenda launched at the fourth WTO Ministerial Conference in Doha, Qatar, in

November 2001.

Developing countries are key players

A key question now is how to take account of the increasing role of developing countries. These countries have become major participants in world trade: their share of global exports rose from 22 percent in 1980 to 32 percent in 2005 and is expected to reach 45 percent by 2030 (see Chart 1) (World Bank, 2006). About two-thirds of the WTO's members are developing countries.

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WTO STRUCTURE

The WTO has about 150 members, accounting for about 95% of world trade. Around 30 others

are negotiating membership.

Decisions are made by the entire membership. This is typically by consensus. A majority vote is

also possible but it has never been used in the WTO, and was extremely rare under the WTO’s

predecessor, GATT. The WTO’s agreements have been ratified in all members’ parliaments.

The WTO’s top level decision-making body is the Ministerial Conference which meets at least

once every two years.

Below this is the General Council (normally ambassadors and heads of delegation in Geneva, but

sometimes officials sent from members’ capitals) which meets several times a year in the Geneva

headquarters. The General Council also meets as the Trade Policy Review Body and the Dispute

Settlement Body.

At the next level, the Goods Council, Services Council and Intellectual Property (TRIPS)

Council report to the General Council.

Numerous specialized committees, working groups and working parties deal with the individual

agreements and other areas such as the environment, development, membership applications and

regional trade agreements.

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WHO WTO IS

The WTO was born out of negotiations, and everything the WTO does is the result of

negotiations. The bulk of the WTO’s current work comes from the 1986–94 negotiations called

the Uruguay Round and earlier negotiations under the General Agreement on Tariffs and Trade

(GATT). The WTO is currently the host to new negotiations, under the ‘Doha Development

Agenda’ launched in 2001.

Where countries have faced trade barriers and wanted them lowered, the negotiations have

helped to open markets for trade. But the WTO is not just about opening markets, and in some

circumstances its rules support maintaining trade barriers — for example, to protect consumers

or prevent the spread of disease.

At its heart are the WTO agreements, negotiated and signed by the bulk of the world’s trading

nations. These documents provide the legal ground rules for international commerce. They are

essentially contracts, binding governments to keep their trade policies within agreed limits.

Although negotiated and signed by governments, the goal is to help producers of goods and

services, exporters, and importers conduct their business, while allowing governments to meet

social and environmental objectives.

The system’s overriding purpose is to help trade flow as freely as possible — so long as there are

no undesirable side effects — because this is important for economic development and well-

being. That partly means removing obstacles. It also means ensuring that individuals, companies

and governments know what the trade rules are around the world, and giving them the

confidence that there will be no sudden changes of policy. In other words, the rules have to be

‘transparent’ and predictable.

Trade relations often involve conflicting interests. Agreements, including those painstakingly

negotiated in the WTO system, often need interpreting. The most harmonious way to settle these

differences is through some neutral procedure based on an agreed legal foundation. That is the

purpose behind the dispute settlement process written into the WTO agreements.

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WHAT WTO STANDS FOR

The WTO agreements are lengthy and complex because they are legal texts covering a wide

range of activities. But a number of simple, fundamental principles run throughout all of these

documents. These principles are the foundation of the multilateral trading system.

Non-discrimination

A country should not discriminate between its trading partners and it should not discriminate

between its own and foreign products, services or nationals.

More open

Lowering trade barriers is one of the most obvious ways of encouraging trade; these barriers

include customs duties (or tariffs) and measure such as import bans or quotas that restrict

quantities selectively.

Predictable and transparent

Foreign companies, investors and governments should be confident that trade barriers should not

be raised arbitrarily. With stability and predictability, investment is encouraged, jobs are created

and consumers can fully enjoy the benefits of competition — choice and lower prices.

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More competitive

Discouraging ‘unfair’ practices, such as export subsidies and dumping products at below cost to

gain market share; the issues are complex, and the rules try to establish what is fair or unfair, and

how governments can respond, in particular by charging additional import duties calculated to

compensate for damage caused by unfair trade.

More beneficial for less developed countries

Giving them more time to adjust, greater flexibility and special privileges; over three-quarters of

WTO members are developing countries and countries in transition to market economies. The

WTO agreements give them transition periods to adjust to the more unfamiliar and, perhaps,

difficult WTO provisions.

Protect the environment

The WTO’s agreements permit members to take measures to protect not only the environment

but also public health, animal health and plant health. However, these measures must be applied

in the same way to both national and foreign businesses. In other words, members must not use

environmental protection measures as a means of disguising protectionist policies.

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WTO AND DEVELOPING COUNTRIES

Development and trade

Over three quarters of WTO members are developing or least-developed countries. All WTO agreements contain special provision for them, including longer time periods to implement agreements and commitments, measures to increase their trading opportunities and support to help them build the infrastructure for WTO work, handle disputes, and implement technical standards.

The 2001 Ministerial Conference in Doha set out tasks, including negotiations, for a wide range of issues concerning developing countries. Some people call the new negotiations the Doha Development Round.

Before that, in 1997, a high-level meeting on trade initiatives and technical assistance for least-developed countries resulted in an “integrated framework” involving six intergovernmental agencies, to help least-developed countries increase their ability to trade, and some additional preferential market access agreements.

A WTO committee on trade and development, assisted by a sub-committee on least-developed countries, looks at developing countries’ special needs. Its responsibility includes implementation of the agreements, technical cooperation, and the increased participation of developing countries in the global trading system

Technical assistance and training  

The WTO organizes around 100 technical cooperation missions to developing countries annually. It holds on average three trade policy courses each year in Geneva for government officials. Regional seminars are held regularly in all regions of the world with a special emphasis on African countries. Training courses are also organized in Geneva for officials from countries in transition from central planning to market economies.

The WTO set up reference centers in over 100 trade ministries and regional organizations in capitals of developing and least-developed countries, providing computers and internet access to enable ministry officials to keep abreast of events in the WTO in Geneva through online access to the WTO’s immense database of official documents and other material.  Efforts are also being made to help countries that do not have permanent representatives in Geneva.

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Number of WTO technical assistance activities per year

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WTO MISSION STATEMENT

The World Trade Organization the WTO is the international organization whose primary purpose

is to open trade for the benefit of all.

The WTO provides a forum for negotiating agreements aimed at reducing obstacles to

international trade and ensuring a level playing field for all, thus contributing to economic

growth and development. The WTO also provides a legal and institutional framework for the

implementation and monitoring of these agreements, as well as for settling disputes arising from

their interpretation and application. The current body of trade agreements comprising the WTO

consists of 16 different multilateral agreements (to which all WTO members are parties) and two

different plurilateral agreements (to which only some WTO members are parties).

Over the past 60 years, the WTO, which was established in 1995, and its predecessor

organization the GATT have helped to create a strong and prosperous international trading

system, thereby contributing to unprecedented global economic growth. The WTO currently has

159 members, of which 117 are developing countries or separate customs territories. WTO

activities are supported by a Secretariat of some 700 staff, led by the WTO Director-General.

The Secretariat is located in Geneva, Switzerland, and has an annual budget of approximately

CHF 200 million ($180 million, €130 million). The three official languages of the WTO are

English, French and Spanish.

Decisions in the WTO are generally taken by consensus of the entire membership. The highest

institutional body is the Ministerial Conference, which meets roughly every two years. A

General Council conducts the organization's business in the intervals between Ministerial

Conferences. Both of these bodies comprise all members. Specialized subsidiary bodies

(Councils, Committees, Sub-committees), also comprising all members, administer and monitor

the implementation by members of the various WTO agreements.

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CHAPTER 2:- WORKING OF WTO

The WTO has a multiplicity of committees, sub-committees and working groups made up of

trade diplomats from member-countries, a General Council of all member-countries which is

ostensibly responsible for setting its agenda, and a Secretariat of administrators (currently headed

by WTO director general Mike Moore, a former Labor PM of New Zealand). Many of these

bodies meet every single day in WTO headquarters in Geneva.

Officially, the WTO works on consensus; every country must agree for something to take effect.

However, in most cases the Quad sets the agenda and works out the draft agreements between

itself and selected other countries in what are known as "Green Room" negotiations. Once the

Quad believes "sufficient" support for them is garnered, these drafts are then presented as

accomplished facts to the other members.

Corporations and corporate lobby groups also play a major role, sometimes behind the scenes

through their country delegations, sometimes more officially through the observer status of such

bodies as the International Chamber of Commerce.

Many agreements are specifically tailored to corporate needs and suggest heavy corporate

involvement in their drafting. It is widely believed, for example, that the Intellectual Property

Council, a corporate lobby group, wrote the first draft of the agreement on intellectual property

rights.

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WHAT WTO DOES

The WTO is run by its member governments. All major decisions are made by the membership

as a whole, either by ministers (who usually meet at least once every two years) or by their

ambassadors or delegates (who meet regularly in Geneva).While the WTO is driven by its

member states, it could not function without its Secretariat to coordinate the activities. The

Secretariat employs over 600 staff and its experts — lawyers, economists, statisticians and

communications experts — assist WTO members on a daily basis to ensure, among other things,

that negotiations progress smoothly, and that the rules of international trade are correctly applied

and enforced.

Trade negotiations

The WTO agreements cover goods, services and intellectual property. They spell out the

principles of liberalization, and the permitted exceptions. They include individual countries’

commitments to lower customs tariffs and other trade barriers, and to open and keep open

services markets. They set procedures for settling disputes. These agreements are not static; they

are renegotiated from time to time and new agreements can be added to the package. Many are

now being negotiated under the Doha Development Agenda, launched by WTO trade ministers

in Doha, Qatar, in November 2001.

Implementation and monitoring

WTO agreements require governments to make their trade policies transparent by notifying the

WTO about laws in force and measures adopted. Various WTO councils and committees seek to

ensure that these requirements are being followed and that WTO agreements are being properly

implemented. All WTO members must undergo periodic scrutiny of their trade policies and

practices, each review containing reports by the country concerned and the WTO Secretariat.

Dispute settlement

The WTO’s procedure for resolving trade quarrels under the Dispute Settlement Understanding

is vital for enforcing the rules and therefore for ensuring that trade flows smoothly. Countries

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bring disputes to the WTO if they think their rights under the agreements are being infringed.

Judgments by specially appointed independent experts are based on interpretations of the

agreements and individual countries’ commitments.

Building trade capacity

WTO agreements contain special provision for developing countries, including longer time

periods to implement agreements and commitments, measures to increase their trading

opportunities, and support to help them build their trade capacity, to handle disputes and to

implement technical standards. The WTO organizes hundreds of technical cooperation missions

to developing countries annually. It also holds numerous courses each year in Geneva for

government officials. Aid for Trade aims to help developing countries develop the skills and

infrastructure needed to expand their trade.

Outreach

The WTO maintains regular dialogue with non-governmental organizations, parliamentarians,

other international organizations, the media and the general public on various aspects of the

WTO and the ongoing Doha negotiations, with the aim of enhancing cooperation and increasing

awareness of WTO activities.

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WTO WORKINGS ON AGREEMENTS

The WTO’s rules the agreements are the result of negotiations between the members. The

current set were the outcome of the 1986–94 Uruguay Round negotiations which included a

major revision of the original General Agreement on Tariffs and Trade (GATT).

GATT is now the WTO’s principal rule-book for trade in goods. The Uruguay Round also

created new rules for dealing with trade in services, relevant aspects of intellectual property,

dispute settlement, and trade policy reviews. The complete set runs to some 30,000 pages

consisting of about 30 agreements and separate commitments (called schedules) made by

individual members in specific areas such as lower customs duty rates and services market-

opening.

Through these agreements, WTO members operate a non-discriminatory trading system that

spells out their rights and their obligations. Each country receives guarantees that its exports will

be treated fairly and consistently in other countries’ markets. Each promises to do the same for

imports into its own market. The system also gives developing countries some flexibility in

implementing their commitments.

Goods 

It all began with trade in goods. From 1947 to 1994, GATT was the forum for negotiating lower

customs duty rates and other trade barriers; the text of the General Agreement spelt out important

rules, particularly non-discrimination.

Since 1995, the updated GATT has become the WTO’s umbrella agreement for trade in goods. It

has annexes dealing with specific sectors such as agriculture and textiles, and with specific issues

such as state trading, product standards, subsidies and actions taken against dumping.

Services 

Banks, insurance firms, telecommunications companies, tour operators, hotel chains and

transport companies looking to do business abroad can now enjoy the same principles of freer

and fairer trade that originally only applied to trade in goods.

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These principles appear in the new General Agreement on Trade in Services (GATS). WTO

members have also made individual commitments under GATS stating which of their services

sectors they are willing to open to foreign competition, and how open those markets are.\

Intellectual property  

The WTO’s intellectual property agreement amounts to rules for trade and investment in ideas

and creativity. The rules state how copyrights, patents, trademarks, geographical names used to

identify products, industrial designs, integrated circuit layout-designs and undisclosed

information such as trade secrets “intellectual property” should be protected when trade is

involved.

Dispute settlement  

The WTO’s procedure for resolving trade quarrels under the Dispute Settlement Understanding

is vital for enforcing the rules and therefore for ensuring that trade flows smoothly. Countries

bring disputes to the WTO if they think their rights under the agreements are being infringed.

Judgments by specially-appointed independent experts are based on interpretations of the

agreements and individual countries’ commitments.

The system encourages countries to settle their differences through consultation. Failing that,

they can follow a carefully mapped out, stage-by-stage procedure that includes the possibility of

a ruling by a panel of experts, and the chance to appeal the ruling on legal grounds. Confidence

in the system is borne out by the number of cases brought to the WTO around 300 cases in eight

years compared to the 300 disputes dealt with during the entire life of GATT (1947–94).

Policy review  

The Trade Policy Review Mechanism’s purpose is to improve transparency, to create a greater

understanding of the policies that countries are adopting, and to assess their impact. Many

members also see the reviews as constructive feedback on their policies.

All WTO members must undergo periodic scrutiny, each review containing reports by the

country concerned and the WTO Secretariat.

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CHAPTER 3:- DISPUTE SETTLEMENT MECHANISM OF WTO

Dispute settlement is regarded by the World Trade Organization (WTO) as the central pillar of

the multilateral trading system, and as the organization's "unique contribution to the stability of

the global economy". A dispute arises when one member country adopts a trade policy measure

or takes some action that one or more fellow members considers to a breach of WTO agreements

or to be a failure to live up to obligations. By joining the WTO, member countries have agreed

that if they believe fellow members are in violation of trade rules, they will use the multilateral

system of settling disputes instead of taking action unilaterally — this entails abiding by agreed

procedures (Dispute Settlement Understanding) and respecting judgments, primarily of the

Dispute Settlement Body (DSB), the WTO organ responsible for adjudication of disputes. A

former WTO Director-General characterized the WTO dispute settlement system as "the most

active international adjudicative mechanism in the world today."

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DISPUTE SETTLEMENT UNDERSTANDING

In 1994, the WTO members agreed on the Understanding on Rules and Procedures Governing

the Settlement of Disputes or Dispute Settlement Understanding (DSU) (annexed to the "Final

Act" signed in Marrakesh in 1994). Pursuant to the rules detailed in the DSU, member states can

engage in consultations to resolve trade disputes pertaining to a "covered agreement" or, if

unsuccessful, have a WTO panel hear the case. The priority, however, is to settle disputes,

through consultations if possible. By January 2008, only about 136 of the nearly 369 cases had

reached the full panel process.

The operation of the WTO dispute settlement process involves the parties and third parties to a

case and may also involve the DSB panels, the Appellate Body, the WTO Secretariat, arbitrators,

independent experts, and several specialized institutions. The General Council discharges its

responsibilities under the DSU through the Dispute Settlement Body (DSB). Like the General

Council, the DSB is composed of representatives of all WTO Members. The DSB is responsible

for administering the DSU, i.e. for overseeing the entire dispute settlement process. It also has

the authority to establish panels, adopt panel and Appellate Body reports, maintain surveillance

of implementation of rulings and recommendations, and authorize the suspension of obligations

under the covered agreements. The DSB meets as often as necessary to adhere to the timeframes

provided for in the DSU.

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FROM COMPLAINT TO FINAL REPORT

These approximate periods for each stage of a dispute settlement procedure are target figures —

the agreement is flexible. In addition, the countries can settle their dispute themselves at any

stage. Totals are also approximate.

60 days Consultations, mediation, etc

45 days Panel set up and panelists appointed

6 months Final panel report to parties

3 weeks Final panel report to WTO members

60 days Dispute Settlement Body adopts report (if no

appeal)

Total = 1 year (without appeal)

60-90 days Appeals report

30 days Dispute Settlement Body adopts appeals report

Total = 1y 3m (with appeal)

1:- If a member state considers that a measure adopted by another member state has deprived it

of a benefit accruing to it under one of the covered agreements, it may call for consultations with

the other member state.

2:- If consultations fail to resolve the dispute within 60 days after receipt of the request for

consultations, the complainant state may request the establishment of a Panel. It is not possible

for the respondent state to prevent or delay the establishment of a Panel, unless the DSB by

consensus decides otherwise. The panel, normally consisting of three members appointed ad hoc

by the Secretariat, sits to receive written and oral submissions of the parties, on the basis of

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which it is expected to make findings and conclusions for presentation to the DSB. The

proceedings are confidential, and even when private parties are directly concerned, they are not

permitted to attend or make submissions separate from those of the state in question. Disputes

can also arise under Non-violation nullification of benefits claims.

3:- The final version of the panel's report is distributed first to the parties;

4:- two weeks later it is circulated to all the members of the WTO.

5:- In sharp contrast with other systems, the report is required to be adopted at a meeting of the

DSB within 60 days of its circulation, unless the DSB by consensus decides not to adopt the

report or a party to the dispute gives notice of its intention to appeal.

6:- A party may appeal a panel report to the standing Appellate Body, but only on issues of law

and legal interpretations developed by the panel. Each appeal is heard by three members of the

permanent seven-member Appellate Body set up by the Dispute Settlement Body and broadly

representing the range of WTO membership. Members of the Appellate Body have four-year

terms. They must be individuals with recognized standing in the field of law and international

trade, not affiliated with any government. The Appellate Body may uphold, modify or reverse

the panel's legal findings and conclusions. Normally appeals should not last more than 60 days,

with an absolute maximum of 90 days. The possibility for appeal makes the WTO dispute

resolution system unique among the judicial processes of dispute settlement in general public

international law.

7:- Members may express their views on the report of the Appellate Body, but they cannot derail

it. The DSU states unequivocally that an Appellate Body report shall be adopted by the DSB and

unconditionally accepted by the parties, unless the DSB decides by consensus within thirty days

of its circulation not to adopt the report. Unless otherwise agreed by the parties to the dispute, the

period from establishment of the panel to consideration of the report by the DSB shall as a

general rule not exceed nine months if there is no appeal, and twelve months if there is an appeal.

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COMPLIANCE

The DSU addresses the question of compliance and retaliation. Within thirty days of the

adoption of the report, the member concerned is to inform the DSB of its intentions in respect of

implementation of the recommendations and rulings. If the member explains that it is

impracticable to comply immediately with the recommendations and rulings, it is to have a

"reasonable period of time" in which to comply. This reasonable amount of time should not

exceed 15 months. If no agreement is reached about the reasonable period for compliance, that

issue is to be the subject of binding arbitration; the arbitrator is to be appointed by agreement of

the parties. If there is a disagreement as to the satisfactory nature of the measures adopted by the

respondent state to comply with the report, that disagreement is to be decided by a panel, if

possible the same panel that heard the original dispute, but apparently without the possibility of

appeal from its decision. The DSU provides that even if the respondent asserts that it has

complied with the recommendation in a report, and even if the complainant party or the panel

accepts that assertion, the DSB is supposed to keep the implementation of the recommendations

under surveillance.

WTO Complainants by Country

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COMPENSATION AND RETALIATION

If all else fails, two more possibilities are set out in the DSU:

If a member fails within the "reasonable period" to carry out the recommendations and

rulings, it may negotiate with the complaining state for a mutually acceptable

compensation. Compensation is not defined, but may be expected to consist of the grant

of a concession by the respondent state on a product or service of interest to the

complainant state.

If no agreement on compensation is reached within twenty days of the expiry of the

"reasonable period", the prevailing state may request authorization from the DSB to

suspend application to the member concerned of concessions or other obligations under

the covered agreements. The DSU makes clear that retaliation is not favored, and sets the

criteria for retaliation. In contrast to prior GATT practice, authorization to suspend

concessions in this context is semi-automatic, in that the DSB "shall grant the

authorization within thirty days of the expiry of the reasonable period", unless it decides

by consensus to reject the request. Any suspension or concession or other obligation is to

be temporary. If the respondent state objects to the level of suspension proposed or to the

consistency of the proposed suspension with the DSU principles, still another arbitration

is provided for, if possible by the original panel members or by an arbitrator or arbitrators

appointed by the Director-General, to be completed within sixty days from expiration of

the reasonable period.

While such "retaliatory measures" are a strong mechanism when applied by economically

powerful countries like the United States or the European Union, when applied by economically

weak countries against stronger ones, they can often be ignored. Whether or not the complainant

has taken a measure of retaliation, surveillance by the DSB is to continue, to see whether the

recommendations of the panel or the Appellate Body have been implemented.

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Panels: - Panels are like tribunals. But unlike in a normal tribunal, the panellists are usually chosen in consultation with the countries in dispute. Only if the two sides cannot agree does the WTO director-general appoint them.

Panels consist of three (possibly five) experts from different countries who examine the evidence and decide who is right and who is wrong. The panel’s report is passed to the Dispute Settlement Body, which can only reject the report by consensus.

Panelists for each case may be chosen from an indicative list of well-qualified candidates

nominated by WTO Members, although others may be considered as well, including those who

have formerly served as panelist.  Panelists serve in their individual capacities. They cannot

receive instructions from any government. The indicative list is maintained by the Secretariat and

periodically revised according to any modifications or additions submitted by Members.

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DEVELOPING COUNTRIES AND DISPUTE SETTLEMENT UNDERSTANDING

Like most of the agreements adopted in the Uruguay Round, the DSU contains several

provisions directed to developing countries. The Understanding states that members should give

"special attention" to the problems and interests of developing country members. Further, if one

party to a dispute is a developing country, that party is entitled to have at least one panelist who

comes from a developing country. If a complaint is brought against a developing country, the

time for consultations (before a panel is convened) may be extended, and if the dispute goes to a

panel, the deadlines for the developing country to make its submissions may be relaxed. Also,

the Secretariat is authorized to make a qualified legal expert available to any developing country

on request. Formal complaints against least developed countries are discouraged, and if

consultations fail, the Director-General and the Chairman of the DSB stand ready to offer their

good offices before a formal request for a panel is made. As to substance, the DSU provides that

the report of panels shall "explicitly indicate" how account has been taken of the "differential and

more favorable treatment" provisions of the agreement under which the complaint is brought.

Whether or not a developing country is a party to a particular proceeding, "particular attention" is

to be paid to the interests of the developing countries in the course of implementing

recommendations and rulings of panels. In order to assist developing countries in overcoming

their limited expertise in WTO law and assist them in managing complex trade disputes, an

Advisory Centre on WTO Law was established in 2001. The aim is to level the playing field for

these countries and customs territories in the WTO system by enabling them to have a full

understanding of their rights and obligations under the WTO Agreement.

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CHAPTER 4:- WTO DISPUTE SETTTLEMNT CASES

UNITED STATES AND INDIA

On 15 July 1997, the US requested consultations with India in respect of quantitative restrictions

maintained by India on importation of a large number of agricultural, textile and industrial

products. The US contended that these quantitative restrictions, including the more than 2,700

agricultural and industrial product tariff lines notified to the WTO, are inconsistent with India’s

obligations under Articles XI:1 and XVIII:11 of GATT 1994, Article 4.2 of the Agreement on

Agriculture, and Article 3 of the Agreement on Import Licensing Procedures. On 3 October

1997, the US requested the establishment of a panel. At its meeting on 16 October 1997, the

DSB deferred the establishment of a panel.

Panel and Appellate Body proceedings: Further to a second request to establish a panel, the DSB

established a panel at its meeting on 18 November 1997. On 10 February 1998, the US requested

the Director-General to determine the composition of the Panel. On 20 February 1998, the Panel

was composed. The report of the Panel was circulated to Members on 6 April 1999. The panels

found that the measures at issue were inconsistent with India’s obligations under Articles XI and

XVIII11 of GATT 1994, and to the extent that the measures apply to products subject to the

Agreement on Agriculture, are inconsistent with Article 4.2 of the Agreement on Agriculture.

The panel also found the measures to be nullifying or impairing benefits accruing to the United

States under GATT 1994, and the Agreement on Agriculture. On 26 May 1999, India notified its

intention to appeal certain issues of law and legal interpretations developed by the Panel. The

report of the Appellate Body was circulated to Members on 23 August 1999. The Appellate

Body upheld all of the findings of the panel that were appealed from. The DSB adopted the Panel

and Appellate Body reports at its meeting on 22 September 1999.

  Implementation of adopted reports: At the DSB meeting of 14 October 1999, India stated its

intention to comply with the recommendations and rulings of the DSB, at the same time drawing

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attention to the Panel’s suggestion that the reasonable period of time for implementation in this

case could be longer than 15 months in view of the practice of the IMF, the BOP Committee and

GATT and WTO panels of granting longer phase-out periods for the elimination of BOP

restrictions, and in view of India’s status as a developing country Member.

On 28 December 1999, the parties informed the DSB that they had reached an agreement on the

reasonable period of time for India to comply with the recommendations and rulings of the DSB.

The reasonable period of time was to expire on 1 April 2000, except for some tariff items to be

notified by India to the US for which the reasonable period of time was to expire on 1 April

2001. Pursuant to the agreement reached, India had to treat the US no less favorably than any

other Member with respect to the elimination of or modification of quantitative restrictions

affecting any product covered by the agreement.

At the DSB meeting of 27 July 2000, India stated that it had notified to the United States those

tariff items for which the reasonable period is to expire on 1 April 2001 and that for all other

items India had implemented the recommendation of the DSB by 1 April 2000. At the DSB

meeting of 5 April 2001, India announced that, with effect from 1 April 2001, it had removed the

quantitative restrictions on imports in respect of the remaining 715 items and had thus

implemented the DSB’s recommendations in this case. The United States welcomed India’s

action and said that it had some specific questions to ask India in the next few days.

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BRAZIL AND EC

DS332 – Measures affecting imports of retreaded tyres.

On 20 June 2005, the EC requested WTO consultations with Brazil on its measures affecting the

importation of retreaded tyres from the EC. Brazil maintains an import ban on retreaded tyres

and also applies financial fines on the importation as well as storage, transportation and sale of

imported retreaded tyres. Imports from other Mercosur countries are exempted from these

measures. The EC considers that these measures are inconsistent with Articles I:1, III:4, XI:1 and

XIII:1 of the GATT 1994. Consultations were held on 20 July 2005. The DSB established the

panel at its meeting on 20 January 2006. The panel publicly circulated its final report on 12 June

2007. Based on a procedural agreement with Brazil, the appeal was delayed so that it has started

on 3 September 2007.

The Appellate Body circulated its report on 3 December 2007. The Appellate Body has

strengthened the previous panel ruling against Brazil's imports ban on retreaded tyres. The EC

wins the dispute entirely on the chapeau of Article XX (arbitrary and unjustifiable

discrimination, disguised restriction on international trade) because of both the MERCOSUR

exception and the importation of casings. The Appellate Body confirms that these features of the

import ban's application make the import ban illegal, no matter how few casings or MERCOSUR

retreads are actually imported. The EC however loses on its claims that the import ban on

retreaded tyres is not "necessary" to protect human health and life. Still, the reasoning of the

Appellate Body on the "necessity" test is of significantly higher quality than that of the panel,

and indirectly redeems certain of the EC's misgivings with the panel's reasoning. On 17

December 2007, the Dispute Settlement Body adopted the Appellate Body report. On 29 August

2008, a WTO arbitrator ruled that the reasonable period of time to implement ends on 17

December 2008. Brazil has failed to meet that deadline. The EC and Brazil have, on 5 January,

concluded a “sequencing agreement”, under which the EC maintains its right to directly initiate

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retaliation procedures, but is obliged to first conduct a compliance review once Brazil adopts

implementing measures.

On 24 June 2009, the Brazilian Supreme Court (STF) confirmed the constitutionality of the

Brazilian import prohibition against the import of retreaded tyres and declared that any decision

to import retreaded tyres in Brazil (including the Mercosur exception) is unconstitutional.

Brazil’s Secretary of Foreign Trade issued a new regulation, Portaria SECEX 24/2009, published

on 28 August 2009. This regulation prohibits new licenses for the importation of used and

retreaded tyres to be issued, irrespective of their origin (abolition of the Mercosur exception).

In its seventh Status Report to the DSB, dated 15 September 2009, Brazil claimed to be in full

compliance. The Commission is continuing to monitor Brazil’s claim of full compliance.

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VENEZUELA AND UNITED STATES

On 23 January 1995, Venezuela complained to the Dispute Settlement Body that the United

States was applying rules that discriminated against gasoline imports, and formally requested

consultations with the United States. Just over a year later (on 29 January 1996) the dispute panel

completed its final report. (By then, Brazil had joined the case, lodging its own complaint in

April 1996. The same panel considered both complaints.) The United States appealed. The

Appellate Body completed its report, and the Dispute Settlement Body adopted the report on 20

May 1996, one year and four months after the complaint was first lodged.

The United States and Venezuela then took six and a half months to agree on what the United

States should do. The agreed period for implementing the solution was 15 months from the date

the appeal was concluded (20 May 1996 to 20 August 1997).

The case arose because the United States applied stricter rules on the chemical characteristics of

imported gasoline than it did for domestically-refined gasoline.

Venezuela (and later Brazil) said this was unfair because US gasoline did not have to meet the

same standards — it violated the “national treatment” principle and could not be justified under

exceptions to normal WTO rules for health and environmental conservation measures. The

dispute panel agreed with Venezuela and Brazil. The appeal report upheld the panel’s

conclusions (making some changes to the panel’s legal interpretation). The United States agreed

with Venezuela that it would amend its regulations within 15 months and on 26 August

1997 it reported to the Dispute Settlement Body that a new regulation had been signed on 19

August.

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WTO DISPUTE CASES BY INDUSTRY 

Industry Number of casesAgricultural Products 32Alcoholic and other Beverages 6Textile and Clothing 10Animal Skin Products 2Electronics 3Telecommunications 3Automobiles 5Aircraft 2Satellite Systems 1Cement Products 1Chemical Products 6Pharmaceutical Products 5Other Industrial Products 4

CASE CHARACTERISTICS BY COUNTRY  Complainants Frequencies by matterDeveloped Country against Developing Country  27Developed Country against Developed Country  36Developing Country against Developed Country  16Developing Country against Developing Country  9 

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CHAPTER 5:- CONCLUSION

The tension between rising demand for natural resources due to population and income growth

on the one hand, and their scarcity and exhaustibility on the other, is a challenge facing modern

society. This tension seems likely to increase, especially as the global economy recovers from

recession and the circle of development and industrialization continues to widen. Fears of

inadequate access to supplies in resource-scarce countries and of inappropriate exploitation in

resource-rich regions could lead to trade conflict or worse. Adequately defined rules for

international cooperation, built on a shared perception of gain, will contribute to the avoidance of

such an outcome.

In sum, the analysis in this report argues strongly for cooperation. The importance of natural

resources to virtually every aspect of human activity, and the particular characteristics of these

products, make it vital that governments work together to find common ground and appropriate

trade-offs. Such cooperation should aim to ensure sound resource management, equity and

mutual gain.

The trade aspects of cooperation have been a particular focus of the report, and the case has been

made for seeking accommodation through effective multilateral trade rules. Well-designed rules

on trade are not only about securing the standard gains from trade; they are also a key component

of cooperation in domains such as environmental protection and domestic policies to manage

scarce resources.

As trade expands in volume, in the number of products traded, and in the numbers of countries

and companies trading, there is a greater chance that disputes will arise. The WTO system helps

resolve these disputes peacefully and constructively.

There could be a down side to trade liberalization and expansion. More trade means more

possibilities for disputes to arise. Left to themselves, those disputes could lead to serious conflict.

But in reality, a lot of international trade tension is reduced because countries can turn to

organizations, in particular the WTO, to settle their trade disputes.

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Before World War 2 that option was not available. After the war, the world’s community of

trading nations negotiated trade rules which are now entrusted to the WTO. Those rules include

an obligation for members to bring their disputes to the WTO and not to act unilaterally.

When they bring disputes to the WTO, the WTO’s procedure focuses their attention on the rules.

Once a ruling has been made, countries concentrate on trying to comply with the rules, and

perhaps later renegotiating the rules — not on declaring war on each other.

Around 300 disputes have been brought to the WTO since it was set up in 1995. Without a

means of tackling these constructively and harmoniously, some could have led to more serious

political conflict.

The fact that the disputes are based on WTO agreements means that there is a clear basis for

judging who is right or wrong. Once the judgment has been made, the agreements provide the

focus for any further actions that need to be taken.

The increasing number of disputes brought to GATT and its successor, the WTO, does not

reflect increasing tension in the world. Rather, it reflects the closer economic ties throughout the

world, the GATT/WTO’s expanding membership and the fact that countries have faith in the

system to solve their differences.

Sometimes the exchanges between the countries in conflict can be acrimonious, but they always

aim to conform to the agreements and commitments that they themselves negotiated.

In conclusion, the World Trade Organization is the most important international organization

governing trade. The WTO sets and enforces trade rules and promotes global economic

cooperation. Poor countries are better able to compete in the world economy. Governments will

hopefully take profits from trade and improve the health, education, and employment of their

citizens. International business will undoubtedly continue to thrive under the supervision of the

World Trade Organization.

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BIBLIOGRAPHY:

WEBSITES

www.wikipedia.com

www.investopedia.com

www.wto.com

BOOK

WTO and international trade – by M.B. Rao

WTO text and cases – by Palle Krishna Rao

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