Trade, Law and Development: Vol. IV, No. 2

Winter, 2012
Vol. IV, No. 2 Trade, Law and Development
ARTICLES Ernst-Ulrich Petersmann, Human Rights and International

Economic Law
Mavluda Sattorova, Investment Treaty Breach as
Internationally Proscribed Conduct: Shifting Scope, Evolving
Objectives, Recalibrated Remedies?
Surendra Bhandari, Doha Round Negotiations: Problems,
Potential Outcomes and Possible Implications
NOTES AND Daniel Gervais, Challenges in Intellectual Property

COMMENTS Governance: Providing the Right Incentives in the Quest for
Global Innovation
Mitsuo Matsushita, A Note on the Appellate Body Report
in the Chinese Minerals Export Restrictions Case
Felicity Hammond, A Balancing Act: Using WTO Dispute

Settlement to Resolve Regional Trade Agreement Disputes
BOOK REVIEW Nicolas Lamp, A Review of Sonia E. Rolland, Development

at the World Trade Organization (Oxford Univ. Press 2012)
ISSN : 0976 - 2329

eISSN : 0975 - 3346
Trade, Law and Development
Vol. 4, No. 2 2012

PATRON
Justice N. N. Mathur
FACULTY-IN-CHARGE
Yogesh Pai
EDITORS-IN-CHIEF
Meghana Chandra Shreya Munoth
EDITORS
Lakshmi Neelakantan Prianka Mohan Neha Reddy
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ASSOCIATE EDITORS
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COPY EDITORS
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CONSULTING EDITORS
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Aman Prateek Bhattacharya Jayant Raghu Ram
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Daniel Magraw B. S. Chimni M. Sornarajah
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Published by
The Registrar, National Law University, Jodhpur
ISSN : 0976-2329 | eISSN : 0975-3346
Trade, Law and Development
Felicity Hammond, A Balancing Act: Using
WTO Dispute Settlement to Resolve Regional
Trade Agreement Disputes
4(2) TRADE L. & DEV. 421 (2012)

A BALANCING ACT: USING WTO DISPUTE SETTLEMENT TO

RESOLVE REGIONAL TRADE AGREEMENT DISPUTES
FELICITY HAMMOND
This note outlines a proposal for creating and maintaining a strong and balanced
international trade law framework. The author argues that the institutional balance
between the judicial and legislative arms of the international trade law system has been
tipped. In the World Trade Organization (WTO), as the rule-making body remains in
a decade-long deadlock, the specter of judicial activism is raised as the WTO dispute
settlement system (WTO DSS) attempts to adequately address the evolving needs of its
Members. In contrast, although most Bilateral and Regional Trade Agreements
(RTAs) include dispute resolution mechanisms, it appears the parties are largely
continuing to rely on the WTO DSS to provide a judicial check. In order to address
these issues and restore equilibrium, this note proposes that disputes under RTAs are
referred to the WTO DSS for resolution. If implemented, this proposal would provide
the WTO DSS with an expanded mandate to consider emerging issues in international
trade law, and provide RTAs with access to a robust judicial mechanism to resolve
disputes. This proposal encourages increased engagement and interaction between the two
systems and in doing so, creates a path for de facto convergence in trade law
jurisprudence. The key strengths of both systems—a robust judicial mechanism provided
by the WTO and a dynamic source of international trade law provided by the ever-
expanding network of RTAs—are aligned.


B.A./LL.B (Hons) (Melbourne), LL.M. (Harvard). This article is written in a personal
capacity as part of the LL.M. degree at Harvard Law School and presents the views of the
author only. The author can be contacted at: felicityhammond[at]gmail.com.
422 Trade, Law and Development [Vol. 4: 315
TABLE OF CONTENTS
I. INTRODUCTION
II. IMBALANCE IN THE INTERNATIONAL TRADE LAW SYSTEM
A. Imbalance in the WTO
B. Imbalance in RTAs
C. Existing Proposals for Reform
III. RESTORING THE BALANCE: A PROPOSAL
A. Jurisdiction under the WTO
B. Jurisdiction under RTAs
C. Choice of Forum
D. Applicable Law
E. Dispute Resolution Procedures
1. Consultations
2. Panel Procedures
3. Appellate Body Procedures
4. Participation of Third Parties
F. Adoption of Reports, Implementation, and Suspension of Concessions
1. Adoption of Panel and Appellate Body Reports
2. Implementation of Recommendations
3. Suspension of Concessions
G. Resourcing
IV. RESTORING THE BALANCE: ANALYSIS
A. Expanding the Mandate of the WTO DSS
B. Strengthening Judicial Review under RTAs
C. Creating De Facto Convergence
V. CONCLUSION
I. INTRODUCTION
The institutional balance between the judicial and legislative arms of the
international trade law system has been tipped. In the World Trade Organization
(WTO), the failure to break the impasse in the Doha Round has left its ‘legislative’
body practically inert. This has saddled the WTO dispute settlement system (WTO
DSS) - the comparatively active ‘judicial arm’ of the WTO, with the burden of
potentially having to stretch its mandate to ensure that the existing rules meet the
evolving needs of WTO Members. Meanwhile, reciprocal trade agreements
between two or more trading partners (Regional Trade Agreements or RTAs) have
become the vehicle through which trading powers are pursuing their trade
liberalisation goals.1 Although legislative action in the international trade law

1 As on Jan. 15, 2012, 511 notifications of RTAs (counting goods and services
separately) had been received by the GATT/WTO. Of these, 319 were in force, see WORLD
Winter, 2012] Using WTO DS to Resolve RTA Disputes 423
sphere has moved to the negotiation of RTAs, judicial review under RTAs has
been comparatively inactive. Most RTAs incorporate dispute settlement
provisions, however, RTA parties have relatively rarely invoked them, apparently
choosing instead to use the WTO DSS to resolve issues that may also fall within
the scope of their RTA.2
Against this background, the author outlines a proposal for the restoration of
the institutional balance in the international trade law system. Specifically, the
author proposes that disputes that arise under RTAs are referred to the WTO DSS
for resolution. The WTO DSS would provide an established dispute resolution
institution, including access to a standing Appellate Body experienced in
international trade law.3 However, the rules to be applied to resolve the dispute
would be those of the relevant RTA—there would be no explicit merging or
hierarchical application of RTA or WTO rules in the event of overlap. In order to
implement this proposal, the WTO Dispute Settlement Understanding (DSU),4
would need to be amended. Parties would also need to structure dispute resolution
mechanisms in their RTAs to provide for disputes to be resolved by the WTO
DSS.
The proposal would provide equilibrium in the international trade law system
by injecting the WTO with the power to resolve disputes implicating international
trade related issues and rules that extend beyond the current, static WTO mandate.
At the same time, it would provide a robust judicial avenue, including appellate

TRADE ORGANIZATION, Regional trade agreements, http://www.wto.org/english/
tratop_e/region_e/region_e.htm (last visited Apr. 16, 2012) [hereinafter WTO on RTAs].
2 David Morgan, Dispute Settlement Under PTAs, Political or Legal?, in CHALLENGES TO
MULTILATERAL TRADE: THE IMPACT OF BILATERAL, PREFERENTIAL AND REGIONAL

AGREEMENTS 241, 257 (Ross P. Buckley et al. eds., 2008) [hereinafter Morgan]. See also
WORLD TRADE ORGANIZATION, WORLD TRADE REPORT 2011, THE WTO AND
PREFERENTIAL TRADE AGREEMENTS: FROM CO-EXISTENCE TO COHERENCE 176 (2011)
[hereinafter WORLD TRADE REPORT].
3 Henry Gao and C. L. Lim have also proposed that that one way to ‘save the WTO
from the risk of irrelevance’ due to the proliferation of RTAs is for RTA disputes to be
resolved by the WTO DSS. See Henry Gao & C. L. Lim, Saving the WTO from the Risk of
Irrelevance: The WTO Dispute Settlement Mechanism as a ‘Common Good’ for RTA Disputes, 11 J.
INT’L ECON. L. 899, 899 (2008) [hereinafter Gao & Lim]. Colin B. Picker also includes
referral to the WTO DSS as one element of a broader proposal to deal with what he
perceives as the threat to the WTO posed by RTAs. See Colin B. Picker, Regional Trade
Agreements v. The WTO: A Proposal for Reform of Article XXIV to Counter this Institutional Threat,
26 U. PA. J. INT'L ECON. L. 267 (2005) [hereinafter Picker].
4 Understanding on the Rules and Procedures Governing the Settlement of Disputes,
Apr. 15, 1994, Marrakesh Agreement Establishing the World Trade Organization, Annex 2,
1869 U.N.T.S. 401 [hereinafter DSU].

review, for the resolution of disputes under RTAs. Importantly, the WTO and the
network of RTAs would no longer operate as silos. The proposal draws on the
relative strengths of both systems and increases the level of interaction between
them. Through the sharing of a dispute resolution institution, and the introduction
of both “horizontal” and “vertical” consistency, the path is set for incremental de
facto convergence in trade law jurisprudence.
This note is structured as follows: Part I will set out the problem of
‘imbalance’ in the international trade law system; Part II will outline in detail the
proposal for addressing this imbalance through the referral of disputes under
RTAs to the WTO DSS; and Part III will analyse this proposal and discuss the
ways in which it will restore equilibrium and increase the interaction between the
two regimes. The proposal positions the WTO and RTAs not as competing forces,
but as complementary systems that can be productively used to reinforce each
other.
II. IMBALANCE IN THE INTERNATIONAL TRADE LAW SYSTEM
A. Imbalance in the WTO
The WTO institutional structure can broadly be divided into a legislative

branch and a judicial branch.5 At the peak of the legislative branch is the General
Council—the highest rule and decision-making body. The General Council,
through the Trade Negotiations Committee, is currently engaged in negotiating
updated rules and improved market access through the Doha Development
Round. The ‘Doha Round’ is to be negotiated as a “single undertaking” where
“nothing is agreed until everything is agreed”.6 Having been initiated in 2001, more
than a decade of negotiations has passed, and the Doha Round has failed to reach

5 Frieder Roessler, noted in 2000 that, “[t]he framers of the WTO Agreement carefully
negotiated a more complex institutional structure under which separate judicial and
political bodies are empowered to take binding decisions that confirm, define or alter the
rights and obligations of Members.” See Frieder Roessler, The Institutional Balance Between the
Judicial and Political Organs of the WTO, in NEW DIRECTIONS IN INTERNATIONAL ECONOMIC
LAW, ESSAYS IN HONOUR OF JOHN H. JACKSON 325 (Marco Bronckers & Reinhard Quick
eds., 2000) [hereinafter Roessler]. See also Steve Charnovitz, Judicial Independence in the World
Trade Organization, in INTERNATIONAL ORGANIZATIONS AND INTERNATIONAL DISPUTE
SETTLEMENT: TRENDS AND PROSPECTS 219, 219 (Laurence Boisson de Chazournes et al.
eds., 2002), available at http://www.worldtradelaw.net/ articles/charnovitzjudicial.pdf;
Lorand Bartels, The Separation of Powers in the WTO: How to Avoid Judicial Activism, 53 INT’L &
COMP. L. Q. 861 (2004) [hereinafter Bartels].
6 See World Trade Organization, The Doha Round, http://www.wto.org/english/
tratop_e/dda_e/dda_e.htm (last visited Apr. 16, 2012).

a successful conclusion. As a result, the current rules governing WTO Members

have become increasingly outmoded in two principal ways. First, ambiguous, non-
binding and occasionally conflicting text in the WTO Agreement7 mean that in
many areas, the goals of WTO Members cannot be achieved in the most efficient
and effective way. For example, questions have been raised over how to give
content to “special and differential treatment” obligations as regards developing
country Members in the text.8 Another ambiguity in the text that has resulted in a
series of disputes being brought before the WTO DSS is whether Members can
legally use ‘zeroing’ as a methodology for calculating antidumping duties against
foreign products.9 Secondly, the WTO Agreement does not cover a number of
trade-related areas that are of increasing concern for WTO Members. For example,
there are only limited disciplines relating to foreign investment,10 and there are no
detailed substantive provisions in relation to labour standards11 and the

7 The Marrakesh Agreement Establishing the World Trade Organization, Apr. 15,
1994, 1867 U.N.T.S. 154 [hereinafter WTO Agreement] sets out the rules governing the
WTO Members. The WTO Agreement is an umbrella agreement that includes a number of
other agreements on Annexed are the agreements on goods, services, intellectual property,
dispute settlement, the trade policy review mechanism and plurilateral agreements as
annexes.
8 The Special Session of the Committee on Trade and Development was established
by the Trade Negotiations Committee in February 2002 to fulfill the Doha Declaration
mandate to review all special and differential treatment provisions “with a view to
strengthening them and making them more precise, effective and operational.” See Article
44, World Trade Organization, Ministerial Declaration of 14 November 2001,
WT/MIN(01)/DEC/1, 41 I.L.M. 746 (2002). For a discussion of some of the issues
regarding special and differential treatment provisions, see Manuela Tortora, Special and
Differential Treatment and Development Issues in the Multilateral Trade Negotiations: The Skeleton in
the Closet (Draft, Jan. 2003), available at http://www.acp-eu-trade.org/library/files/Tortora-
Manuela_EN_012003_UNCTAD_SDT-and-Development-Issues-in-the-Multi lateral-
Trade-Negotiations-The-Skeleton-in-the-Closet.pdf.
9 For a discussion of the controversy surrounding zeroing, see Daniel J. Ikenson,
Zeroing In: Antidumping's Flawed Methodology under Fire, 11 CATO INSTITUTE FREE TRADE
BULLETIN (2004), available at http://www.cato.org/ publications/free-trade-
bulletin/zeroing-antidumpings-flawed-methodology-under-fire.
10 The Agreement on Trade Related Investment Measures, Apr. 15, 1994, Marrakesh
Agreement Establishing the World Trade Organization, Annex 1A, 1868 U.N.T.S. 186 sets
out some rules that apply to the domestic regulations applicable to foreign investors but is
limited to disciplining certain measures such as local content requirements. Also the
General Agreement on Trade in Services, Apr. 15, 1994, Marrakesh Agreement
Establishing the World Trade Organization, Annex 1B, 1869 U.N.T.S. 183, regulates the
supply of services by a foreign company setting up operations in a host country.
11 See World Trade Organization, Labour standards: consensus, coherence and controversy,
http://www.wto.org/ english/thewto_e/whatis_e/tif_e/bey5_e.htm (last visited, Apr. 16,

2012).

environment.12
In contrast, the WTO DSS has continued to function in an active and

relatively efficient manner. The WTO DSS provides an independent and rule-
based formal dispute settlement mechanism. Any dispute arising under the WTO
Agreement must be resolved in accordance with the DSU.13 Under the DSU, in the
event of a dispute, the parties must engage in compulsory consultations before the
complainant Member can request the Dispute Settlement Body (consisting of all
WTO Members) to establish an ad hoc panel to hear the dispute.14 Either party can
make an appeal to the standing Appellate Body.15 If the respondent Member does
not comply with recommendations made in the final adopted report within the
required reasonable period of time, and if negotiations to agree on compensation
have failed, the complainant Member may request authorisation to impose
retaliatory measures by suspending concessions or obligations (for example, by
raising tariffs on certain imports).16 As of October 31, 2012, the WTO DSB had
adopted 177 dispute settlement reports, and in most cases Members have
implemented recommendations made against them in these reports.17 As noted by
David Jacyk, the WTO DSS has “been used frequently and with great success”.18

12See World Trade Organization, The environment: a specific concern, http://www.wto.org/
english/thewto_e/ whatis_e/tif_e/bey2_e.htm (last visited Apr. 16, 2012).
13 DSU art. 23.1 provides:
[w]hen Members seek the redress of a violation of obligations or other

nullification or impairment of the benefits under the covered agreements
. . . they shall have recourse to, and abide by the rules and procedures of
this Understanding.” DSU art. 1.1 further provides: “The rules and
procedures of this Understanding shall apply to disputes brought
pursuant to the consultation and dispute settlement provisions of the
agreements listed in Appendix 1 to this Understanding (referred to in
this Understanding as the “covered agreements”). The rules and
procedures of this Understanding shall also apply to consultations and
the settlement of disputes between Members concerning their rights and
obligations under the provisions of the Agreement Establishing the
World Trade Organization (referred to in this Understanding as the
“WTO Agreement”) and of this Understanding taken in isolation or in
combination with any other covered agreement.” The covered
agreements include the WTO Agreement and the multilateral and
plurilateral agreements annexed to it (see DSU, Appendix 1).
14 DSU art. 4.3 and art. 6.
15 DSU art. 17.1 and art. 17.4.
16 DSU arts. 20, 21 and 22.
17 See World Trade Organization, Dispute Settlement Body, Annual report (2012) - Overview
of the state of play of WTO disputes – Addendum, WT/DSB/58/Add.1, available at http://www.

wto.org/english/tratop_e/dispu_e/dispu_e. htm#disputes.
18 David Jacyk, The Integration of Article 25 Arbitration in WTO Dispute Settlement: The Past,
The relative success of the WTO DSS is not guaranteed. The juxtaposition in
terms of activity between the legislative and judicial branches of the WTO means
the WTO DSS is burdened with the task of interpreting and applying the existing
rules in a way that meets the evolving needs of WTO Members. In doing so, the
WTO DSS runs the risk of stepping over the boundary of its legitimate mandate.
As noted by Lorand Bartels, “[p]olitical stalemate and an active dispute settlement
system is truly a recipe for judicial activism.”19 Richard H. Steinberg et al. suggest
that the WTO DSS has engaged in “gap filling”, described as “judicial law-making
on a question for which there is no legal text directly on point” and “ambiguity
clarification”, “judicial law-making on a question for which there is legal text but
that text needs clarification”.20 Judicial activism by the WTO DSS has been
described as “an imperfect substitute for liberalisation through legislative action.”21
The WTO DSS faces a legitimacy dilemma no matter which way it turns: facing
one direction, and choosing to be cautious by strictly interpreting the existing text,
it risks failing to address the needs of its constituent Members, facing the other
direction, it risks extending beyond its legitimate mandate as defined by its
constituent Members. As C. Johan Westburg highlights, the WTO DSS is in a
“more precarious position the longer it needs to shoulder the burdens of lacking
political progress”.22 The imbalance between the legislative and judicial branches of
the WTO system has been acknowledged by a number of scholars.23 Less

Present and Future, 11 AUSTL. INT’L L. J. 235, 236 (2008) [hereinafter Jacyk]. See also, Bruce
Wilson, Compliance by WTO Members With Adverse WTO Dispute Settlement Rulings: The Record
to Date, 10 J. INT’L ECON. L. 397 (2007).
19 Bartels, supra note 5 at 866. Richard H. Steinberg and Judith L. Goldstein have
noted, “[a]s the prospects for broad legislative rule-making have declined, judicial
lawmaking has become more common, especially through interpretation of unclear rules
and the filling of gaps in WTO agreements.” See Richard H. Steinberg & Judith L.
Goldstein, Negotiate or Litigate? Effects of WTO Judicial Delegation on U.S. Trade Politics 3 UCLA
Sch. of Law, Law-Econ Research Paper No. 14 (2007) [hereinafter Steinberg & Goldstein].
20 Politics in the GATT/WTO System: Legislative and Judicial Processes, in THE EVOLUTION
OF THE TRADE REGIME: POLITICS, LAW, AND ECONOMICS OF THE GATT AND THE WTO
61, 75 (John H. Barton et al. eds., 2008). See also, Richard H. Steinburg, Judicial Lawmaking at
the WTO: Discursive, Constitutional, and Political Constraints, 98 AM. J. INT’L. L. 247, 248 (2004).
21 Steinberg & Goldstein, supra note 19, at 4.
22 See C. Johan Westberg, The WTO DSM – The Dangerous Link of Doha stalemate and
Environmental Pressure, Trade and Environment Nexus (Jan. 5, 2012), http://www.tradeand

environmentnexus.com/the-wto-dsm-the-dangerous-link-of-doha-stalemate-and
environmental-pressure [hereinafter Westberg].
23 See e.g., Debra P. Steger, Why Institutional Reform is Necessary, in REDESIGNING THE
WORLD TRADE ORGANIZATION FOR THE TWENTY-FIRST CENTURY 1, 4 (Debra P. Steger

ed., 2009): “The efficiency of the dispute settlement system contrasted with the inefficiency
of the decision-making and rule-making system has created an imbalance in the
institutional structures of the WTO.” See also Westberg, id.; Debra P. Steger & Natalia

recognized is the fact that the same problem, in reverse, is emerging in the
expanding web of RTAs.24
B. Imbalance in RTAs
With the Doha Round stalling, the legislative action in the international trade
sphere has shifted to the negotiation of RTAs. Over 300 RTAs were in force as of
January 2012. Moreover, of all WTO Members, only Mongolia has not entered
into an RTA.25 RTAs have provided a comparatively efficient means by which
Members can pursue their liberalisation goals through the negotiation of both
reduced trade barriers and also improved rules. The contents of RTAs can
generally be characterised into provisions that either reflect existing WTO rules,
such as bans on quantitative restrictions or incorporate and build on existing WTO
rules, such as improved intellectual property protections; or include new areas not
covered by WTO rules, such as provisions relating to investment, labour and the
environment. Provisions in the last two categories have been characterised as
“WTO-plus” and “WTO-X” respectively.26
As most RTAs incorporate some form of dispute settlement mechanism,27 a

“web” of bilateral trade dispute resolution mechanisms has resulted.28 While there
are differences in the dispute resolution mechanisms, most RTAs provide for one
of the three general dispute settlement mechanisms: diplomatic settlement; referral

Shpilkovskaya, Internal Management of the WTO: Room for Improvement, in REDESIGNING THE
WORLD TRADE ORGANIZATION FOR THE TWENTY-FIRST CENTURY 129, 130 (Debra P.
Steger ed., 2009); Marco C. E. J. Bronckers, Better Rules for a New Millennium: A Warning
Against Undemocratic Developments in the WTO, 2 J. INT’L ECON. L. 547 (1999).
24 See REDESIGNING THE WORLD TRADE ORGANIZATION FOR THE TWENTY-FIRST
CENTURY 6 (Debra P. Steger ed., 2009), which highlights this point. See also, Morgan, supra
note 2, at 3, where he states “[i]t is only recently that dispute settlement mechanisms in
RTAs [other than NAFTA] have been the focus of attention.”
25 See WTO on RTAs, supra note 1. According to the World Trade Report, starting
from the 1950s the number of active PTAs increased more or less continuously to about 70
in 1990. Following this time the number of PTAs proliferated with approximately 300
PTAs in force in 2010. See WORLD TRADE REPORT, supra note 2, at 6. Mongolia is
currently in negotiations with Japan for an economic partnership agreement. See Ministry of
Foreign Affairs of Japan, Japan-Mongolia Economic Partnership Agreement (EPA)
http://www.mofa.go.jp/policy/ economy/fta/mongolia.html.
26 WORLD TRADE REPORT, supra note 2, at 128.
27 Amelia Porges, Dispute Settlement, in PREFERENTIAL TRADE AGREEMENT POLICIES
FOR DEVELOPMENT: A HANDBOOK 467, 467 (Jean-Pierre Chauffour & Jean-Christophe

Maur eds., 2011) [hereinafter Porges].
28 See Peter Drahos, Weaving Webs of Influence: The United States, Free Trade Agreements and
Dispute Resolution, 41 J. WORLD TRADE 191, 192 (2007) [hereinafter Drahos].

to standing tribunals; or ad hoc arbitration.29 Most RTAs provide negotiation as a

first step in the resolution of disputes and ad hoc arbitration is the most popular
choice of mechanism.30 Only in rare cases do dispute resolution mechanisms
provide for referral to standing judicial bodies31, and most do not incorporate an
avenue for appeal.32 Interestingly, in some RTAs, parties have chosen to provide
for differing dispute resolution mechanisms depending on the nature of the
provision. For example, under the North American Agreement on Environmental
Cooperation (“NAAEC”), the environmental side agreement to North American
Free Trade Agreement (“NAFTA”), a separate dispute resolution mechanism with
unique procedures and remedies was created.33
Despite carefully negotiated provisions, “relatively few” disputes have been

resolved under the dispute settlement mechanisms of RTAs.34 According to a 2011
World Bank report surveying RTAs, there have been only 25 known decisions of
RTA dispute settlement panels relating to 16 disputes.35 One explanation is that
RTAs are relatively new and so there has been less time for disputes to arise.36 A
second explanation is that parties are resolving disputes under RTAs via diplomatic
means.37 Thirdly, RTA parties may simply prefer to bring disputes under the WTO
DSS. It appears that RTA parties are continuing to have “frequent recourse” to the
WTO DSS to resolve disputes, even if same set of facts or measures may also
constitute a breach of the provisions of an RTA between the parties.38 This

Porges, supra note 27, at 467.
29
Id. at 468, 471. See also WORLD TRADE REPORT, supra note 2, at 172.
30
31 Examples include the Andean Tribunal of Justice, the Caribbean Court of Justice
and the ECOWAS Community Court of Justice. See generally, Porges, supra note 27, at 471-
73.
32 Some examples include the European Court of Justice [“ECJ”] for the EU customs
union and the Tribunal Permanente de Revisions, created under Mercosur’s Protocol of
Olivos. Under the ASEAN Protocol on Enhanced Dispute Settlement Mechanism, panel
decisions may be appealed to an appellate body to be formed by the ASEAN Economic
Community Council. However, this Appellate Body has not been formed. The 2004
Protocol has almost never been invoked because the decision to refer the dispute to a panel
requires consensus among all ASEAN members including both the complainant and
respondent parties. See generally, Porges, supra note 27, at 481.
33 North American Agreement on Environmental Cooperation, part V, 32 I.L.M. 1480
(1993).
34 Porges, supra note 27, at 492.
35 Id.
36 Porges, id., suggests that parties postpone implementation of ‘difficult’ sectors
meaning disputes about these sectors will also be postponed.

37 Id.
38 According to the World Trade Report, on average, about 30 per cent of WTO
disputes are between members that are party to the same PTA, see WORLD TRADE REPORT,

indicates that there is still a demand for some form of judicial dispute resolution,
but RTA mechanisms are currently not adequately addressing this demand. As
RTAs continue to proliferate and mature, it is unlikely that parties can continue to
turn to the WTO DSS, which currently exists outside the RTA framework, as a
proxy judicial check. Disputes will inevitably arise under the WTO-plus and WTO-
X provisions, which are currently beyond the reach of the WTO DSS. In addition,
if parties did begin to bring disputes with more regularity under the RTA dispute
settlement mechanisms, this would raise the risk of fragmentation. Ad hoc, discrete
dispute settlement panels may interpret substantively similar or identical provisions
in different RTAs in different ways. Further, if RTA parties continue to bring
certain disputes to the WTO DSS, leaving RTA dispute settlement panels to
resolve disputes under WTO-plus and WTO-X provisions, this may create an
additional schism. The lack of adequate and strong dispute resolution provisions in
RTAs indicates that as in the WTO, there is a fundamental imbalance between the
judicial and legislative arms.
C. Existing Proposals for Reform
Various solutions have been proposed to address this issue of imbalance. The
first set of approaches focuses on constraining the judicial arm of the WTO in
order to curb judicial activism.39 One way to achieve this is to return to non-
binding dispute settlement to resolve more controversial or ‘political’ issues. For
example, Lorand Bartels suggests that WTO dispute resolution bodies be granted
the power to reject cases that would interfere with the powers of the political
organs and to suspend cases to allow for determination in a political forum. 40
However, to the extent the adoption of these approaches manages to create the
required balance, it would only be temporary: the pressure placed on the institution
as a result of its failure to keep pace with its Members would continue to build. In
the WTO context, the focus should not be on “watering down”41 the power of the

supra note 2, at 176.
39 See Roessler, supra note 5, at 387. Roessler states “[j]ust as modern states, the WTO
must ensure that its judicial organs exercise their powers with due regard to the jurisdiction
assigned to the other parts of its institutional structure.”
40 Bartels, supra note 5, at 894-95. Bartels acknowledges that “[t]hese solutions are
perhaps not optimal, but for so long as WTO Members continue their practice of voting by
consensus on every issue, they may provide a useful safety valve in a system in which the
allocation of powers between the political quasi-judicial organs has become seriously
unbalanced.” Claude Barfield has also proposed a number of reforms including a system of
resolution of certain disputes by political negotiation, see CLAUDE. E. BARFIELD, FREE
TRADE, SOVEREIGNTY, DEMOCRACY: THE FUTURE OF THE WORLD TRADE
ORGANIZATION 112-13 (2001).
41 Thomas Cottier, A Two-Tier Approach to WTO Decision-Making, in REDESIGNING THE
WORLD TRADE ORGANIZATION FOR THE TWENTY-FIRST CENTURY 43, 51 (Debra P.

judicial arm. Instead, it is suggested that the solution lies in providing a new
mandate and source of rules for the judicial arm to interpret.
A second set of approaches focuses on strengthening the rule-making power

of the WTO’s existing legislative arm, for example, through reforms to its
decision-making and negotiation processes.42 Although further consideration of
ways to bolster the WTO’s decision-making processes is advocated, fundamental
changes to the mode of negotiations and decision-making processes of the WTO
may be practically difficult to achieve, at least in the near future. Further, suggested
approaches are limited in that they do not address the issue of imbalance in RTAs.
A third set of approaches attempts to build on the dynamism of RTAs as a way to
reconcile perceived tensions between RTAs and the WTO system.
“Multilateralising regionalism” has been promoted as a general approach under
which RTA-related initiatives are aligned and consolidated over time into the
WTO framework.43 Joost Pauwelyn has suggested that the WTO DSS may be “one
of the main engines” for mutlilaterising regionalism.44 Colin Picker has suggested
that the WTO DSS be used to resolve RTA disputes, and where WTO and RTA
rules overlap, “the WTO Rules shall be supreme.”45 The key problem with this
hierarchical approach is that it pits RTAs as a threat to the WTO system that must
be curtailed. In contrast, it is suggested that the proliferation of RTAs is something
that is irreversible and so the focus should be on constructive solutions to draw
on, rather than repress, the dynamism of RTAs. As noted by Pauwelyn, “[r]ather
than lament their inconsistency with WTO principles . . . it may be more fruitful to
think of how the web of WTO and co-existing regional agreements can be
untangled so as to give maximum effect to both.”46 Pauwelyn proposes an
approach based on “interaction and dialogue” where the integration of regional
developments into WTO activities is achieved by, for example, keeping the
jurisdiction of the WTO DSS limited to determining violation claims under the
relevant treaty, but “allowing WTO dispute settlement panels to interpret and

Steger ed., 2009).
42 For example, in noting that “the proper balance should be achieved through an
enhanced political process rather than watering down dispute settlement”, Thomas Cottier
has proposed a “two-tier” approach with the separation of negotiations over rule-making
from tariff concessions and the division of rules into different categories. The two-tier
approach is combined with different modes of decision-making depending on the category
of rules. See id. See also, Marco C. E. J. Bronckers, Better Rules for a New Millennium: A Warning
Against Undemocratic Developments in the WTO, 2 J. INT’L ECON. L. 547 (1999).
43 WORLD TRADE REPORT, supra note 2, at 54.
44 Joost Pauwlyn, Legal avenues to 'multilateralising regionalism': beyond article XXIV, in
MULTILATERALIZING REGIONALISM CHALLENGES FOR THE GLOBAL TRADING SYSTEM

368, 393 (Richard Baldwin & Patrick Low eds., 2009) [hereinafter Pauwelyn].
45 Picker, supra note 3, at 268.
46 Pauwelyn, supra note 44.

apply WTO rules with reference to regional arrangements agreed to by both

parties”.47 Under this approach, the two dispute resolution mechanisms remain
separate at an institutional level. Although treating the two sources of law as
parallel rather than hierarchical is appropriate, the ability of a “dialogue” approach
to achieve convergence is limited. Building on the ‘multilateralising regionalism’
approaches, an alternative approach will be set out that capitalises on the key
strengths of both the WTO and RTAs in order to achieve the necessary balance in
the international trade law system.
III. RESTORING THE BALANCE: A PROPOSAL
It is suggested that equilibrium and integration in the international trade law

system can be achieved by positioning the WTO as an institution to resolve
disputes arising under both the WTO Agreement and RTAs. From a legal
perspective, similar to the ‘dialogue approach’, the two sets of rules will continue
to run in parallel, at least at a formal level, with neither set of rules explicitly
overriding the other. From a procedural perspective, to the extent possible, the
provisions of the DSU would govern the conduct of the dispute under the RTA.
In order to save the WTO from being “eclipsed into irrelevance” by RTAs, Gao
and Lim have similarly proposed positioning the WTO as an “enforcer” by using
the WTO dispute settlement mechanism as a venue for resolving some disputes
between RTA parties.48 Gao and Lim suggest their proposal is a “possible starting
point for deeper reflection”.49 In order to contribute to this discussion, the key
features of such a system and how it would function will now be outlined in detail.
A. Jurisdiction under the WTO
As noted, the DSU limits the jurisdiction of the WTO DSS to the settlement
of disputes under the WTO Agreement.50 Therefore, in order to implement this
proposal, the DSU would need to be amended such that it governs the resolution
of disputes arising under RTAs (including RTAs that include non-WTO Members
as parties) as well that are referred to it by an RTA party. The WTO DSS would
also have the power to determine whether the dispute was properly referred to it
under the terms of the RTA.
Under Article X.8 of the WTO Agreement, the DSU may only be amended
upon approval of a proposal to do so by consensus of all WTO Members (acting
through the Ministerial Conference). It cannot be denied that any attempt to

47 Id. at 326.
48 Gao & Lim, supra note 3, at 899.
49 Id. at 922.
50 See WTO Agreement, supra note 7.
amend the DSU is likely to meet resistance. Only one attempt has been made to
amend the WTO Agreement, and this proposed amendment does not yet formally
apply as the required threshold of acceptance by two-thirds of the Membership for
that particular type of amendment has not yet been met.51 Further, given the state
of the Doha Round, Members may not have the appetite to accept an ad hoc
amendment. In relation to his proposal, Picker acknowledged, “the likelihood of
the adoption of a formal amendment, this one in particular, to the WTO is
unlikely”.52 However, there are some indications that Members may consider this
proposal a viable option to deal with the problem of imbalance and the general
interaction between RTAs and the WTO. First, as almost all WTO Members have
entered into an RTA, the Membership clearly has an interest in introducing
reforms that aim to maintain the stability and effectiveness of both systems.
Secondly, the issue of the interaction between RTAs and the WTO has proved to
be one area in which WTO Members have been willing to act. In 2006, as part of
the Doha Round Negotiations on Rules, the General Council agreed to adopt a
new transparency mechanism for regional trade agreements on a provisional
basis.53 WTO Director-General Pascal Lamy highlighted that this decision,
“reflects a growing level of concern regarding the consequences of a continuing
regionalisation of trade relations”.54 Despite the myriad of other issues on the
Doha Round negotiating table, the fact that Members were willing to make a move
on this particular issue indicates that they may be at least open to consider related
proposals. As time goes on, and as pressure increases, the impetus for this kind of
amendment may increase.
One possible question that may be raised as a consequence of a WTO dispute

settlement body agreeing to hear a dispute under an RTA is whether it will be
construed as tacitly accepting that the relevant RTA meets the applicable
‘exception’ for free trade areas and customs unions under Article XXIV of the
General Agreement for Tariffs and Trade (GATT) or ‘agreements liberalising trade
in services’ under Article V of the General Agreement on Trade in Services
(GATS).55 Although it is unlikely that agreeing to resolve an RTA dispute would be

51 On December, 6 2005, WTO Members approved an amendment to the TRIPS
agreement, making permanent a decision on patents and public health originally adopted in
2003. The deadline to accept this amendment has been extended on a number of occasions
and is currently December 31, 2013. See World Trade Organization, Members accepting
amendment of the TRIPS Agreement, http://www.wto.org/english/tratop_e/trips
_e/amendment_e.htm (last visited, Apr. 23, 2012).
52 Picker, supra note 3 at 318.
53 See, General Council, Transparency Mechanism for Regional Trade Agreements, WT/L/671
(Dec. 18, 2006).

54 Pascal Lamy, Foreward, in MULTILATERALISING REGIONALISM: CHANGES FOR THE
GLOBAL TRADING SYSTEM i, xiii (Richard Baldwin & Patrick Low, eds., 2009).
55 Article XXIV of the General Agreement on Tariffs and Trade, Apr. 15, 1994,

construed in this way, particularly if the WTO DSS has an express mandate to
accept the dispute, if it is considered necessary, the DSU could be amended to
include an express provision, for the avoidance of doubt, that a panel or the
Appellate Body in accepting a dispute under the RTA is not expressly or implicitly
ruling on the whether the RTA meets the relevant requirements under GATT 1994
or GATS. Gao and Lim have suggested that in addition to making it clear that the
WTO DSS is authorised hear disputes under RTAs, the RTA parties should also
grant the dispute settlement bodies the power to decide whether the RTA fully
complies with the requirements under these ‘exceptions’.56 Although the RTA
parties are free to include such a provision, this proposal does not include it as a
prerequisite to the WTO DSS hearing a dispute referred to it. If a WTO Member
has doubts about whether the relevant RTA meets the required thresholds, that
Member would still be free to invoke its existing right to challenge it under the
WTO rules, or alternatively, trigger scrutiny by the Committee on Regional Trade
Agreements which has been established with the purpose of monitoring RTAs.
B. Jurisdiction under RTAs
In order to implement this proposal, when concluding all future RTAs, state
parties will need to include a provision that provides that all disputes arising under
the RTA are to be referred to the WTO DSS for resolution in accordance with the
rules set out in the DSU. Parties can specify in the RTA any variations to the DSU
procedure that they wish to apply in relation to their particular RTA. For example,
parties may wish to maintain their own procedures and time frames with respect to
the initial consultation phase. Where necessary, RTA parties may also maintain the
flexibility to carve out certain provisions of the RTA from referral to the WTO
DSS, for example, disputes under investment or labour standards provisions could
continue to be resolved by a separate mechanism. However, such variations should

Marrakesh Agreement Establishing the World Trade Organization, Annex 1A, 1867
U.N.T.S. 187 [hereinafter GATT 1994], provides: “The provisions of this Agreement shall
not prevent, as between the territories of contracting parties, the formation of a customs
union or of a free-trade area.” Similarly, Article V of the General Agreement on Trade in
Services, Apr. 15, 1994, Marrakesh Agreement Establishing the World Trade Organization,
Annex 1B, 1869 U.N.T.S. 183 [hereinafter GATS] provides “this Agreement shall not
prevent any of its Members from being a party to or entering into an agreement liberalizing
trade in services between or among the parties to such an agreement.” Although these
provisions have been subject only to limited judicial scrutiny, they have generally been
treated as a green light for Members to enter into preferential trade agreements that meet
certain threshold requirements that would otherwise likely breach the obligation of non-
discrimination as between Members under the ‘most-favoured nation’ provisions under the
GATT 1994 and the GATS.
generally be kept to a minimum, and to the extent possible, the key provisions
regarding the panel and Appellate Body procedures, compliance and retaliation
should apply as provided for in the DSU.
The proposed dispute settlement provision should be included in RTAs

currently under negotiation as well as in ‘model’ RTAs relied on by larger trading
partners such as the United States and European Union as a basis for the
negotiation of future RTAs. In addition, given that over 300 RTAs have already
been concluded amongst key trading nations, to have full force, parties to existing
RTAs should consider amending the dispute resolution provisions to refer disputes
to the WTO DSS where possible. As noted by Picker, for his proposal to “come
close to achieving its goals”, it must also apply to “extant agreements”.57
Admittedly, given the understandable reluctance of parties to re-enter negotiations
for concluded RTAs, particularly for certain complex RTAs with relatively
entrenched dispute settlement mechanisms such as the European Union and
NAFTA, this is clearly a more difficult proposition than inclusion in new RTAs.
Hopefully, however, if this approach is adopted in new RTAs, parties to existing
RTAs will be more willing to sign on.
C. Choice of Forum
One key issue that has arisen in the context of overlapping WTO and RTA
provisions is the possibility of parallel proceedings. In some circumstances, a state
may technically be able to bring a dispute both to the WTO DSS and to the
existing RTA dispute settlement mechanism to resolve a claim for a breach of an
obligation that is substantively equivalent under both sets of agreements. The most
common approach taken by RTA parties to manage this risk is to include a choice
of forum clause in their RTA. The more common form of choice of forum clause
is a ‘fork in the road’ provision under which an RTA party may choose to take the
dispute either to the WTO DSS under the WTO Agreement or to the RTA dispute
settlement mechanism under the RTA rules. Once a party has commenced
proceedings under one system, it is barred from pursing its claim in the alternative
system. 58 An alternative approach is an ‘exclusive’ forum clause under which the
RTA designates either the RTA dispute settlement mechanism or the WTO DSS

Picker, surpra note 3, at 306.
57
For example, Article 2005.1 of the North American Free Trade Agreement
58
[“NAFTA”] provides: “[d]isputes regarding any matter arising under both this
Agreement and [GATT 1994] . . . may be settled in either forum at the discretion of
the complaining Party.” Article 2005.6 provides: “Once dispute settlement procedures
have been initiated under [this Agreement] or dispute settlement proceedings have
been initiated under the [GATT 1994], the forum selected shall be used to the
exclusion of the other.”

as the exclusive dispute resolution forum.59 Because a party may be liable for a
breach of the RTA if it chooses to ignore the choice of forum clause, the risk of
parallel claims is significantly mitigated. However, as the WTO is technically not
bound by the choice of forum clause in an RTA, it may continue to accept
jurisdiction to settle a claim even if it has already been adjudicated under the RTA
in breach of the choice of forum clause. A similar scenario arose in the Mexico–Soft
Drinks dispute where Mexico argued that the WTO panel should decline
jurisdiction on the basis that it was inextricably linked to a broader dispute already
brought under the NAFTA dispute settlement system. In a finding later upheld by
the Appellate Body, the panel noted it had no discretion to decline to exercise its
jurisdiction.60
Under this proposal, even though disputes under RTAs would technically be
brought to the WTO DSS as an institution, RTAs would still include a choice of
forum clause (whether ‘fork in the road’ or ‘exclusive’) under which a party can
either take its dispute to the WTO DSS under the WTO Agreement, or
alternatively, take a dispute to the WTO DSS under the RTA. By providing a single
institution to resolve both disputes, this proposal significantly decreases the risk of
parallel disputes and double remedies. First, the package of proposed amendments
to the DSU could include a provision that generally provides that a panel or the
Appellate Body must refuse jurisdiction if a dispute that is substantively equivalent
(appropriately defined) has already been brought before it, even if the dispute is
brought under a different set of rules. Even if this kind of amendment is not
feasible, an RTA party may be deterred from attempting to bring parallel claims
under my proposal. Assuming the relevant provisions are substantively equivalent,
a party may not reasonably expect a different result if panelists under the same
institution, and if appealed, the same Appellate Body, is deciding the dispute. DSU
Article 3.7 provides that the “aim of the dispute settlement mechanism is to secure
a positive solution to a dispute”. Although it is not clear, it may be possible that a
WTO panel or the Appellate Body may take a number of steps to prevent parallel
disputes or double remedies in the interests of securing a “positive solution”. For
example, a WTO dispute settlement body may rely on doctrine such as res judicata;61

See WORLD TRADE REPORT, supra note 2, at 173.
59
Appellate Body Report, Mexico — Taxes on Soft Drinks, WT/DS308/AB/R (Mar. 6,

60
2006), at 44-57.
61 See WORLD TRADE REPORT, supra note 2, at 174, which notes,
[C]ommentators have also referred to several international law doctrines

that could be used to avoid or resolve conflicts between overlapping
jurisdictions. The doctrine of res judicata or finality refers to situations
where a matter has been decided by a competent adjudicative body
barring its relitigation in subsequent proceedings. Lis Alibi Pendens . . .
refers to parallel proceedings and is a principle pursuant to which once a
dispute is pending in one forum, it cannot be brought before another
the use of its power under the DSU to consolidate complaints ‘related to the same
matter’;62 or its ability to determine whether the level of suspension of concessions
is equivalent to the level of nullification or impairment.63
D. Applicable Law
Although the rules under the WTO Agreement and an RTA are likely to
overlap in a number of areas, this proposal does not attempt to impose a hierarchy
between the two sources of law. As discussed, the relevant WTO dispute
settlement body would apply the law as set out in the agreement under which the
party brought the claim. If the complainant brought the dispute under the RTA,
the panel would apply the rules as set out under the RTA. Similarly, if a dispute
was brought under the WTO Agreement, the panel would apply the rules under
that Agreement. Under this approach, there may be scope for a dispute settlement
panel to take into account rules under parallel agreements in accordance with
Article 31 of the Vienna Convention on the Law of Treaties,64 however, the
substantive rules to be applied are those under the relevant agreement. This
approach contrasts with Picker’s approach which provides that “the [WTO] DSB
shall employ WTO jurisprudence to the extent of any inconsistency with the

forum. However, for these doctrines to apply, there must be an
“inextricable link” between the proceedings, which usually is understood
as an identity of the parties and of the issues.
The panel in India — Measures Affecting the Auto Sector, WT/DS146/R (Dec. 21, 2001)
discussed the applicability of res judicata in the WTO dispute settlement context. At 7.66,
the panel noted it
Therefore considers that for res judicata to have any possible role in
WTO dispute settlement, there should, at the very least, be in essence
identity between the matter previously ruled on and that submitted to the
subsequent panel. This requires identity between both the measures and
the claims pertaining to them. There is also, for the purposes of res
judicata, a requirement of identity of parties.
In that case the panel did not need to apply res judicata as it found that the relevant
previous dispute did not meet the requirements.
62 DSU art. 9.1.
63 Although it is not clear from the text of the DSU that a WTO dispute settlement
body would have this power, it is possible an arbitrator or panelist may determine that if
remedies have already been granted that are equivalent to the level of the relevant
nullification or impairment concerned, additional remedies are not required as this would
not necessarily achieve the “first objective of the dispute settlement mechanism” as set out
in DSU art. 3.7 to “secure the withdrawal of the measures concerned ”
64 DSU art. 3.2 provides that the DSS serves to “[c]larify the existing provisions of
those agreements in accordance with customary rules of interpretation of public

international law.” See, Pauwelyn, supra note 44.

[RTA] jurisprudence”.65 As discussed, this proposal is designed to draw on the

strengths of both the WTO and the RTA systems and does not attempt to secure
the WTO system as dominant as envisaged under a hierarchical approach. By
taking a parallel approach, the carefully negotiated substantive provisions under the
RTAs are preserved, meaning it is likely to be more politically acceptable to the
majority of WTO Members that have entered into RTAs.
E. Dispute Resolution Procedures
1. Consultations
In referring a dispute to the WTO DSS, the parties under an RTA could
specifically adopt the DSU provisions that govern consultations. Under the DSU,
if a party makes a request for consultations under the WTO Agreement, the other
party must respond within 10 days and enter into consultations within 30 days. If
consultations fail, after 60 days the complaining party may request the
establishment of a panel.66 As discussed, RTA parties could either adopt the
consultation provisions under the DSU, or alternatively, in order to preserve
additional flexibility, RTA parties could continue to use their own consultation
provisions as set out in the RTA and opt-in to the WTO DSS at the point of
establishing a panel in the event consultations fail.
2. Panel Procedures
Under this proposal, disputes under an RTA may be referred to a panel

established in accordance with the procedure in the DSU. Under the DSU,
following the consultations process outlined above, the complainant party may
request the DSB to establish a panel. The DSB must agree to this request unless
the DSB decides by consensus not to establish a panel.67 Panel members must have
the required qualifications and expertise and will be selected by the WTO
Secretariat.68 In the event of a dispute over the selection of panelists, the Director-
General of the WTO in consultation with the parties will determine the final
composition of the panel.69 The DSU procedures governing the panel process,
including time frames, the right to seek information, confidentiality of
deliberations and provisions regarding the interim review stage, will also apply to
the settlement of RTA disputes where possible.

66 DSU art. 4. There are various mechanisms under the DSU to shorten the
consultation period, such as by mutual agreement (DSU art. 4.7), in cases of urgency (DSU
art. 4.9), or if the party does not respond to a request for consultations (DSU art. 4.3).
67 DSU art. 6.1.
68 DSU arts. 8.1-8.6.
69 DSU art. 8.7.
The procedure for the selection of panelists under the WTO DSS represents a
relatively significant departure from the arbitration-style dispute settlement
approach taken in many RTAs. RTAs often adopt an ad hoc arbitration model
where each party to a dispute selects one arbitrator (who is usually a national of
that party) and then a ‘chair’ is selected in a neutral manner (for example, by
agreement of the parties, the arbitrators, or a neutral third person or institution).70
The advantage of the WTO DSS panelist selection procedure is that all three
panelists are appointed through a neutral process from a pool of persons that have
expertise in international trade law and usually have had experience as a panelist.
Also, as noted by Amelia Porges, because the panelist selection process under the
DSU involves selection by the Secretariat in the first instance, followed by
selection by the Director-General in the event of a dispute, these procedures
successfully prevent “moral hazard” which may arise under RTAs when a
defending party refuses to name its arbitrator or cooperate in the process.71
3. Appellate Body Procedures
A party to a dispute under an RTA will have the right to refer a dispute to the
standing Appellate Body following the panel procedures under this proposal. The
membership of the Appellate Body and procedures that apply to appellate review
will be as set out in the DSU. As noted, it is relatively rare for RTAs to provide
recourse to appeal. The availability of recourse to an experienced standing
appellate body will provide a robust avenue of judicial determination for RTA
parties, and, as will be discussed in Part IV, it will assist in ensuring some
consistency in international trade law jurisprudence.
Under the WTO DSS, third party Members that have a “substantial interest”
in a matter have limited rights to participate in that dispute.72 These rights include
the right to receive the written submissions of the parties to the first panel hearing
and to be heard by, and make submissions to, the panel and the Appellate Body.73
This proposal provides that third party Members would also have these rights in
relation to disputes brought to the WTO DSS under RTAs. Even though these
Members are not party to the RTA that is the subject of a dispute, given the
overlaps that often exist between RTAs and the WTO Agreement and also as
between RTAs, a number of Members are likely to have at least a “systemic”74

70 See Porges, supra note 27, at 484.
71 Id.
72 DSU art. 10.1.
73 DSU arts. 10.2, 10.3 and 17.4.
74 Third party Members that claim a ‘systemic interest’ in a dispute, rather than a

interest in the outcome. This approach generally supports the aim of increased
integration and interaction between the two international law regimes. If, however,
this aspect of the proposal proves to be not politically feasible, an alternative
approach would be to allow third party Members to participate, except if all
disputing RTA parties refuse to allow such participation.75
F. Adoption of Reports, Implementation, and Suspension of Concessions
1. Adoption of Panel and Appellate Body Reports
This proposal provides that the DSB will continue to be charged with
administering the rules and procedures under the DSU in relation to an RTA
dispute. Under the DSU, in order for reports issued by a panel and the Appellate
Body to be binding, they must be adopted by the DSB. Similar to the decision to
establish panels, unless all DSB parties by consensus agree not to adopt the report,
it will be adopted.76 This procedure would generally continue to apply to reports
issued in relation to RTA disputes. If a non-WTO Member is a party to an RTA,
then that party may also be included in the vote on whether to adopt the report. In
practice, given that the ‘winning’ party would have to vote against the adoption of
the report, it is unlikely that the involvement of other WTO Members will
substantively interfere with the dispute resolution process as between RTA parties.
However, as with the aspects of the proposal that continue to require DSB
approval for the establishment of panels and the allowance of third party
participation in RTA disputes, this process serves as an opportunity to increase the
linkages between the two systems and promotes the active engagement by the
broader WTO Membership with RTAs.
2. Implementation of Recommendations
The process for the implementation of recommendations in an adopted report

relating to an RTA dispute will largely reflect those set out in the DSU, including in
relation to setting the reasonable period of time for implementation, assessment of
compliance and surveillance by the DSB.77

substantial trade interest, are often granted permission to participate in a dispute. See Marc
L. Busch & Eric Reinhardt, Three’s a Crowd: Third Parties and WTO Dispute Settlement, 58
WORLD POL. 446, 451-52 (2006).
75 Gao and Lim have suggested a similar approach in relation to the participation of
third parties, “[s]uch an arrangement will . . . not only ensure the highest degree of support
among all parties who might have an interest in such cases, but also the highest degree of
uniformity between different cases as well.”See Gao & Lim, supra note 3, at 924.
76 DSU art. 17.14.
77 Refer generally to DSU art. 21.
3. Suspension of Concessions
Under the DSU, in the event a Member fails to bring its measure into
compliance with the WTO Agreement following a recommendation to do so by a
panel or the Appellate Body, the parties to the dispute must enter into negotiations
to agree on compensation, and in the event negotiations fail, the complainant party
may seek authorisation from the DSB to suspend concessions or other obligations
under the WTO Agreement.78 The level of the suspension must be equivalent to
the level of nullification or impairment.79 Under this proposal, a similar system in
relation to compensation and suspension of concessions would apply, but the
obligations or concessions to be suspended would be limited to those that exist
under the RTA. Some RTAs provide a variation to the DSU mechanism such as
the requirement under some U.S. RTAs to provide an annual monetary assessment
in lieu of the suspension of concessions.80 If considered necessary, the RTA parties
may specify particular modifications to the sanctions process under the DSU.
Although a number of RTAs already include remedies that involve the suspension
of concessions, some even reflecting the DSU approach, a number of RTAs do
not provide for the imposition of sanctions.81 By introducing direct access to
remedies that are backed up by a mechanism for judicial review (including
appellate review) and increased transparency via scrutiny by the WTO
Membership, my proposal may act to strengthen compliance under RTAs.
G. Resourcing
One of the issues currently facing the WTO DSS is the increasing workload
being placed on the institution, and in particular, the Appellate Body. Currently,
the WTO DSS is funded from the WTO budget supported by general WTO
Member contributions.82 In order to account for any increased strain on resources
due to disputes under RTAs, RTA parties that refer a dispute to the WTO DSS
could be required to contribute additional funds, for example, on a set fee or a per
day basis. The International Centre for the Settlement of Investment Disputes
(ICSID), which sets a schedule of fees to be paid by the parties to a dispute that is
referred to it, may be used as a possible model for this arrangement.83

DSU art. 22.
78
DSU art. 22.4.

79
80 See Porges, supra note 27, at 491.
81 Id., at 490-91.
82 See World Trade Organization, The WTO: Secretariat and Budget,
http://www.wto.org/english/thewto_e/secre _e/budget_e.htm (last visited Apr. 24 2012).
83 See ICSID, Schedule of Fees, http://icsid.worldbank.org/ICSID/FrontServlet?Request
Type=ICSIDDocRH&actionVal=scheduledFees&reqFrom=Main (last visited Apr. 24,

2012). Various mechanism may also be introduced to assist developing country Members

As the number and complexity of disputes increase, the WTO Appellate Body
increasingly has had to request extended time frames beyond those set out in the
DSU for the resolution of disputes.84 Currently the there are seven Appellate Body
Members appointed by the DSB.85 In order to deal with the increased pressure that
would result from the additional workload for the Appellate Body created by the
referral of RTA disputes to the WTO DSS, the number of Appellate Body
Members could be increased.86 The fees paid by RTA parties could go toward
subsidising the consequential increase in expenses. The DSU would need to be
amended to reflect any decision of the Members to increase the number of
Appellate Body Members—this amendment could be included in the bundle of
other DSU amendments proposed in this note.
In the next part, a critique of this proposal will be offered and how the
proposal will achieve its aim of rebalancing the international trade law system will
be outlined.
IV. RESTORING THE BALANCE: ANALYSIS

This proposal is fundamentally designed to restore the balance between the
judicial and legislative arms of the international trade law system to ensure its
sustainability. To achieve this, if implemented, the proposal would: provide the
WTO DSS with an expanded mandate to consider emerging issues of international
trade law; provide RTAs with access to a robust judicial mechanism to resolve
disputes between the parties; and encourage increased interaction between the two
systems, and in doing so, create a path for de facto convergence in trade law
jurisprudence. By drawing together the key strengths of both systems—the success
of the WTO dispute resolution system and the dynamism of RTAs in making
rules—a symbiotic relationship is created.

meet this fee, for example, the fee scale could be adjusted for Least Developed Countries
and Developing Countries.
84 For example, the WTO Appellate Body received some criticism due to the delays in
issuing its report in the complex Boeing and Airbus disputes. See, e.g., EU angered over WTO
delay of Boeing ruling, EU BUSINESS, (Jul. 8, 2010), http://www.eubusiness.com/news-eu/us-
aerospace-wto.5i3; Pilita Clarke, Airbus fears delay to Boeing report, FINANCIAL TIMES, (Dec.
20, 2009), http://www.ft.com/cms/s/0/8e491306-edaa-11de-ba12-00144feazb49a.html#
axzz1szBU7rk4.
85 DSU art. 17.1.
86 Other international tribunals have varying numbers of Members, for example, the
International Court of Justice is composed of 15 judges, see International Court of Justice,

Members of the Court, http://www.icj-cij.org/court/index.php?p1=1&p2=2 (last visited Apr.
24, 2012).
A. Expanding the Mandate of the WTO DSS
Facing roadblocks in the multilateral system, parties have detoured to RTAs to

achieve their trade liberalisation objectives. As discussed, one of the key
distinguishing features of RTAs is the inclusion of “WTO-plus” and “WTO-X”
provisions. By allowing the WTO DSS to resolve disputes between RTA parties,
questions of how to interpret provisions that reach beyond the existing WTO rules
will inevitably fall to WTO dispute settlement panels and the Appellate Body for
consideration. The judicial arm of the WTO will therefore have a legitimate
mandate to interpret emerging issues of importance in the international trade
regime whilst avoiding the specter of judicial activism.
Debra Steger states “looking into the future, a vibrant, relevant WTO would
have a mandate to deal with international economic regulation generally, not just
trade.”87 One normative concern that may be raised in response to my approach is
that the WTO DSS should not adjudicate WTO-plus and WTO-X provisions.
According to Youri Devuyst & Asja Serdarevic, the “WTO is partial in the sense
of being biased in favour of liberal trade values, to the detriment of broader
societal norms that are often expressed in regional agreements”.88 Robert Howse
and Kalypso Nicolaidis contend that instead of the WTO “transforming itself into
a socially just global economic government, by assimilating social and
environmental governance into its institutions”, what should be emphasised is the
“importance of non-WTO institutions and norms in treaty interpretation that
represent values other than free or freer trade”.89 Devuyst and Serdarevic conclude
that “[t]he limited range of competence of WTO law should lead to modesty in
proposals for expanded constitutional supervisory powers over RTAs”.90 Another
possible objection beyond the normative question is the practical question of
whether the WTO DSS can competently deal with WTO-X issues as it lacks
expertise in dealing with issues outside the trade sphere.
First, normative arguments about the danger of viewing “non-trade” issues

through a trade lens make an arbitrary distinction between ‘trade’ policies and

87 Debra P. Steger, Why Institutional Reform is Necessary, in REDESIGNING THE WORLD
TRADE ORGANIZATION FOR THE TWENTY-FIRST CENTURY 1, 10 (Debra P. Steger ed.,

2009).
88 Youri Devuyst & Asja Serdarevic, The World Trade Organization and Regional Trade
Agreements: Bridging the Constitutional Credibility Gap, 18 DUKE J. COMP. & INT’L L. 1, 56
(2007) [hereinafter Devuyst & Serdarevic]. See also, Jeffrey L. Dunoff, Constitutional Conceits:
The WTO’s ‘Constitution’ and the Discipline of International Law, 17 EUR. J. INT’L. L. 647 (2006).
89 Robert Howse & Kalypso Nicolaidis, Enhancing WTO Legitimacy: Constitutionalization
or Global Subsidiarity?, 16 GOVERNANCE 73, 75 (2003).

90 Devuyst & Serdarevic, supra note 88, at 60.

other policies such as social, developmental, economic, and environmental policies.

All of these policies are inextricably linked. This is demonstrated most clearly by
the fact that parties have chosen to include WTO-X provisions in RTAs—they are
making a clear statement that these issues should be viewed in the framework of
trade, at least in the context of the RTA. As the parties have already taken steps to
regulate the relationship between trade and broader issues under the RTA, the
WTO, in interpreting these provisions, would arguably not be taking steps beyond
the original intention of the parties. If parties to an RTA viewed an issue as
inherently political or specialised and therefore not suitable for resolution by the
WTO DSS, they could carve it out of the scope of the dispute resolution
provision, similar to the approach currently taken in some RTAs on certain issues
such as labour and environment.91 Secondly, on the practical question of whether
the WTO DSS could competently deal with issues outside its trade expertise, the
WTO DSS currently deals with a number of issues that may be viewed as falling
outside traditional trade issues such as border measures and tariffs. These issues
include behind the border measures such as sanitary and phytosanitary measures
and technical regulations as well as broader issues such as intellectual property. In
interpreting these issues, the WTO DSS may also call on experts under its express
power under DSU Article 1392 and have reference to existing international
instruments in the field.93 It is not such a stretch to expect that the WTO DSS
could competently deal with additional issues in RTAs other than ‘traditional’ trade
issues. In doing so, the WTO would in fact be responding to the modern demands
of world trading partners.
B. Strengthening Judicial Review under RTAs
Similar to explanations offered for why the WTO should not be used to
resolve WTO-plus or WTO-X issues under RTAs, scholars rely on a dichotomy
where RTAs are positioned as ‘political’ agreements and WTO agreements as
‘legal’ agreements in order to justify differences in approaches to dispute

See Porges, supra note 27, at 482-83.
91
DSU art. 13 provides that panels have a “right to seek information and technical
92
advice from any individual or body which it deems appropriate.” A panel may also “consult
experts to obtain their opinion on certain aspects of the matter. With respect to a factual
issue concerning a scientific or other technical matter raised by a party to a dispute, a panel
may request an advisory report in writing from an expert review group.”
93 For example, the Appellate Body in the dispute, United States - Import Prohibition of
Certain Shrimp and Shrimp Products, referred to existing international instruments including
international environmental agreements in interpreting the expression “exhaustible natural
resources” in GATT 1994 art. XX. The Appellate Body noted that that the words “must be
read in the light of contemporary concerns of the community of nations about the
protection and conservation of the environment.” See Appellate Body, United States - Import
Prohibition of Certain Shrimp and Shrimp Products, 129-130 WT/DS58/AB/R (Oct. 12, 1998).
resolution. As RTAs are inherently political, so the argument goes, it is not

appropriate to ‘judicialise’ them through formal dispute resolution systems. Rather
than take what John H. Jackson characterises as a judicial, “rule-oriented”
approach, a diplomatic, “power-oriented” approach to dispute settlement is more
appropriate.94 David Jacyk has advocated a roll back to from the formalized WTO
dispute settlement approach to an arbitration-based approach for “politically
charged issues”.95 Jacyk contends that for these types of issues, one of the main
disadvantages associated with judicial settlement and a right to appeal is that
“they may serve to entrench the position of the parties and foster inflexibility
within domestic political factions, creating potential hurdles to a negotiated
resolution”.96
It may be true that some of the flexibility and impetus to resolve disputes
diplomatically is reduced by the existence of a judicial model of dispute resolution.
However, there are a number of benefits to a judicial approach over a purely
diplomatic or ‘power-oriented’ approach. For example, a number of scholars have
advocated judicial dispute resolution processes as a way to level the playing field.97
A 2000 Report on the Future of the WTO by the Consultative Board to the WTO
Director-General notes: “[e]veryone has an interest in the continued success of the
WTO as an institution, but no group has a greater interest than the weak and the
poor.”98 Having analysed the various advantages and disadvantages between WTO
dispute settlement and dispute settlement under RTAs from the perspective of
developing countries, Peter Drahos concludes that the WTO dispute settlement
mechanism offers an advantage over bilateral dispute resolution as “the third-party
procedures of the DSU offer the smaller state the possibility of prevailing as part
of a coalition”.99
Judicial dispute settlement has significant advantages for the larger trading

94 See John H. Jackson, Perspectives on the Jurisprudence of International Trade: Costs and
Benefits of Legal Procedures in the United States, in JOHN H. JACKSON, THE JURISPRUDENCE OF
GATT AND THE WTO: INSIGHTS ON TREATY LAW AND ECONOMIC RELATIONS 277, 278
(2000).
95 Jacyk, supra note 18, at 239.
96 Id.
97 As noted by J. H. H. Weiler, “the new DSU makes legal resolution more attractive
to Members because, for example, it can equalize egregious disparities of power which exist
at the negotiation table”. See J. H. H. Weiler, The Rule of Lawyers and the Ethos of Diplomats:
Reflections on the Internal and External Legitimacy of WTO Dispute Settlement, 6 (Harvard Jean
Monnet Working Paper No. 9, 2000).
98 Peter Sutherland et al., The Future of the WTO, Report by the Consultative Board to the
Director General Supachai Panitchpakdi (2004), available at http://www.ipu.org/splz-e/wto-

symp05/future_WTO.pdf.
99 Drahos, supra note 28, at 193.

partners with greater bargaining power as well. At a basic level, if the provisions in
an RTA reflect to a large degree the interests of the more powerful party in the
negotiation, that party logically has an enhanced interest in seeing it enforced. For
example, a number of large capital-exporting states have eschewed diplomatic
espousal in favour of dispute settlement provisions that provide international
arbitration in order to protect their interests under bilateral investment treaties.100
Judicial dispute resolution may also be used by large trading states to ensure
domestic “policy lock-in” where the state leverages the threat of being challenged
under a formal dispute settlement system in order to counter domestic resistance
to the implementation of measures that are consistent with the state’s international
trade law obligations, but potentially harmful to specific domestic constituencies.101
Finally, judicial dispute settlement mechanisms may become more important for
current trading powers as the geopolitical landscape evolves and new world trading
powers emerge. For example, the United States is increasingly utilizing the WTO
DSS to challenge a measures implemented by China that it considers to be
inconsistent with WTO rules.102
Importantly, the fact that parties are increasingly incorporating ‘judicial’ style
dispute resolution provisions in their RTAs indicates that parties do not necessarily
view judicial resolution of disputes under these agreements as inappropriate.103 As
RTAs mature, parties appear to be increasingly comfortable with a judicialised
dispute settlement approach.104 For example, in RTAs entered into by the
European Union pre-2000, political settlement as a dispute resolutions mechanism
was preferred. The European Union’s policy has since shifted to prefer an ad hoc
arbitration.105 The ASEAN Free Trade Area (“AFTA”) ‘judicialised’ its existing
dispute settlement mechanism by introducing the “ASEAN Protocol on Enhanced
Dispute Settlement Mechanism” in 2004 replacing a 1996 protocol that was based

See e.g. Judge Stephen M. Schwebel, Lecture: The Overwhelming Merits of Bilateral
100
Investment Treaties, 32 SUFFOLK TRANSNAT'L L. REV. 263 (2009); Todd Allee & Clint
Peinhardt, Delegating Differences: Bilateral Investment Treaties and Bargaining Over Dispute Resolution
Provisions, 54 INT’L STUD. Q. 1, 3 (2010).
101 See Ann Capling & Patrick Low, The Domestic Politics of Trade-Policy Making, in
GOVERNMENTS, NON-STATE ACTORS AND TRADE POLICY-MAKING, NEGOTIATING

PREFERENTIALLY OR MULTILATERALLY? 4, 23 (Ann Capling & Patrick Low eds., 2010).
102 For a list of disputes refer to World Trade Organization, Disputes by country/territory,
http://www.wto.org/english/tratop_e/dispu_e/dispu_by_country_e.htm (last visited Apr.

24, 2012).
103 As noted by Drahos, “[t]he same commitment to rule orientation in trade dispute
settlement seems to be finding its way into the regional trade agreements.” See Drahos,
supra note 28, at 191.
104 According to Porges, RTA dispute settlement provisions have generally evolved
from a diplomatic settlement model to a judicial model. See Porges, supra note 27, at 468.
105 Porges, supra note 27, at 468.
on diplomatic dispute resolution.106 Further evidence of the existence of a demand

for a judicialised dispute resolution in general, and through the WTO DSS in
particular, is the fact highlighted in this paper that RTA parties are continuing to
use the WTO DSS to resolve disputes that could also technically be resolved under
their RTA.107 William Davey concludes that, “the apparent superiority of the WTO
dispute settlement system is a significant reason why regional trade agreements do
not ultimately threaten to supplant…the WTO system”.108
C. Creating De Facto Convergence
A key benefit of this proposal is that it breaks down barriers between the two
international trade law regimes. Dispute resolution mechanisms under the WTO
and RTAs, despite often dealing with the same substantive issues, currently operate
largely as ‘silos’ with little interaction or coordination between them.109 This runs
the risk of fragmentation in international trade law.110 Fragmentation not only has
the potential to emerge as between WTO and RTA jurisprudence, but also in
jurisprudence as between RTAs and even in relation to the same RTA due to ad
hoc arbitration panels that are not subject to oversight by a standing appellate
body. Nguyen Tan Son warns: “[t]he security and predictability of the world
trading system would suffer if disputes concerning very similar issues were to be
resolved inconsistently by the WTO and RTAs’ dispute settlement entities.”111 As
discussed, a number of scholars have suggested solutions to this issue. For
example, by providing that WTO jurisprudence prevails to the event of
inconsistency with RTA jurisprudence, Picker’s proposal aims at creating “uniform
international trade jurisprudence”.112 Rather than adopt a hierarchical approach,
this proposal challenges the isolation between the systems by funnelling disputes to
the same institution for resolution. First, the proposal encourages active

106 See ASEAN Protocol on Enhanced Dispute Settlement Mechanism available at
http://www.aseansec.org/ 16754.htm.
107 See WORLD TRADE REPORT, supra note 2, at 176.
108 William Davey, Dispute Settlement in the WTO and RTAs: A Comment, in REGIONAL
TRADE AGREEMENTS AND THE WTO LEGAL SYSTEM 343, 354-56 (Lorand Bartels &
Federico Ortino eds., 2006). See also, Pauwelyn, supra note 44, at 388.
109 As noted by Nguyen Tan Son, “WTO and RTAs’ dispute settlement have no
institutional relationship that can instruct the interpretation as well as application of WTO
and RTA law by adjudicatory bodies. Therefore, it is totally reasonable to be concerned
about the clinical isolation of WTO and RTA law on issues that are substantially similar.”
See Nguyen Tan Son, Towards a Compatible Interaction between Dispute Settlement under the WTO
and Regional Trade Agreements, 5 MACQUARIE J. BUS. L. 113, 130 (2008) [hereinafter Nguyen
Tan Son].
110 See David Morgan, supra note 2, at 257.
111 Nguyen Tan Son, supra note 109, at 127.

engagement by the WTO Membership with RTA disputes by preserving the role
of the DSB in forming panels, adopting reports and monitoring compliance as well
as the ability for non-RTA parties to join a dispute as a third party. Further,
although the two systems of law will technically continue to run in parallel, it is
argued that de facto convergence in jurisprudence may result.
Noemi Gal-Or posits that in an international dispute resolution system,

consistency can be conceptualized as “vertical” and “horizontal”.113 Vertical
consistency arises from “interpretation of the law as progressing through a
hierarchy of authoritative adjudicatory instances”, usually represented by a system
of appeals.114 Horizontal consistency “secures that rights and obligations remain
identical and universal across time and subject matter as they arise in different
cases and under varying circumstances”, usually manifest in some form of
precedent.115 These two conceptions of consistency “are not contradictory and,
combined, contribute to integrity”.116 By introducing a system of appeals to RTA
disputes via access to the WTO Appellate Body, this proposal introduces vertical
consistency. In the investor-state arbitration field Susan Franck has warned of a
“legitimacy crisis” arising from conflicting decisions due to reliance on ad hoc
arbitration.117 Franck, among others, has proposed the introduction of an appellate
mechanism to the system to avert this crisis.118 In contrast, although Donald
McRae has acknowledged the ability of the WTO Appellate Body to ensure
“coherence and consistency” in WTO jurisprudence, he has questioned whether an
appellate body would be able to reproduce this coherence and consistency in
deciding questions under a myriad of bilateral investment agreements as opposed
to the same collection of agreements under the umbrella WTO Agreement.119
McRae contends that this could be achieved only if “the interpretative body were
to impose on the various bilateral agreements its own conception of obligations
undertaken by the parties, regardless of the actual wording used”.120 Such an
approach, McRae posits, “would undermine the legitimacy of the interpretative
body”.121

113 Noemi Gal-Or, The Concept of Appeal in International Dispute Settlement, 19 EUR. J.
INT’L. L. 43 (2008).
114 Id. at 47.
115 Id.
116 Id.
117 See Susan D. Franck, The Legitimacy Crisis in Investment Treaty Arbitration: Privatizing
Public International Law Through Inconsistent Decisions, 73 FORDHAM L. REV. 1521 (2005).
118 Id. at 1524.
119 Donald McRae, The WTO Appellate Body: A Model for an ICSID Appeals Facility?, J.
INT’L. DISPUTE RESOLUTION 1, 14 (2010)

120 Id.
121 Id.
In areas where they overlap, RTA provisions often mirror the wording of the
corresponding WTO provisions. In addition, there are often similarities in wording
between RTAs, particularly given the regular use of ‘model’ RTAs. This indicates
that the differences between these agreements may not be so great as to prevent
the Appellate Body from being able to legitimately provide some ‘vertical
consistency’ in its interpretation of at least broader concepts under RTAs and the
WTO Agreement. Unlike ad hoc tribunals, the WTO Appellate Body is also more
likely to be cognizant of its previous decisions and would be reluctant to depart
from its own approach unless differences in the text require it.
This proposal is also designed to bring a level of horizontal consistency in

jurisprudence between the two systems. There is no formal system of precedent in
the WTO DSS. However, an informal, or ‘de facto’ system of precedent has
emerged: through the issuance and publication of Appellate Body decisions,
disputing parties usually refer to decisions of panels and the Appellate Body in
their submissions and WTO panels and the Appellate Body do the same. As
McRae notes, the Appellate Body has been able to maintain the integrity of the
system and “has always had a sense of its role as the guardian of the WTO system
and has demanded that panels respect that role.”122 This de facto system of
precedent would arguably continue to evolve if the WTO DSS was charged with
resolving disputes under RTAs. As noted by Gao and Lim, “under the stewardship
of the Appellate Body, the law will in time work itself pure”.123
Under a hierarchical approach where WTO rules prevail to the extent of

inconsistency with RTA rules, a consistent body of jurisprudence is more likely to
directly result. However, under the parallel approach outlined in this proposal, the
rights of states to enter into RTAs and craft their own approaches to international
trade law issues would be preserved, whilst at the same time, a path would be
created for the de facto convergence between RTA rules and WTO rules by the
introduction of varying degrees of both vertical and horizontal consistency.
IX. CONCLUSION
In this note, a proposal for how to maintain a strong and balanced
international trade law framework has been outlined. The existing framework,
consisting of the WTO and the network of RTAs, is suffering from an imbalance
between its legislative and judicial arms. In the WTO, as the rule-making body
remains in a decade-long deadlock, the WTO DSS is faced with the difficult choice
of failing to adequately address the current needs of its Members or venturing into

122 Id. at 8.

the realm of judicial activism. In contrast, although most RTAs include dispute
resolution mechanisms, it appears that these mechanisms are failing to meet the
dispute resolution demands of the parties who are largely continuing to rely on the
WTO DSS to provide a judicial check. This situation is also unsustainable as
inevitably, disputes will arise between RTA parties that implicate provisions that
fall outside the current mandate of the WTO DSS.
In order to address these issues and restore equilibrium, it has been proposed
that disputes under RTAs are referred to the WTO DSS for resolution. If
implemented, this proposal would provide the WTO DSS with an expanded
mandate to consider emerging issues in international trade law; provide RTAs with
access to a robust judicial mechanism to resolve disputes; and encourage increased
engagement and interaction between the two systems. Through the introduction of
a degree of both horizontal and vertical consistency, de facto convergence in trade
law jurisprudence may result. This proposal aligns the key strengths of both
systems: a robust judicial mechanism provided by the WTO and a dynamic source
of international trade law provided by the ever-expanding network of RTAs. This
will create a sustainable international trade law framework to support the trade
liberalisation ambitions of world trading partners.

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Winter, 2012

Vol. IV, No. 2 Trade, Law and Development

ARTICLES Ernst-Ulrich Petersmann, Human Rights and International

NOTES AND Daniel Gervais, Challenges in Intellectual Property

Felicity Hammond, A Balancing Act: Using WTO Dispute

BOOK REVIEW Nicolas Lamp, A Review of Sonia E. Rolland, Development

ISSN : 0976 - 2329

A BALANCING ACT: USING WTO DISPUTE SETTLEMENT TO

MULTILATERAL TRADE: THE IMPACT OF BILATERAL, PREFERENTIAL AND REGIONAL

II. IMBALANCE IN THE INTERNATIONAL TRADE LAW SYSTEM

A. Imbalance in the WTO

The WTO institutional structure can broadly be divided into a legislative

tratop_e/dda_e/dda_e.htm (last visited Apr. 16, 2012).

a successful conclusion. As a result, the current rules governing WTO Members

http://www.wto.org/ english/thewto_e/whatis_e/tif_e/bey5_e.htm (last visited, Apr. 16,

In contrast, the WTO DSS has continued to function in an active and

[w]hen Members seek the redress of a violation of obligations or other

of the state of play of WTO disputes – Addendum, WT/DSB/58/Add.1, available at http://www.

Environmental Pressure, Trade and Environment Nexus (Jan. 5, 2012), http://www.tradeand

WORLD TRADE ORGANIZATION FOR THE TWENTY-FIRST CENTURY 1, 4 (Debra P. Steger

As most RTAs incorporate some form of dispute settlement mechanism,27 a

FOR DEVELOPMENT: A HANDBOOK 467, 467 (Jean-Pierre Chauffour & Jean-Christophe

Dispute Resolution, 41 J. WORLD TRADE 191, 192 (2007) [hereinafter Drahos].

to standing tribunals; or ad hoc arbitration.29 Most RTAs provide negotiation as a

Despite carefully negotiated provisions, “relatively few” disputes have been

meaning disputes about these sectors will also be postponed.

C. Existing Proposals for Reform

WORLD TRADE ORGANIZATION FOR THE TWENTY-FIRST CENTURY 43, 51 (Debra P.

A second set of approaches focuses on strengthening the rule-making power

MULTILATERALIZING REGIONALISM CHALLENGES FOR THE GLOBAL TRADING SYSTEM

apply WTO rules with reference to regional arrangements agreed to by both

III. RESTORING THE BALANCE: A PROPOSAL

It is suggested that equilibrium and integration in the international trade law

A. Jurisdiction under the WTO

One possible question that may be raised as a consequence of a WTO dispute

(Dec. 18, 2006).

B. Jurisdiction under RTAs

The proposed dispute settlement provision should be included in RTAs

Appellate Body Report, Mexico — Taxes on Soft Drinks, WT/DS308/AB/R (Mar. 6,

[C]ommentators have also referred to several international law doctrines

those agreements in accordance with customary rules of interpretation of public

[RTA] jurisprudence”.65 As discussed, this proposal is designed to draw on the

E. Dispute Resolution Procedures

Under this proposal, disputes under an RTA may be referred to a panel

3. Appellate Body Procedures

4. Participation of Third Parties

F. Adoption of Reports, Implementation, and Suspension of Concessions

1. Adoption of Panel and Appellate Body Reports

The process for the implementation of recommendations in an adopted report

DSU art. 22.4.

Type=ICSIDDocRH&actionVal=scheduledFees&reqFrom=Main (last visited Apr. 24,

IV. RESTORING THE BALANCE: ANALYSIS

International Court of Justice is composed of 15 judges, see International Court of Justice,

A. Expanding the Mandate of the WTO DSS

Facing roadblocks in the multilateral system, parties have detoured to RTAs to

First, normative arguments about the danger of viewing “non-trade” issues

TRADE ORGANIZATION FOR THE TWENTY-FIRST CENTURY 1, 10 (Debra P. Steger ed.,

or Global Subsidiarity?, 16 GOVERNANCE 73, 75 (2003).

other policies such as social, developmental, economic, and environmental policies.