Special and Differential Treatment (SDT) provisions encapsulate dialogues of convergence between the economic centre and the periphery to bridge the significant gap between the developed and developing members of the World Trade Organization (WTO). The purpose and objective of SDT provisions have evolved significantly since first being introduced, reflecting the changing role and perception of developing countries in the system. Before the introduction of SDT, developing countries participated as equals in all tariff negotiations and disputes. In 1954–5, the General Agreement on Tariff and Trade (GATT) introduced the first SDT provision by revising Article XVIII, allowing developing countries to use trade restrictions to address balance-of-payment problems and protect infant industries. Later, in 1979, the Enabling Clause gave a legal basis to the Generalized System of Preferences, under which developed countries could offer non-reciprocal preferential treatment to products from developing countries.Footnote 1 As an outcome of the Uruguay Round of negotiations, and with the establishment of the WTO, a range of SDT provisions was introduced into the WTO agreements to promote trade between developing and developed countries and to preserve domestic policy instruments that could be used in pursuit of development policies. However, while these SDT provisions benefitted developing countries, albeit in “best-endeavour” language, some require developing countries to take on additional obligations and implement significant national reforms. Despite numerous deliberations in the WTO's Committee on Trade and Development (CTD) and academic voices emphasizing the inadequacy and ineffectiveness of these provisions, meagre action has been taken to ameliorate the grievances of developing countries and address the development objectives of the WTO in a meaningful way. A reform of SDT provisions is currently being debated in the WTO, where deep-rooted division exists between the developing and developed members of the WTO regarding the concept, scope, and beneficiaries of SDT provisions. While developing countries consider these provisions their institutional right and entitlement, developed countries believe that the advanced developing countries are taking advantage of SDT provisions and are unwilling to attach the status of “entitlement” to SDT.Footnote 2
At this juncture, this article examines the efficacy of the SDT provisions in the WTO's Dispute Settlement Understanding (DSU)Footnote 3 to understand whether the WTO's development objectives embodied in the preamble of the WTO Agreement are reflected in these SDT provisions.Footnote 4 The first paragraph of the preamble provides for the development objectives of “raising standards of living, ensuring full employment … with the objectives of sustainable development … in a manner consistent with their respective needs and concerns at different levels of economic development”.Footnote 5 The second paragraph of the preamble articulates the development objectives and philosophy behind the SDT provisions: “there is need for positive efforts designed to ensure that developing countries, and especially the least developed among them, secure a share in the growth in international trade commensurate with the needs of their economic development”.Footnote 6
If we focus on the two fundamental pillars of the WTO as an effective international organization, they are (1) the principle of special and differential treatment, captured precisely in these two paragraphs of the preamble, which holds all the members of the WTO together and (2) a rules-based, as opposed to a power-based, dispute settlement mechanism, where all countries, despite the level of their economic development, are expected to have access based on rules that are fair and equitable.Footnote 7 By contrast, a power-based system means that only members with economic and political power have access to an effective dispute settlement. A group of African countries precisely captured their expectation from the WTO Dispute Settlement Mechanism (DSM) in this way:
It should be clearly affirmed, that the DS is not just about expedition or speed, it is also about real justice to all Members; and that the DS must be part of the mechanisms for attaining the development objectives of the WTO as an institution.Footnote 8
This research examines whether SDT provisions within the DSU effectively achieve the WTO's development objectives. The article is divided into three parts. Part I critically examines the SDT provisions within the DSU and the approach taken by the WTO adjudicating bodies comprising the panel, the Appellate Body (AB), and the arbitrators in interpreting and applying these provisions in litigation and arbitration cases. The analysis in Part I sheds light on why SDT provisions in the WTO DSU should be reimagined to benefit the WTO's low-income developing countries (LIDCs) and Least Developed Countries (LDCs). Part II makes two categories of suggestions – secondary lawmaking and progressive treaty interpretation – for reimagining the SDT provisions and operationalizing them to achieve the development objectives of the WTO. Part III concludes the article.
I. SDT Provisions in the DSU
This part analyses the scope of the SDT provisions in different stages of dispute settlement, their invocation by the WTO members, and their interpretation by the panel and the AB to highlight how the gaps in the drafting resulted in uncertainty in their application. Although development arguments have been made under provisions that are not SDT provisions,Footnote 9 a discussion of all these provisions is beyond the scope of this article.
The DSU sets out the procedures and processes that govern the WTO's dispute settlement system. The Dispute Settlement Body (DSB) regulates the DSU and administers consultation, litigation, implementation, and arbitration processes. To do so, the DSB is authorized to establish panels, adopt panel and AB reports, maintain surveillance over the implementation of rulings and recommendations, and approve the suspension of concessions and other obligations.Footnote 10 A central objective of the DSU is to provide “security and predictability in the multilateral trading system”.Footnote 11 To achieve this objective, the panel and the AB need to interpret the WTO agreements clearly and logically while considering the economic disparity of the WTO's respective members.
When the DSU was drafted, negotiators were concerned about the disadvantaged positions of LIDCs and LDCs when attempting to bring their legal disputes against developed countries and when complaints are brought against them.Footnote 12 To address this disparity and to take into account the development concerns of developing countries, SDT provisions were incorporated into the DSU.Footnote 13 The WTO CTD identified eleven SDT provisions in the WTO DSU,Footnote 14 of which seven – Articles 4.10; 8.10; 12.10; 12.11; 21.2; 21.7; and 21.8 – fall under the category of provisions for safeguarding the interests of developing countries. Other relevant articles include Article 3.12, which relates to “flexibility of commitments, of action, or use of policy instruments”; Article 27.2, which concerns “technical assistance”; and Article 24.1, which is a specific provision relating to LDC members.Footnote 15 Aside from these provisions, in 1966, a special procedure was adopted under the GATT for developing countries, which provided for the automatic creation of panels on request and a fixed timeframe for each stage of the procedure. This has become a common feature of the dispute settlement mechanism, applicable to all members.
A. SDT in Consultation Process
The WTO dispute settlement process commences when a member makes a complaint to the WTO DSB seeking redress for the violation of obligations, or for the nullification or impairment of benefits under WTO-covered agreements, or for an obstruction to achieve the objectives of the agreements by another member.Footnote 16 Article 4 of the DSU sets out the rules for the consultation phase of the WTO's dispute settlement system, whereby members can settle without litigation.Footnote 17 If negotiations reach an impasse, the panel procedure can be invoked automatically by the DSB at the request of the complaining party.Footnote 18 Two SDT provisions are relevant at the consultation stage: Articles 4.10 and 12.10. The first part of Article 12.10 applies to consultation, while the second part relates to the panel process, which will be discussed under the panel process.
Article 4.10 states that “[d]uring consultations members should give special attention to the particular problems and interests of developing country members”.Footnote 19 The section is broad without clarifying the developing countries' particular difficulties and interests that should be considered during the consultation phase. The vaguely worded provision is somewhat problematic; the diverse range of developing countries are at different development levels, with various concerns and interests affecting LIDCs and LDCs. To reinforce, “should” renders the provision declaratory rather than mandatory.Footnote 20 As such, the parties are not strictly bound to comply with the provision that considers the interests of developing countries. The political nature of the bargaining between the parties in the consultation stage underscores the need for clearer provisions in Article 4.10.
The difficulties ensuing from the declaratory nature of Article 4.10 of the DSU are illustrated in the United States – Measures Affecting the Cross Border Supply of Gambling and Betting Services (Antigua – United States).Footnote 21 In this case, Antigua made a complaint against the United States, alleging that several federal and state laws prohibited the cross-border supply of gambling services.Footnote 22 Antigua contended that the US's decision to impose such a prohibition damaged Antigua's domestic gambling industry and was tantamount to violating the General Agreement on Trade in Services (GATS).Footnote 23
Antigua stated that the US measures affected its small economy, making it difficult for Antigua to survive on trade.Footnote 24 Antigua argued that her economy survived primarily on the tourism industry but had diversified into the electronic commerce market due to the destruction of its hotels and infrastructure by hurricanes.Footnote 25 This electronic commerce attracted the internet gambling industry. It provided the Government of Antigua with revenues that could be used to provide basic facilities, including goods and services, to its people. The industry employed young people who would otherwise have turned to illicit drug trafficking.Footnote 26 Antigua argued that the US prohibition prevented operators within Antigua from lawfully offering gambling in the United States. The parties engaged in a consultation meeting on 30 April 2003 that lasted less than an hour, indicating no genuine consultation effort from the United States.Footnote 27 In its consultation, Antigua expressed its willingness to work for a mutually agreeable solution on the basis that the regulatory framework would be refined.Footnote 28 However, the United States refused Antigua's suggestion.Footnote 29
Even though Antigua outlined its development concerns through Article 4.10 of the DSU, the United States preferred to adopt a legalistic approach with no consideration for Antigua's development concerns at the consultation, thereby violating the spirit of Article 4.10 of the DSU.Footnote 30 The use of “should” in Article 4.10 suggests that while the United States should have considered Antigua's development concerns, they had no binding obligation to do so. The lack of enforceability of Article 4.10 suggests a lack of effective procedure applicable to the consultation mechanism, which results in fruitless negotiations and practical inefficiencies that undermine the very objective of the DSU.Footnote 31
The ineffectiveness of Article 4.10 is further illustrated in Pakistan's Dispute Settlement Case on Combed Cotton Yarn Exports to the United States, which resulted from the United States’ refusal to comply with orders made by the WTO's Textile Monitoring Body (TMB).Footnote 32 The United States challenged transitional safeguard measures sanctioned under the Agreement of Textiles and Clothing (ATC).Footnote 33 It informed the TMB of its intention to impose quota restraints on imports from Pakistan for three years.Footnote 34 The TMB decided in favour of Pakistan and requested the United States to lift the quota restraints. However, the United States refused.Footnote 35
Pakistan complained to the DSB and consulted with the United States under Article 4.10. Consultation failed because the United States was unwilling to offer a mutually agreeable solution.Footnote 36 During the consultation, the United States disregarded Pakistan's status as a developing country and the fact that the textile industry was Pakistan's largest manufacturing sector, with an 8.5 per cent share of GDP at that time.Footnote 37
As these cases illustrate, by not mandating the procedure for dealing with developing countries’ development concerns or providing any guidance on the development concerns that should be considered,Footnote 38 Article 4.10 is not adequately designed to assist developing countries in the consultation phase and results in practical inefficiencies. The consultation stage is regarded as a political exercise of bargaining power and leverage between the disputing parties, where external matters to the dispute could also have an influence.Footnote 39 Therefore, members possessing greater economic and political power may be able to link external considerations, such as foreign aid and diplomatic efforts, to the dispute. Hence, members cannot come to an amicable solution or block consultation.Footnote 40 In both Antigua – United States and Pakistan's Dispute Settlement Case on Combed Cotton Yarn Exports to the United States, the United States used the consultations as a delaying tactic.Footnote 41
Another SDT provision relevant to the consultation stage is the first part of Article 12.10 of the DSU, which states:
In consultations involving a measure taken by a developing country Member, the parties may agree to extend the periods established in paragraphs 7 and 8 of Article 4. If, after the relevant period has elapsed, the consulting parties cannot agree that the consultations have concluded, the Chairman of the DSB shall decide, after consultation with the parties, whether to extend the relevant period and, if so, for how long.Footnote 42
The language of the first section seeks to ensure that an extended timeframe is allocated during consultations when a complaint is brought against a developing country. This provision does not create an obligation for the developed country or the DSB to extend the time period for consultation in favour of a developing country since such an extension needs to be agreed upon by both parties. In Pakistan – Patent Protection, when the United States requested to establish a panel, Pakistan invoked this provision in resisting the United States’ request. Pakistan questioned whether a developed country could unilaterally decide that the consultation had been concluded within the context of Article 12.10.Footnote 43
B. SDT in Panel Process
If the parties to a dispute cannot reach an agreement through consultation, the complaining party may request the DSB to establish a panel to adjudicate the dispute.Footnote 44 Article 12 of the DSU deals with panel procedures for litigation, of which Articles 12.10 and 12.11 contain SDT provisions.
1. Flexible Time for Preparing Submissions
The second part of Article 12.10 states:
[I]n examining a complaint against a developing country Member, the panel shall accord sufficient time for the developing country Member to prepare and present its argumentation. The provisions of paragraph 1 of Article 20 and paragraph 4 of Article 21 are not affected by any action pursuant to this paragraph.Footnote 45
Article 12.10 recognizes the need to give developing countries sufficient time to prepare written submissions and obtain necessary documents and evidence for panel proceedings. Compared to developed countries, the panel process is often particularly demanding and time-consuming for most developing countries due to the dearth of human, financial, and institutional resources.Footnote 46 Use of the word “shall” in Article 12.10 indicates the mandatory nature of the panel's obligation. This interpretation is supported by the common tendency of panels to consider the second part of Article 12.10, even where neither party has invoked Article 12.10.Footnote 47 For instance, in India – Quantitative Restrictions on Imports of Agricultural, Textile and Industrial Products, Footnote 48 the panel referred to the second part of Article 12.10 as justification for its decision to grant additional time to India. However, India did not invoke this provision requesting extra time.Footnote 49
Several factors question the efficacy of this provision. First, Article 12.10 is of little practical value since, under Article 12.4, the panel must provide sufficient time to both parties to the dispute, including both developed and developing members. Second, Article 12.10 grants panels the discretion to determine what constitutes a sufficient time frame. Third, there needs to be more guidance on what factors the panel should consider in granting sufficient time. Fourth, the wording of this part of Article 12.10 reconfirms the position that this provision is invoked where a developing country is a respondent rather than a complainant or a third party. In European Communities – Bananas, the ACP third partiesFootnote 50 contended that they were given insufficient time to prepare and present their submissions, which was inconsistent with Article 12.10. The panel did not even consider this argument because of the clear provision in Article 12.10, which stated that this is applicable only when a complaint is made against a developing country member.Footnote 51 The discretionary nature of Article 12.10 and the lack of guiding principles means the provision lacks certainty for developing countries that rely on the provision.
2. The SDT Provision that Connects with all SDT Provisions in the WTO Agreements
Article 12.11 of the DSU is the most progressive SDT provision, providing a direct linkage to invoke other SDT provisions in the covered agreements. In theory, this provision should shift the focus to developing countries by imposing a positive obligation on the panel to report on how it considers the development condition of a developing country member. Article 12.11 states:Footnote 52
Where one or more of the parties is a developing country Member, the panel's report shall explicitly indicate the form in which account has been taken of relevant provisions on differential and more-favourable treatment for developing country members that form part of the covered agreements which have been raised by the developing country Member in the course of the dispute settlement procedures.
Despite the provision's great potential to enforce other SDT provisions in the WTO agreement, the text of this provision and its interpretation and application by the panel raises at least six uncertainties that go to the heart of its real benefit to LIDCs and LDCs.
First, scholars such as Qureshi question whether this provision creates a procedural or a substantive obligation.Footnote 53 The authors argue that Article 12.11 is both procedural and substantive. The procedural aspect arises from the fact that when developing countries invoke an SDT provision, it is mandatory for panels to expressly set out how the panel has taken the SDT provision into account. The terms “relevant provisions on differential and more favourable treatment … that form part of the covered agreements” clearly show that the article has contemplated the substantive rules of the covered agreements and granted broad powers to the panel to deal with SDT provisions relevant to a dispute at hand.
Second, it is unclear whether using the words “raised by the developing Member” means to “allude to or raise”.Footnote 54 It is also unclear whether a developing country needs to raise SDT provisions in the covered agreement or only raise the breach of the covered agreement with the panel considering the relevant SDT provisions in that agreement.Footnote 55 In Mexico – Taxes on Soft Drinks, Mexico made development arguments supporting its claim. While the panel acknowledged the importance of special and differential treatments for developing countries, the panel considered that Mexico had not raised any specific SDT provision requiring “additional consideration”.Footnote 56 The LDC group, in a 2002 proposal to the DSB, argued that if a developing country needs to raise the SDT provision specifically, it places an unnecessary legal burden and contradicts the well-established legal principle jura novit curia (that the judge or the court is supposed to know the law).Footnote 57 The LDC group proposed the removal of the phrase “which have been raised by the developing country Member” so as to require the panel to apply all applicable legal principles.
The third issue of uncertainty arises when the SDT provision needs to be raised, whether it needs to be included in the terms of references or whether it can be raised at any time “in the course of the dispute settlement procedures”. In United States – Continued Dumping and Subsidy Offset,Footnote 58 India and Indonesia invoked Article 15 of the Anti–Dumping AgreementFootnote 59 because they were developing countries. Article 15 of the Anti-Dumping Agreement was not included in the panel's terms of reference during the panel stage. Nonetheless, the panel addressed the SDT provision of Article 15 of the Anti-Dumping Agreement because it was invoked during the proceedings, and Article 12.11 required the panel to address the SDT provision.Footnote 60 In this case, the panel held that the invoked provision was irrelevant to the case and that India and Indonesia had not “substantiated” their arguments.Footnote 61 This article argues that a developing country can allude to the SDT provision at any stage of the dispute settlement procedure: all decision-makers, including the panel, the AB, and the arbitrators, need to consider this SDT provision.
Fourth, ambiguity arises as to what extent the panel needs to take account of the SDT provision – whether the panel may meet its obligation by providing lip service to the SDT provision or whether it must give more weight to SDT provisions in their reports. Article 12.11 requires the panel to “explicitly indicate the form in which account has been taken” of the relevant SDT provision. However, there is a concerning trend where the panel does not apply this provision substantively: instead, only mentioning in one paragraph that the parties have not raised any SDT provision or that the panel has considered the relevant SDT provision. In most cases, the panel does not provide further details on how the panel has taken SDT provisions into account.Footnote 62 For instance, in the case of Mexico – Measures Affecting Telecommunications Services,Footnote 63 the panel stated that “pursuant to Article 12.11 of the DSU, it has taken into account in its findings GATT provisions on differential and more-favourable treatment for developing country members”, but did not elaborate further.Footnote 64 According to the wording of Article 12.11 of the DSU, panels are not bound to decide the matter according to the SDT provisions so invoked.Footnote 65 The lack of further detail on how the panels should consider those provisions effectively means there is no requirement for the provisions in the WTO agreement or covered agreements to be applied. Roessler observes that Article 12.11 of the DSU “is nothing but a specific application of the general obligation of panels to present in their reports an objective assessment of the matter before them”.Footnote 66
Fifth, a related issue to the above is whether the panel can use the doctrine of judicial economy to bypass its obligation to give a detailed consideration of the SDT provision.Footnote 67 Brazil submitted to the AB that the panel had improperly exercised judicial economy by refusing to address Brazil's claim that the United States violated Articles 1.1 and 3.1(a) of the Agreement on Subsidies and Countervailing Measures (SCM Agreement) concerning export credit guarantees.Footnote 68 In the case of United States – Definitive Safeguard Measures on Imports of Certain Steel Products,Footnote 69 the panel concluded that the United States had acted inconsistently with the provisions of the Agreement on Safeguards and the GATT 1994.Footnote 70 However, the panel used its policy of judicial economy to avoid considering an additional claim made under the SDT provision of Article 9.1 of the Agreement on Safeguard.Footnote 71
Sixth, the phrase “where one or more of the parties is a developing country” is not clear as to whether a developing country, in whose favour the panel considers the SDT provision, must be a party to the dispute or whether a third-party developing country can also point to the SDT provision in a covered agreement.
In addition to the issues of ambiguity surrounding the interpretation of Article 12.11, in several cases where both Articles 12.10 and 12.11 are relevant, the panel seems to discharge its obligation only by stating that it has established a flexible timetable for submissions and adjudication. This type of interpretation makes Article 12.11 redundant.Footnote 72
C. SDT Provisions Regarding the Implementation of Recommendations and Rulings
Once the WTO DSB adopts the panel or AB reports, the proceeding enters the implementation stage, and the losing member is obliged to comply with and implement the ruling of the DSB. Article 21.3 of the DSU requires members to inform the DSB of its intention to implement the DSB's recommendations and rulings within thirty days. If the losing member fails to implement the ruling within thirty days or within “a reasonable period of time”, the winning member can resort to arbitration.Footnote 73 Article 21.3(c) provides a guideline for the arbitrator; fifteen months should be the maximum period of time, starting from the adoption of the panel or AB reports. The relevant SDT provision, enshrined in Article 21.2, states: “Particular attention should be paid to matters affecting the interests of developing country members with respect to measures which have been subject to dispute settlement”.Footnote 74
Although the provision is open-ended, the placement of the provision in Article 21 indicates its relevance in the context of arbitration. The provision was raised in fourteen cases, from which thirteen cases were invoked for a determination by the arbitrator, asking for a reasonable period of time to implement the panel or the AB rulings and recommendations. From the outset, using the word “should” indicates that Article 21.2 grants discretionary powers to arbitrators to determine a reasonable period of time for implementation.Footnote 75 We will examine whether developing countries can invoke Article 21.2 as a complainant, a respondent, or in both capacities and what development arguments they make to support their request under Article 21.2. We will also analyse the arbitration cases to identify the arbitrator's approach in interpreting and applying this Article regarding these two issues.
1. Who can invoke Article 21.2?
Reliance on Article 21.2 by the implementing developing country is straightforward, as is apparent from the arbitration cases where arbitrators consider whether a developing country has proved its case that its development consideration should be considered in determining the reasonable period of time. However, whether a developing country can invoke this Article as a complaining member was initially unsettled. In the United States – Gambling Services (Article 21.3(c)), when Antigua invoked Article 21.2 as a complaining developing country, the United States argued the provision is relevant only when the developing country is an implementer.Footnote 76 The arbitrator did not give a clear answer to this argument.Footnote 77
In later cases, such as in European Communities – Customs Classification of Frozen Boneless Chicken Cuts (Article 21.3(c)), the arbitrator agreed with Brazil that “Article 21.2, on its face, makes no distinction in cases where developing country members are complaining rather than implementing members in a particular dispute”.Footnote 78
In all the arbitrations where a developing country was the complainant, the arbitrator determined the “reasonable period of time” to be the shortest period possible to implement the decision within the legal framework of the implementing developed country.Footnote 79 In deciding the shortest period, the arbitrators usually conclude that the status of a developing country as a complainant is irrelevant in the absence of more specific evidence on how a developing country is disadvantaged by such determination.Footnote 80 For instance, in European Communities – Customs Classification of Frozen Boneless Chicken Cuts (Article 21.3(c)),Footnote 81 the EC requested that the arbitrator determine a reasonable period of time to be twenty-six months for implementation of the DSB's recommendation after Brazil was successful in their case against the EC.Footnote 82 The EC requested this timeframe to repeal and update the measure at issue and other relevant measures. Brazil argued that EC should be allowed five months and ten days.Footnote 83 The arbitrator held that a reasonable period of time for the EC was nine months from the date of adoption of the panel and the AB reports.Footnote 84 The arbitrator concluded that a “reasonable period of time for implementation is not additionally affected by the fact that Brazil, as a complaining member in this dispute, is a developing country”.Footnote 85 Similarly, in United States – Cool (Article 21.3(c)), in allowing the United States ten months as a reasonable period of time for implementation, the arbitrator justified this timeframe as the “shortest possible period” within the United States legal system.Footnote 86 The arbitrator stated that Mexico's status as a developing country had no bearing on the final determination of the timeframe. The arbitrator was not persuaded by Mexico's argument that its cattle producers were being “economically harmed” by the United States’ delay in implementation.Footnote 87
These cases clearly show that the arbitrators prioritized the situation of developed countries in making necessary changes to their statutes and administrative orders. In doing so, the arbitrators deprioritized the plight of developing countries arising from the delay in implementation.Footnote 88
Whether the development considerations of the third-party developing countries are relevant or not arose in two arbitration cases where, interestingly, it was the developed member, the EC, that raised the hardship of third-party developing countries for the arbitrator's determination of a reasonable period of time. In European Communities – Sugar Subsidies (Article 21.3(c)), the EC argued that Article 21.2 applies to non-party developing countries and that a shorter implementation period would adversely affect sugar-importing developing countries and ACP countries.Footnote 89 While interpreting Article 21.3, the arbitrator observed that the drafters did not limit the application of Article 21.2 to any particular type of developing country.Footnote 90 However, the arbitrator found that EC failed to provide sufficient evidence on how implementing the rulings and recommendations would affect ACP countries or sugar-importing or exporting developing countries.Footnote 91 Therefore, the arbitrator found that, in this case, it was unnecessary to decide whether Article 21.3 applies to third-party developing countries.Footnote 92 In European Communities – Tariff Preferences (Article 21.3(c)), the EC made a similar argument of an adverse effect on third-party developing countries – beneficiaries of the EC preferential scheme – to justify its request for a longer implementation timeframe. The arbitrator also took a similar approach in not deciding the question of applicability of Article 21.2 to non-party developing countries on the ground that neither party could provide sufficient evidence or an explanation of how developing countries’ interests would be affected by the EC's implementation.Footnote 93
In several arbitrations, both complaining and implementing developing countries invoked Article 21.2.Footnote 94 In these cases, the arbitrator found that both parties’ status as developing countries would offset each other unless one party could prove that its economy was more susceptible to impact, depending on whether a shorter or longer period of time was granted.Footnote 95 For instance, in Peru – Agricultural Products (Article 21.3(c)), the arbitrator found that Guatemala as a complainant and Peru as an implementer were both developing countries, rendering this status “of little relevance” unless one of them could prove that it was more severely affected because of its status as a developing country.Footnote 96 The arbitrator decided that neither Peru nor Guatemala could prove how their status as developing countries should have a bearing on determining a “reasonable period of time”.Footnote 97 Similarly, in Columbia – Measures Relating to the Implementation of Textiles, Apparel and Footwear (Article 21.3(c)), where both the complaining party (Panama) and implementing party (Colombia) were developing countries, the arbitrator reiterated:
[I]n a situation where both the implementing and complaining Member are developing countries, the requirement provided in Article 21.2 is of little relevance, except if one party succeeds in demonstrating that it is more severely affected by problems related to its developing country status than the other party with respect to measures that have been subject to dispute settlement.Footnote 98
2. Development Consideration under Article 21.2
In Indonesia – Certain Measures Affecting the Automobile Industry (Article 21.3(c)),Footnote 99 Indonesia requested the arbitrator for fifteen months as a reasonable time period to implement the panel's rulings. By invoking Article 21.2, Indonesia claimed that its domestic economic condition was severe, “near collapse”, and the financial and economic crisis affected the automobile industry the most.Footnote 100 Therefore, the Indonesian government needed additional time to stabilize the economy to prevent further unemployment and avert a deepening economic crisis.Footnote 101 Indonesia tied its development arguments with the preamble of the WTO Agreement, which, as we saw above, enshrines the importance of ensuring full employment in trade and economic development.Footnote 102
In determining a reasonable period of time, the arbitrator commented on the difficulties in considering the argument submitted by Indonesia due to the ambiguity of Article 21.2 of the DSU, stating that “the language of [Article 21.2 of the DSU] is rather general and does not provide a great deal of guidance”.Footnote 103 However, the arbitrator agreed with Indonesia to fully consider Indonesia's developing country status, stating that Indonesia “is a developing country that is currently in a dire economic and financial situation. Indonesia itself states that its economy is ‘near collapse.’”Footnote 104 The arbitrator granted Indonesia an additional six months above the usual six months required for implementation within the Indonesian legal system.Footnote 105
In the case of Argentina – Measures Affecting the Export of Bovine Hides and the Import of Finished Leather (Article 21.3(c)),Footnote 106 after losing its case against the EC, Argentina requested approximately forty-six months as a reasonable period of time for implementation, because its fiscal position had seriously deteriorated due to the economic recession that occurred in 1997 and 1998.Footnote 107 The arbitrator found that “Argentina has not been very specific about how its interests as a developing country Member actually bear upon the duration of a reasonable period of time” for compliance.Footnote 108 Referring to Indonesia – Certain Measures Affecting the Automobile Industry (Article 21.3(c)), the arbitrator doubted whether Argentina's economy was “near collapse”, as was Indonesia's.Footnote 109 However, the arbitrator agreed with the arbitration decision on Indonesia – Auto that developing countries confronted by “severe economic and financial problems” required particular attention from the arbitratorFootnote 110 and, on that ground, provided Argentina with special treatment by granting twelve months and twelve days for implementation, despite the lack of specific evidence by Argentina.Footnote 111
In contrast, the arbitrator in the United States – Gambling Services (Article 21.3(c)), found that Antigua had failed to provide specific data in support of its claim that its interests were adversely affected by a delayed implementation and that Antigua failed to show a clear relationship between the decline of its industry and the measures at issue.Footnote 112 In Chile – Taxes on Alcoholic Beverages (Article 21.3(c)), Chile submitted that the arbitrator should pay attention to the particular interests of developing countries and stressed the fact that it had to consider the political sensitivity when implementing the recommendations of the DSB.Footnote 113 Chile further submitted that “[legal change for implementation of the DSB award] will affect fiscal revenues, public health and the social and economic situation of pisco producers”.Footnote 114 The arbitrator noted that he was “mindful of the great difficulties that a developing country member may, in a particular case, face as it proceeds to implement the recommendations and rulings of the DSB”.Footnote 115 Nevertheless, the arbitrator was not convinced by Chile's submissions. According to the arbitrator, Chile did not specifically demonstrate how its interests as a developing country would affect Chile's ability to change its laws to comply with the DSB's recommendations.
The case analysis shows that, in recent times, arbitrators have required more concrete assertions of how a developing country's status should have a bearing on the determination of a reasonable period of time. Although in all cases where a developing country is involved, the arbitrators expressly mention that they have taken into account the interests of the developing countries; however, the extent to which those interests impact the arbitrator's determination of a reasonable time for implementation remains a key concern. The cases also show a disparity in the arbitrators’ approach, requiring more concrete evidence of developing countries’ specific interests as opposed to the general condition of developing countries. More worrying is the trend of the arbitrator to conclude that the developing country status of the complaining and implementing members offset each other. This article proposes that where LIDCs or LDCs are involved in a dispute where the other party is a middle- to high-income developing country, the development considerations of LIDCs and LDCs require greater attention.
Two other SDT provisions relevant at the implementation stage are Articles 21.7 and 21.8 of the DSU, which empower the DSB to consider developing countries’ interests. Article 21.7 of the DSU states: “If the matter is one which has been raised by a developing country Member, the DSB shall consider what further action it might take which would be appropriate to the circumstances.”Footnote 116
Article 21.8 states that when a developing country member brings a case, and the DSB needs to take appropriate action, the DSB shall consider “trade coverage of the measures complained of” and “their impact on the economy of developing country members concerned”.Footnote 117 These provisions do not clearly indicate when the DSB can act or whether developing countries need to specifically raise these provisions so that the DSB can apply them.Footnote 118 It seems to be that these provisions could be used at the implementation stage when an implementing developed country does not comply with the recommendations and rulings of the panel and AB.
The only case where Article 21.8 was considered was European Communities – Bananas III (Ecuador) (Article 22.6).Footnote 119 Ecuador requested the DSB's authorization to suspend concessions or other obligations against the EC in the amount of $450 million (US). The EC requested arbitration under Article 22.6 of the DSU, claiming that the suspension of the concession proposed by Ecuador was excessive compared to the nullification or impairment suffered due to the EC measure.Footnote 120 Ecuador requested the suspension of concessions and other obligations under the GATS and TRIPS agreements because such a suspension in the goods sector was not practicable.Footnote 121 Referring to Article 21.8, Ecuador claimed the arbitrators should consider the total economic impact of the EC Banana regime in calculating the level of nullification and impairment suffered by Ecuador.Footnote 122 Ecuador highlighted the importance of bananas as “the lifeblood of its economy”, being “the largest source of employment and the largest source of foreign earnings”.Footnote 123 It further claimed that “the banana industry is of greater importance to its economy than the whole agricultural sector in most developed countries”.Footnote 124 The arbitrators found Ecuador's argument more reasonable in establishing that the nullification and impairment caused by the WTO-inconsistent aspects of the EC banana import regime aggravated the economic problems of Ecuador, while the EC would hardly face any consequence from Ecuador's suspension of concessions.Footnote 125 The arbitrators decided that Ecuador complied with the principles and procedures of Article 22.3 in requesting the DSB authorization to suspend some of their obligations under the TRIPS Agreement.Footnote 126 The arbitrators noted that their interpretation and application of Article 22.3(d) was corroborated by Article 21.8, which required them to consider the impact of the complained measures on the economy of the developing country members.Footnote 127
D. SDT Provision Exclusively for the Least Developed Countries
Article 24 of the DSU deals exclusively with least-developed countries, even though other SDT provisions of the DSU equally apply to LDCs. The first sentence of Article 24.1 states: “At all stages of the determination of the causes of a dispute and of dispute settlement procedures involving a least-developed country Member, particular consideration shall be given to the special situation of least-developed country members.”Footnote 128
Through the use of the word “shall”, Article 24.1 mandatorily requires particular consideration of the situation of least-developed country members. The crux of the problem is that Article 24.1 does not specify who should give “particular consideration” to the special situation of LDCs and whether LDCs can invoke this provision as a third party.
Bangladesh, being a least-developed country, brought the first case under this Article to the DSU against India, challenging India's imposition of anti-dumping measures against the import of batteries from Bangladesh.Footnote 129 This case was settled at the consultation stage;Footnote 130 therefore, it is too early to analyse how this article would operate and how a panel would interpret it.Footnote 131
In the case of United States – Subsidies on Upland Cotton,Footnote 132 Benin and Chad invoked Article 24.1 as third parties in their intervention at the appeal stage of a dispute between the United States and Brazil. Brazil alleged that the United States had violated the SCM Agreement and Article III:4 of the GATT 1994. Benin and Chad argued before the AB that the United States’ upland cotton subsidies eventually increased the United States’ world market share, which caused serious prejudice to the economies of the West African countries by reducing theirs.Footnote 133 Benin and Chad sought to persuade the AB to support the removal of United States subsidies and their adverse effects, not only in relation to Brazil but also in respect of Benin and Chad.Footnote 134 The AB stated that “[it] fully recognize[s] the importance of [Article 24.1 of the DSU]”.Footnote 135 Ultimately, however, the AB found that it was unable to consider Benin and Chad's request as a third party since the AB found it was not necessary to rule on Brazil's appeal regarding the interpretation of the phrase “world market share” in Article 6.3(d) of the SCM Agreement. The AB found that the condition to adhere to the request of Benin and Chad was not met.Footnote 136
The second sentence of Article 24.1 states that “members shall exercise due restraint in raising matters under these procedures involving a least-developed country member”.Footnote 137 However, it is unclear whether Article 24.1 refers to developed or developing countries or both developed and developing countries that will exercise due restraint. The third sentence of Article 24.1 states:
If nullification or impairment is found to result from a measure taken by a least-developed country Member, complaining parties shall exercise due restraint in asking for compensation or seeking authorization to suspend the application of concessions or other obligations pursuant to these procedures.Footnote 138
This third sentence is interesting because it is designed to exempt an LDC from an action for suspension of concessions against an LDC, indicating the preoccupation of the drafters to frame SDT provisions as exemption provisions. This shows that the drafters should have realized that LDCs require more assistance as a complaining party due to their lack of legal, technical, and logistic resources.
E. Technical Assistance and SDT provision
Article 27.2 of the DSU is the only provision concerning technical assistance to developing countries where the onus is imposed on the WTO Secretariat to provide assistance in the form of “additional legal advice and assistance in respect of dispute settlement” when requested by a developing country. Article 27.2 provides that “the Secretariat shall make available a qualified legal expert from the WTO technical cooperation services to any developing country Member which so requests”.Footnote 139 In coordination with the Institute for Training and Technical Cooperation, which coordinates WTO's technical assistance and training programmes,Footnote 140 the secretariat arranges for the services of two consultants to provide legal assistance to developing countries.Footnote 141 However, the flow of legal advice and assistance could be problematic when both parties are developing countries, given that, as per Article 27.2, the Secretariat needs to maintain its impartiality while providing legal assistance to developing countries. The Advisory Centre on WTO Law (ACWL), established in 2001 as an organization independent of the WTO, provides legal assistance in WTO law to LDCs and thirty-nine developing countries that are currently members of the ACWL.Footnote 142 Its assistance to developing countries in all stages of dispute settlement and all capacities as complainants, respondents, and third parties is commendably bridging the gaps in technical assistance provided by the WTO.Footnote 143 However, the legal services provided by ACWL are not enough to overcome the shortcomings of the SDT provisions in the DSU. Hence, in Part IV, the article suggests a way forward for effective SDT provisions to reinforce the trade's development aspect, particularly concerning LIDCs and LDCs.
II. Why Reimagine the SDT Provisions in the DSU and the Way Forward
Part II underscored that SDT provisions in the DSU require adaptation to meet the needs of the WTO's LIDCs and LDCs. In recent years, China's rising economic and geopolitical power has become a concern for most developed countries, particularly the United States. To strip the advanced developing countries of their SDT, the Trump administration circulated a communication to all WTO members in February 2019, calling for reform of the SDT in the WTO to reflect the differences between developing countries at different stages of development.Footnote 144 The United States’ proposal on differentiation among developing countries found vehement opposition from ten such countries – China, India, South Africa, Venezuela, Laos, Bolivia, Kenya, Cuba, Pakistan, and the Central African Republic – each of which maintained their stance on the persisting gap between developed and developing countries, despite some developing countries’ impressive achievements.Footnote 145 Other developed members, such as the European Union,Footnote 146 Norway,Footnote 147 and Canada,Footnote 148 took a middle course and proposed a reimagination and reform of SDT beyond the binary terms of developed and developing countries.
The debate over the concept, scope, parameters, and beneficiaries of SDT has proved to be a bottleneck in WTO negotiations, evidenced by a note of frustration from Ambassador Kadra Ahmed Hassan (Djibouti), chairperson of the CTD, on the lack of proactive engagement from all WTO members.Footnote 149 The group of 90 countries (G90): the African, Caribbean, and Pacific (ACP) group; the African group; and the LDC group – submitted agreement-specific proposals focusing on ten specific issues out of 155 total SDT provisions in the covered agreements and WTO instruments.Footnote 150 Interestingly, the group of 90 did not include the DSU in these proposals, indicating their disappointment with the SDT provisions in the DSU to uphold the WTO's development objectives, instead focusing on operationalizing ambiguous SDT provisions in other agreements. The major developed members of the WTO – the United States, the European Union, the United Kingdom, Australia, Japan, and the Republic of Korea – regarded these proposals as archaic, rejecting the need for further negotiations.Footnote 151 Underlying this divide is the deep-rooted discordance with the concept of SDT.
SDT has been considered by developing countries and LDCs as “an institutional right for developing members”,Footnote 152 “a non-negotiable right of all developing countries”,Footnote 153 “a treaty-embedded right”,Footnote 154 and an “integral part of the multilateral trading system”.Footnote 155 Some developed members are ready to consider SDT as a “fundamental pillar of the WTO”Footnote 156 and a “fundamental tenet and principle of the WTO”Footnote 157 and have recognized the needs of SDT for LDCs and other developing countries that can demonstrate their special needs.Footnote 158 Nevertheless, these views do not necessarily accord with recognizing SDT as “an entitlement and right of developing countries”.
Turning to the DSM of the WTO, in many ways, the transition from the GATT system to the current WTO system has been central to enabling the panel and the AB to interpret the covered agreements in a development-friendly manner, upholding the preamble of the WTO Agreement. Previously, the dispute settlement procedure under the GATT 1994 lacked a set of central principles and was premised on a power-orientated, diplomatic system whereby disputes were resolved by one party exerting dominance or influence over the other. This approach led to the embedded inequality in the GATT system since large, influential nations had a distinct advantage in the dispute settlement process. Developing countries preferred to have a rule-based system in the GATT.Footnote 159 However, due to the dissatisfaction of the EC and the United States with the GATT system, rather than the need to overcome these inequalities, the rules on mandatory and impartial dispute settlement between parties were incorporated into the DSU.Footnote 160 Therefore, the DSU has largely transformed the dispute settlement system from a diplomatic, power-oriented system to a legalized, rules-based system as set out in the relevant negotiated agreements.Footnote 161 However, diplomacy is still part of the system.Footnote 162
The DSM, labelled as the “jewel in the [WTO's] crown” and the “most powerful and most significant international” adjudicatory system,Footnote 163 is ironically beyond the reach of LIDCs and LDCs. According to a list compiled by the WorldTradeLaw.net database, since the establishment of the WTO in 1995 until 2010, low-income countries have been complainants in twenty-six disputes. Between 1995 and 2008, they were respondents in twenty-four disputes out of 607 under the DSU.Footnote 164 They have been absent from the DSM since 2011. Among the members that participated as low-income countries, there was the predominant presence of India, a complainant in fourteen disputes and a respondent in thirteen disputes,Footnote 165 followed by Pakistan,Footnote 166 Nicaragua,Footnote 167 and Guatemala,Footnote 168 with their limited experience with the DSM. The database now shows that these countries are no longer in the low-income category. Only Bangladesh, as an LDC, filed a WTO complaint against India, which was settled at the consultation stage in a mutually agreeable manner.Footnote 169
Between 1995 and this article's submission date, high-income members were complainants in 362 disputes and respondents in 345; upper-middle-income members were complainants in 147 disputes and respondents in 155; and lower-middle-income members were complainants in 88 disputes and respondents in 83.Footnote 170 The database shows increasing participation in dispute settlement by upper-middle-income members, such as Argentina, Brazil, China, Colombia, Dominican Republic, Mexico, Russia, Turkey, and Malaysia, and lower-middle-income members, such as India, Indonesia, Tunisia, Ukraine, Morocco, and Vietnam.
The near absence of many LIDCs and LDCs from the dispute settlement system does not imply that the trade measures of other WTO members did not aggrieve them. Instead, it indicates that LDCs are unable to have recourse to the system.Footnote 171 Some might attribute this lack of participation to the meagre share of LDCs in international trade: 0.2 per cent of total WTO exportsFootnote 172 and 0.3 per cent of WTO imports.Footnote 173 However, the value of this trade is undoubtedly significant to these countries since they house a large number of the world's population.
The reasons behind the lack of participation of LIDCs and LDCs in dispute settlements are well-documented in the literatureFootnote 174 and can be broadly classified into four categories. First, the lack of human and economic capital, including legal expertise, coupled with the enormous cost of litigation. Second, is the lack of vigilant private sectors to leverage disputes through their respective governments and public-private partnerships. Third, more political will is needed to bring a case against an economically more powerful country. Fourth, the lack of effective and equitable remedies, particularly the lack of retaliatory capacity required to enforce a decision of the panel and the AB.Footnote 175 In essence, WTO remedies are grossly inadequate for LIDCs and LDCs since compensation is voluntary and does not retrospectively cover the loss flowing from the delay in implementing a decision.Footnote 176 Proposals for retrospective monetary compensation by the African countries and LDCs fell on deaf ears. Shaffer, Busch, and Reinhardt rightly phrased this as constraints of “law, money and politics”.Footnote 177
This article does not examine the reasons for lower participation by LIDCs and LDCs. Instead, it focuses its attention on the SDT provisions in the DSU. The participation statistics, coupled with the structural constraints for the utilization of the DSM, reinforce the argument that SDT provisions were incorporated into the DSU to facilitate the participation of developing countries. This article seeks to reimagine the SDT provisions within the DSU to achieve the development objectives of the WTO's preamble. The article suggests two sets of recommendations: first, secondary lawmaking and second, progressive interpretation by the WTO adjudicative bodies. Both processes are complementary. This article seeks to borrow ideas from three seminal works by Mavroidis on WTO lawmaking and legal interpretation,Footnote 178 Rolland on progressive interpretations of the SDT provision,Footnote 179 and Crawford and Keen's work on treaty interpretation techniques.Footnote 180
A. Secondary Lawmaking
We will look at the avenues of secondary lawmaking and then possible reform of the SDT articles in the DSU. A detailed discussion of the decision-making process in the WTO is beyond the scope of this article.Footnote 181 In the WTO, the authority to make decisions on all matters is bestowed on the Ministerial Conference.Footnote 182 Article IX:2 of the WTO Agreement provides for the Ministerial Conference and the General Council, the highest organs of the WTO, which can adopt interpretations of the WTO Agreements, including the DSU, by a three-quarter majority of its members. Mavroidis regarded them as legally binding secondary laws in a hierarchy of WTO law where the primary laws are the covered agreements.Footnote 183
Apart from the highest WTO organs, the lower-ranked committees, such as the CTD, acting within their parameters, can arguably make secondary laws by adopting decisions and recommendations by the SDT, which are normative in character, to regulate transactions and establish regulatory standards between parties.Footnote 184 The General Council established the CTD on 31 January 1995 to work as a “focal point for consideration and coordination of work on development in the [WTO] and its relationship to development-related activities in other multilateral agencies”.Footnote 185 The secondary lawmaking power of the CTD can be deduced from the mandate under Article IV:7 of the WTO Agreement and paragraph 44 of the Doha Ministerial Conference to review the SDT provisions in the WTO agreements periodically and to report to the General Council to strengthen them and make them more precise, effective, and operational.Footnote 186 It can also consider any issues regarding the “application or use” of the SDT provisions in the WTO agreements in favour of developing countries and, in particular, for LDCs.Footnote 187
The Bali Ministerial Conference of December 2013 established a monitoring mechanism to operate in dedicated sessions of the CTD “to analyse and review the implementation” of SDT provisions.Footnote 188 The mechanism can make “recommendations” to the relevant WTO bodies proposing “actions to improve the implementation” of SDT provisions and initiate negotiations on the improvement of SDT provisions under review.Footnote 189 Its recommendations form part of the annual report of the CTD to the General Council.Footnote 190 In making recommendations, the mechanism cannot alter or affect the rights or obligations of WTO members under the covered agreements.Footnote 191
The authority of the CTD and the mechanism to review the SDT provisions and to submit an annual report to the General Council includes an objective assessment of the effectiveness of the SDT provisions and making recommendations to the General Council for their effectiveness. The legal value of such recommendations is still being determined. While we do not have any case where the WTO adjudicatory bodies have had the opportunity to consider any recommendations from the CTD, on some occasions, the panel favourably considered the decision and recommendation of WTO committees, such as the Committee on Balance of Payments and the Antidumping Committee.Footnote 192 Mavroidis considered these decisions to be secondary law due to the absence of a quorum requirement for such committees and subsidiary bodies, unlike the General Council, which complies with the quorum requirement in making decisions.Footnote 193
Moving to the reform of the SDT provisions in the DSU, this article proposes that the CTD could engage in secondary lawmaking through its reviews and reports to the General Council in the areas identified below to make the SDT provisions fulfil the development objectives of the WTO.
First, Article 4.10 could be fleshed out by including illustrations of the problems and interests of developing countries. This will give more guidance to WTO members when they enter into consultations with an LIDC and LDC. To overcome the unenforceability of Article 4.10, in 2003, India submitted a proposal to make Article 4.10 mandatory by replacing the word “should” with “shall”, thereby mandating members to give special attention to the particular problems and interests of developing country members in the consultation process.Footnote 194 Though such a reform would indeed mandate consideration of the interests of developing countries, India's proposal does not illustrate the particular interests of developing countries that require consideration. Without clarifying the interests and concerns to be considered, WTO members and decision-makers will remain relatively unguided in applying Article 4.10.Footnote 195 Members should also be required to explain how they have considered the interests of developing countries in the consultation stage.
Second, Articles 12.10 and 12.11 should apply in proceedings before the panel and the AB. This should be mandatory for the panel and the AB to allow extended time for LIDCs as complainants, respondents, and third parties. This will incentivise these countries to be involved in the dispute settlement as third parties and gain experience and expertise from that place.
Third, Article 12.11 can be a gateway to invoke relevant SDT provisions in the covered agreements. When an LIDC or LDC is a party to a dispute or participates as a third party, the panel and the AB must mandatorily consider relevant SDT provisions. The panel and the AB must not bypass consideration of the provisions on the grounds of judicial economy. Article 12.11 should not require an LIDC or LDC to raise an SDT provision in the covered agreement specifically; such countries do not have the legal expertise to identify a specific SDT provision. Whenever an LIDC or an LDC is a party to the dispute or is a third party, the panel and the AB must consider a relevant SDT provision and record how they have considered the SDT provisions in their decision-making. It is important to consider these provisions when the other party to the dispute is a developed country or a high- or mid-income developing country. If an LIDC or an LDC raises this provision, they should not be restricted to including these provisions in their terms of reference; they should be able to raise this at any stage of the proceedings.
Fourth, Article 24 should include LIDCs within its ambit to offer more special treatment at all stages of dispute settlement. This provision should be available to LIDCs not only as a party to the dispute but also as third parties. This is highly important for accommodating the interests of developing countries as third parties since this will eventually enable them to gain expertise and confidence in dispute settlements. LIDCs and LDCs could utilize their expertise as third parties to identify and pursue a dispute as a complainant.
Fifth, Article 27.2 can be amended to provide priority treatment to LIDCs and LDC when they request legal assistance in dispute settlement, particularly against developed and middle-income developing countries.
B. Progressive Treaty Interpretations
In this section, we will look at the scope of treaty interpretation by the WTO adjudicating bodies, critically examine the current approach to treaty interpretation, and support progressive or dynamic treaty interpretation by applying purposive and evolutive interpretative approaches flowing from the principle of effectiveness. Devoid of any lawmaking power,Footnote 196 the WTO adjudicating bodies can interpret SDT provisions in the DSU and the covered agreement according to Article 3.2 of the DSU, which states:
The Members recognize that [the dispute settlement system] serves to preserve the rights and obligations of Members under the covered agreements and to clarify the existing provisions of those agreements in accordance with customary rules of interpretation of public international law.Footnote 197
Article 3.2 of the DSU inscribes limitations on the interpretative power of the WTO adjudicatory bodies with the words “[r]ecommendation and rulings of the DSB cannot add to or diminish the rights and obligations provided in the covered agreements.”Footnote 198
The reference to “customary rules of interpretation of public international law” undoubtedly refers to the principles contained in the 1969 Vienna Convention on the Law of the Treaties (VCLT)Footnote 199 since most of these provisions have evolved as customary international law.Footnote 200 Articles 31 and 32 of the VCLT embody the rules of treaty interpretation. Article 31(1) states: “A treaty shall be interpreted in good faith in accordance with the ordinary meaning to be given to the terms of the treaty in their context and in the light of its object and purpose.”Footnote 201
Article 32 of the VCLT provides supplementary means of treaty interpretation when applying Article 31 leads to an ambiguous and unreasonable interpretation. The VCLT provides general interpretative rules, which could be elaborated in the context of international trade law, human rights, or environmental law.Footnote 202 This opportunity was seized upon by the AB in United States – Shrimp by crafting a hierarchical means of treaty interpretation:
A treaty interpreter must begin with, and focus upon, the text of the particular provision to be interpreted. It is in the words constituting that provision, read in their context, that the object and purpose of the states parties to the treaty must first be sought. Where the meaning imparted by the text itself is equivocal or inconclusive, or where confirmation of the correctness of the reading of the text itself is desired, light from the object and purpose of the treaty as a whole may usefully be sought.Footnote 203
WTO Adjudicating bodies have developed a “compartmentalized approach”Footnote 204 focusing on the textual interpretation of treaties, heavily relying on the ordinary meaning of the terms.Footnote 205 In this approach, the panel and the AB rarely apply the context, object, and purpose of the WTO Agreement and supplementary means of interpretation.Footnote 206 Such textual interpretation and the reluctance to apply purposive interpretation explains why development has been relegated as a side issue of the WTO.Footnote 207
This article argues that WTO adjudicating bodies should interpret SDT provisions by construing the ordinary meaning of terms in the context of the overall WTO Agreement.Footnote 208 The context of the treaty, as per the VCLT Article 31(2), includes its preamble. Similarly, the object and purpose of the treaty can also be identified in the preamble of the WTO Agreement as well as the covered agreements. The VCLT Article 31(3) expands the means of treaty interpretation, by stating that, along with the context, the adjudicating bodies “shall take into account” (a) any subsequent agreement between the parties and (b) any subsequent practice in the application and interpretation of treaty provisions. The VCLT Article 31(3) also includes “any relevant rules of international law applicable in relations between the parties” as an interpretative element. The WTO adjudicating bodies classified preambles in various covered agreements as “object and purpose of the treaty” under Article 31(1) of the VCLT, and common WTO practice after 1995 as “subsequent practice” under Article 31(3) of the VCLT.Footnote 209
Article 32 of the VCLT encapsulates the supplementary means of treaty interpretation:
Recourse may be had to supplementary means of interpretation, including the preparatory work of the treaty and the circumstances of its conclusion, in order to confirm the meaning resulting from the application of Article 31, or to determine the meaning when the interpretation according to Article 31:
(a) leaves the meaning ambiguous or obscure; or
(b) leads to a result which is manifestly absurd or unreasonable.Footnote 210
The interpretative elements envisaged in this Article are not limited to travaux preparatoires of a treaty, as evidenced by the word “including”. Therefore, in the WTO context, this provision, which has attained the status of a rule of customary international law,Footnote 211 accommodates an extensive variety of interpretative elements for the adjudicating bodies.Footnote 212 Mavroidis established that the WTO adjudicating bodies had classified acts by WTO organs, informal agreements between WTO members, decisions by international courts, and decisions by domestic courts as “supplementary means of implementation”, falling under Article 33 of the VCLT.Footnote 213
Article 3.2 of the DSU and the VCLT Articles 31 and 32, construed together, show an inevitable link to the wider public international law for the interpretation of SDT provisions. Pauwelyn argued for construing WTO law as part of the wider public international law.Footnote 214 Howse convincingly argued that if WTO provisions are interpreted and applied in clinical isolation from the rest of the public international law, they will be repugnant for application to the present concerns of WTO members.Footnote 215 As we look at the domain of public international law, we observe three approaches of treaty interpretation that the WTO adjudicating bodies should apply to interpret SDT provisions.
First, the International Court of Justice adopted the approach of purposive interpretation of treaties by inquiring about the object and purpose of the treaties beyond the ordinary meaning of the text.Footnote 216 In the context of interpretations of the SDT provisions, the WTO adjudicating bodies need to ask this significant question: why were these SDT provisions incorporated in the DSU and other covered agreements and how are they linked with the WTO preamble?
Second, both the European Court of Human Rights (ECHR) and the International Court of Justice (ICJ) applied evolutive interpretation of treaties in light of present-day conditions and, on some occasions, in preference to a textual approach.Footnote 217 WTO adjudicating bodies can similarly ask this question: should the SDT provisions be interpreted in light of the current situation and level of participation of the WTO's LIDCs and LDCs?
Third, the ICJ adopted the principle of effectiveness in treaty interpretation, which is intertwined with the purposive and evolutive approaches.Footnote 218 This principle implies that treaties should be interpreted to give practical and effective meaning to the treaty's purpose. Lauterpacht observed that the principle had been applied in both national and international jurisprudence in the sense of “liberal interpretation” as opposed to “restrictive interpretation” and, in respect of national jurisprudence, gave examples from the English and United States courts.Footnote 219 WTO adjudicating bodies should also interpret SDT provisions to make them effective in achieving the development objectives of the WTO.
As discussed earlier, Article 12.11 of the DSU can pave the way for the WTO adjudicating bodies to consider, interpret, and apply SDT provisions in the covered agreements and decisions, such as the Enabling Clause. While examining the SDT provisions in the DSU in Part IV, we observed that Articles 4.10 and 21.2 used the word “should”, which characterizes them as “best effort” or “best endeavour” provisions. The hortatory provisions have been considered as not creating a binding legal obligation.Footnote 220 Article 4.10 of the DSU states that members “should” give special consideration to the particular concerns of developing countries. Similarly, Article 21.2 uses the word “should” when the arbitrator needs to pay attention to the particular challenges of developing countries. Again, the words “particular attention” used in these two provisions and the words “particular considerations” used in Article 27.2 are also vague. There are many examples of this type of best endeavour provisions in the WTO Agreements.Footnote 221 For instance, Article 12.6 of the Agreement on Technical Barriers to Trade states:
Members shall take such reasonable measures as may be available to them to ensure that international standardizing bodies, upon request of developing country Members, examine the possibility of and, if practicable, prepare international standards concerning products of special interest to developing country Members.Footnote 222 (Emphasis added.)
Phrases such as “as may be available to them” reduce the obligatory force of the word “shall”. To some extent, the “best endeavour” language dissuades developing countries from raising these provisions in dispute settlement, which raises questions about the purpose of these provisions’ very existence.
The WTO adjudicatory bodies can go beyond the textual interpretation of these provisions and interpret them contextually according to the object and purpose of these provisions. In this context, the adjudicatory bodies can draw parallels from environmental law, where most provisions are on a “best endeavour” basis, albeit interpreted as creating legal obligations. Inspirations can be drawn even from national precedence. For instance, as Rolland observed, in Commonwealth of Australia v State of Tasmania,Footnote 223 the majority of the judges of the High Court of Australia interpreted the language of Articles 4 and 5 of the World Heritage Convention as “[i]t will do all it can to this end” and “each state party shall endeavour, in so far as possible, and as appropriate for each country” – creating a binding legal obligation for the state parties for the protection and conservation of the cultural and natural heritage.Footnote 224 Mason J clarified that state parties may have discretion to decide what measures are necessary and appropriate to carry out the obligation. Still, they do not have discretion as to the obligation itself, which makes performance a legal obligation, or at least akin, for the state parties.Footnote 225 This analogy could be applied to interpreting SDT provisions as creating legal obligations to consider the problems and interests of developing countries. These best endeavour provisions create a duty of due diligence for the WTO adjudicating bodies and WTO members.Footnote 226 However, in the current dilemma with the AB, when the United States has been effectively blocking the appointments of AB members as of December 2019 on the grounds of, inter alia, following precedents, taking a legalistic approach, and overreaching its authority by non-textual interpretation of the WTO agreements,Footnote 227 the possibility of a progressive interpretation of the SDT provisions remains bleak. Hence, in the current vacuum, more potential lies with secondary lawmaking.
III. Conclusion
The wider membership of the WTO gives the organization legitimacy for regulating trade and social and economic relations among countries at different stages in their economic development. However, the fundamental pillar of the WTO – its SDT provisions – is at the centre of the negotiating deadlock between developed and developing members of the WTO. The 12th Ministerial Conference of the WTO in 2022 could not adopt any decision on SDT provisions apart from repeating the rhetoric in paragraph 2 of the MC12 Outcome Document: “[w]e reaffirm the provisions of special and differential treatment for developing country members and LDCs as an integral part of the WTO and its agreements”.Footnote 228
In the 12th Ministerial Conference, the WTO members agreed with the central theme of this article that “[s]pecial and differential treatment in WTO agreements should be precise, effective and operational”.Footnote 229 This article addresses the challenges facing LIDCs and LDCs in the WTO dispute settlement process due to these provisions’ uncertain, ineffective, and non-operational nature. One might argue, why bother? These countries hardly participate in the dispute settlement system. This article counter-argues that the ineffectiveness of these provisions contributes to the lack of utilization of the WTO laws’ strongest aspect – their enforceability.
Despite being clearly aimed at assisting developing countries in the dispute settlement system, the DSU's SDT provisions suffer from ambiguity and practical inefficacy, which undermines the ability of developing countries to effectively invoke SDT provisions at all stages of the WTO dispute settlement process.Footnote 230 This article analyses WTO cases where developing countries made “development arguments”, invoking SDT provisions in the DSU at the consultation, litigation, and arbitration phases. But consideration of these provisions by the WTO panel, the AB, and the arbitrators is not always satisfactory. This article identifies the reasons behind the scant consideration of SDT provisions in their ambiguous texts with the predominant adoption of the word “should”. Some SDT provisions, such as Article 12.11, have the potential to make all SDT provisions in other WTO agreements enforceable. This article highlights the ambiguous nature of Article 12.11 by examining the panel reports. Similar ambiguities were found regarding the interpretation and application of Article 21.2, where arbitrators were not convinced by the submissions of developing countries and required more concrete evidence of developing countries’ specific interests.
From its detailed examination of the SDT provisions in the DSU, this article argues that these provisions need more clear direction on how development concerns should be prioritized, which are ineffective in assisting LIDCs and LDCs in dispute settlements. A critical evaluation of the adjudicating body's approaches in interpreting and applying these provisions highlights a significant gap in realizing the development objectives of the WTO.
To address this challenge, this article proposes two sets of recommendations: first, secondary lawmaking by the CTD through its review and reports to the General Council and second, a progressive interpretation of the SDT provisions by the WTO adjudicating bodies to give them more strength, purpose, and meaning. In this context, the article suggests that the WTO adjudicating bodies need to go beyond the textual interpretation and apply a purposive and evolutive interpretation along with the principle of effectiveness. The Outcome Document of the 12th Ministerial Conference of the WTO included a rhetorical pledge to revive “a fully and well-functioning dispute settlement system accessible to all members by 2024”.Footnote 231 Strikingly, even this rhetorical commitment omitted the reference to the AB, indicating a less hopeful future for the progressive interpretation of SDT provisions. Until a solution is reached on the appellate mechanism in the WTO, secondary lawmaking remains the only option to move forward with the SDT provisions in the DSU. This article reignites the debate on the SDT provisions of the WTO and provides some concrete ideas for reimagination. Finally, the authors echo Rolland in arguing that WTO law should not be used merely for balancing the economic interests of WTO members.Footnote 232 The law should be interpreted to uphold the development objectives of the organization enshrined in its preamble because these objectives constitute major terms based on which members joined the social and economic contracts of the WTO.
Acknowledgements
The authors would like to thank the reviewers for their comments.
Funding statement
None.
Competing interest
The authors declare none.
Sharmin TANIA is Lecturer at Curtin Law School, Curtin University, Perth, Australia.
Meika ATKINS is an Associate at the State Administrative Tribunal of Western Australia, Perth, Australia.
Robert CUNNINGHAM is Professor at Curtin Law School, Curtin University, Perth, Australia.
Ajith ANAWARATNA is a former High Court Judge of Sri Lanka.
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