Latin America and the WTO Dispute Settlement System
Fast Facts
The WTO dispute settlement system was established in 1995
As of August 2013:
• 466 consultation requests
• 184 panel reports (including 30 reports of Article 21.5 panels)
• 110 Appellate Body reports (including 18 reports of the Appellate Body under DSU Article 21.5)
• 101 WTO Members have participated in the WTO dispute settlement system
• 30 Latin American Members have participated in the dispute settlement system
Introduction
The WTO dispute settlement system, considered by many as the organization’s crown jewel, entered into force in 1995. It is
embodied in the Understanding on Rules and Procedures Governing the Settlement of Disputes, commonly referred to as the
Dispute Settlement Understanding and abbreviated “DSU”, which is one of the outcomes of the Uruguay Round negotiations. The
DSU functions to provide security and predictability to the multilateral trading system; preserve the rights and obligations of WTO
Members; and provide clarification of rights and obligations of Members through interpretation of the WTO covered agreements.1
It should be noted that under Article 3.7 of the DSU, the aim of the dispute settlement system, is to “…[s]ecure a positive solution
to a dispute. A solution mutually acceptable to the parties to the dispute and consistent with the covered agreements is clearly
to be preferred. In the absence of a mutually agreed solution, the first objective of the dispute settlement mechanism is to
secure the withdrawal of the measures concerned if these are found to be inconsistent with the provisions of any of the covered
agreements”. Therefore, at any stage of the proceedings, the parties are free to sit down and come up with a mutually agreed
solution. As a result, not every request for consultations, which is the initial step in the settlement of disputes under the DSU,
matures into a full-blown dispute.
The dispute settlement process consists of several stages. The parties first consult with each other to see if they can come up with
a mutually agreed solution to the dispute. If the consultations fail, panel proceedings come next. The panel then issues its report,
which either party may appeal before the Appellate Body. Following the adoption of the panel or Appellate Body report, the next
stage is implementation, where the losing party is expected to implement the report within a “reasonable period of time”. In case
of non-compliance, the dispute may advance to the retaliation stage, where it is referred to a panel of arbitrators, which may or
may not be identical to the original panel, to recommend appropriate measures. Figure 1 outlines the dispute settlement process.
1
WTO website: http://www.wto.org/english/tratop_e/dispu_e/disp_settlement_cbt_e/c1s3p1_e.htm
1
Figure 1.
60 days
by 2nd DSB
meeting
0-20 days
20 days (+10 if
Director-General
asked to pick panel)
months from panel’s
composition,
3 months if urgent
up to 9 months
from panel’s
establishment
60 days for panel
report unless
appealed ...
‘Reasonable
Period of Time’:
determined by:
member
proposes, DSB
agrees; or parties
in dispute agree;
or arbitrator
(approx 15
months if by
arbitrator)
30 days after
‘reasonable
period’expires
Consultations
(Art. 4)
During all stages
good offices, conciliation,
or mediation (Art. 5)
Panel established
by Dispute Settlement Body (DSB)
(Art. 6)
Terms of reference (Art. 7)
Composition (Art. 8)
Panel examination
Normally 2 meetings with parties (Art. 12),
1 meeting with third parties (Art. 10)
Expert review group
(Art. 13; Appendix 4)
Interim review stage
Descriptive part of report
sent to parties for comment (Art. 15.1)
Interim report sent to parties for comment (Art 15.2)
Review meeting
with panel
upon request
(Art. 15.2)
NOTE: a panel
can be
‘composed’(i.e.
panellists
chosen) up to
about 30 days
after its
‘establishment’
(i.e. after DSB’s
decision to have
a panel
Panel report issued to parties
(Art. 12.8; Appendix 3 par 12(j))
Panel report circulated to members
(Art. 12.9; Appendix 3 par 12(k))
max 90 days
DSB adopts panel/appellate reports(s)
including any changes to panel report made by appellate
teport (Art. 16.1, 16.4 and 17.14)
Appellate review
(Art. 16.4 and 17)
... 30 days for
appellate report
Implementation
report by losing party of proposed implementation
within‘reasonable period of time’(Art. 21.3)
In cases of non-implementation
parties negotiate compensation pending full
implementation (Art. 22.2)
Retaliation
In no agreement on compensation, DSB authorizes
retaliation pending full implementation (Art. 22)
Cross-retaliation:
same sector, other sectors, other agreements
(Art. 22.3)
Dispute over
implementation:
Proceedings possible,
including referral to initial
panel on implementation
(Art. 21.5)
Total for
Report
Adoption:
Usually up to
9 months (no
appeal), or
12 months (with
appeal) from
establishment of
panel to adoption
of report (Art.20)
90 days
Possibility of arbitration
on level of suspension
procedures and principles
of retaliation
(Art. 22.6 and 22.7)
Source: WTO website: http://www.wto.org/english/thewto_e/whatis_e/tif_e/disp2_e.htm
The purpose of this background note is to provide information on the participation of Latin American and Caribbean countries in
the WTO dispute settlement mechanism. The note will also present a simple comparative perspective of the dispute settlement
activities of Latin American and Asian countries.2
2
“Countries”, as used in this note, refer to countries or customs territories.
2
The dispute settlement mechanism over time
The WTO dispute settlement system was established in 1995. As of August 2013, there have been 466 consultation requests, 205
panels established and 118 appeals.3 The chart below provides an overview as to the number of disputes brought before the WTO
since its establishment.
Figure 2. WTO Dispute Settlement: 1995-2013.
Source: ICTSD combination based on WTO statistics.
Since 1995, there has generally been a decline in the number of requests for consultations per year. Figure 2 shows that for the
first five years there was an average of 37 disputes initiated per year; this dropped to 27 per year between 2000 and 2005; and
further dropped to 16 over the next five years. The year 2012 however, saw 27 requests for consultations filed, with 8 requests
initiated by Latin American countries - Argentina, Brazil, Honduras, Mexico, and Panama. As of August 2013, there have been 12
panel requests.
Membership’s overall participation in WTO dispute settlement
So far, 101 Members have participated in the WTO dispute settlement system. Table 1 lists the most active participants in the
system. It should be noted that three Latin American Members – Argentina, Brazil, and Mexico figure in the top ten users of the
system, either as a complainant or a respondent.
3
Including 30 panels and 19 appeals under DSU Article 21.5. When the parties disagree on whether the losing Member has implemented the panel’s or Appellate Body’s recommendations
and rulings, either of them can request for a compliance panel under Article 21.5 of the DSU.
3
Table 1.
Member
US
EU
Canada
Brazil
Mexico
India
Argentina
Japan
Korea
Thailand
As a complainant
106
89
33
26
23
21
19
18
16
13
Member
US
EU
China
Argentina
India
Canada
Japan
Brazil
Korea
Mexico
As a respondent
120
74
31
22
22
17
15
14
14
14
Source: ICTSD combination based on WTO statistics.
WTO agreements involved
Figure 3 indicates the WTO Agreements cited in disputes. It shows that the GATT 1994 is by far the agreement invoked the most
in disputes by the overall WTO membership. It is followed by the AntiDumping Agreement and the Agreement on Subsidies and
Countervailing Measures, which come second and third, respectively. Agriculture comes fourth, and the Services Agreement
comes in fifth place.
Figure 3. Agreements Cited in Disputes
Source: ICTSD combination based on WTO statistics.
4
The Developing Country Perspective
The DSU takes into account the special situation of developing and least-developed countries and accords them special and
differential treatment, providing for certain flexibilities and privileges in their favour. WTO Members are required to give special
attention to the problems and interests of developing countries. At the consultations stage, for example, if the object of the
consultations is a measure taken by a developing country, the parties may agree to extend the regular period of consultations. At
the panel stage, when facing a developed country Member, the developing country Member may request that the panel include
at least one panelist from a developing country. Similarly, at the implementation stage, arbitrators also take into account the
developing country status of a party in the determination of the reasonable period of time for implementation.
Over the years, developing countries, including Latin American countries have become increasingly active in the WTO dispute
settlement system. Figure 4 shows a relative increase in the use of the WTO dispute settlement system by developing countries
compared to developed countries.
Figure 4. WTO Members as Complainants
Source: ICTSD combination based on WTO statistics.
Latin American countries and the WTO dispute settlement
Latin American countries have always been visible in the realm of WTO dispute settlement. Venezuela and Brazil, for example,
were involved in the first-ever decided dispute (US-Gasoline DS2 and DS4). As of August 2013, most Latin American WTO Members
have participated in the dispute settlement system. Table 2 contains data as to the number of disputes that Latin American
countries have participated in as a complainant, respondent or third party.
5
Table 2.
WTO Member
Brazil
Mexico
Argentina
Chile
Guatemala
Honduras
Panama
Colombia
Costa Rica
Ecuador
Peru
Antigua and Barbuda
Cuba
Dominican Republic
El Salvador
Nicaragua
Uruguay
Venezuela
Barbados
Belize
Bolivia
Dominica
Grenada
Guyana
Haiti
Jamaica
Paraguay
Saint Kitts and Nevis
Saint Lucia
Complainant
26
23
19
10
9
8
7
5
5
3
3
1
1
1
1
1
1
1
Saint Vincent and the
Grenadines
Suriname
Trinidad and Tobago
Total
WTO Member
Argentina
Brazil
Mexico
Chile
Dominican Republic
Peru
Colombia
Ecuador
Guatemala
Nicaragua
Venezuela
Trinidad and Tobago
Panama
Uruguay
Honduras
Costa Rica
Antigua and Barbuda
Cuba
El Salvador
Barbados
Belize
Bolivia
Dominica
Grenada
Guyana
Haiti
Jamaica
Paraguay
Saint Kitts and Nevis
Saint Lucia
WTO Member
Brazil
Mexico
Argentina
Colombia
Chile
Guatemala
Ecuador
Honduras
Venezuela
Paraguay
Costa Rica
Cuba
El Salvador
Peru
Nicaragua
Uruguay
Jamaica
Panama
Dominican Republic
Barbados
Belize
Dominica
Guyana
Saint Kitts and Nevis
Saint Lucia
Trinidad and Tobago
Bolivia
Grenada
Saint Vincent and
the Grenadines
Suriname
Saint Vincent and the
Grenadines
Suriname
Antigua and
Barbuda
Haiti
125
Respondent
22
14
14
13
7
5
4
3
2
2
2
2
1
1
92
Source: ICTSD combination based on WTO statistics.
6
Third party
76
67
46
40
34
27
25
21
16
16
15
15
15
14
13
8
8
6
5
4
4
3
3
3
3
3
1
1
1
1
494
Overall regional comparison
Figure 5 shows that over time, there has been a significant drop in the number of disputes brought before the WTO. However,
the decline in the numbers had been less dramatic with respect to Latin American and Asian countries, as they have remained
active in the dispute settlement field. Although between 1995 and 2000, the United States and the European Union were the top
complainers, they appear to have been overtaken since then by Latin American and Asian countries.
Figure 5. WTO DS 1995 to 2013.
Source: ICTSD combination based on WTO statistics.
Latin America and Asia in WTO dispute settlement
Table 3 provides a side-by-side perspective on the participation of the top ten Latin American complainants and the top ten Asian
complainants. In terms of numbers, Latin American countries appear to have initiated more disputes than Asian countries; and
conversely, Asian countries appear to have been respondents in more disputes than Latin American countries. This may suggest
that Latin American countries are keener than their Asian counterparts in setting the WTO dispute settlement mechanism in
motion as a means of removing trade obstacles.
Table 3.
Member
Brazil
Mexico
Argentina
Chile
Guatemala
Honduras
Panama
Colombia
Costa Rica
Ecuador
Total
Complainant Respondent 3rd Party
26
14
76
23
14
67
19
22
46
10
13
34
9
2
27
8
0
21
7
1
6
5
4
40
5
15
3
3
25
115
73
357
Member
Complainant Respondent 3rd Party
India
21
22
90
Japan
18
15
136
Korea, Republic of
16
14
78
Thailand
13
3
63
China
11
31
100
Indonesia
6
5
8
Philippines
5
6
9
Chinese Taipei
3
0
75
Viet Nam
2
0
16
Hong Kong
1
0
13
Total
96
96
588
Source: ICTSD combination based on WTO statistics.
7
Figure 6 shows that although Latin American countries have always led in terms of number of complaints filed since the
establishment of the dispute settlement system, between 2010 and 2013 Asian countries appear to have taken the lead in terms
of the number of complaints filed. It should also be pointed out that China and Viet Nam account for 7 out of the 19 complaints
filed by Asian countries between 2010 and 2013.
Figure 6. Top 10 Latin American and Asian Complainants
Source: ICTSD combination based on WTO statistics.
Why Latin American Countries litigate at the WTO?
The explanation for the varying extent of participation of WTO Members in the dispute settlement has been the subject of
countless studies that dig deep into the decision-making process of each Member. This paper will provide some figures on the
involvement of Latin American countries in dispute settlement in light of three elements, namely: 1) income level; 2) volume of
trade; and 3) intra and inter-regional disputes compared with intra and inter-regional trade flows. The last part of the paper will
briefly touch on legal capacity as an element in Members’ participation in the dispute settlement system.
Latin American countries’ participation by income level4
Participation by any country in any dispute settlement forum entails the utilization of resources both tangible and intangible.
Although it should be emphasized that the WTO does not charge anything for a Member to file a complaint before it, it is needless
to say that other litigation costs are a factor to consider before any country would initiate a dispute.
Does this mean though, that only high-income and more developed countries could be expected to enter the trade dispute arena
to the exclusion of low-income and less developed countries?
4
Based on the World Bank income classification of countries.
8
Figure 7. Latin American Countries as Complainants
Source: ICTSD combination based on WTO statistics.
Figure 8. Latin American Countries as Respondents
Source: ICTSD combination based on WTO statistics; World Bank income classification for countries.
9
Figure 9. Latin American Countries as Third Parties
Source: ICTSD combination based on WTO statistics.
Available data appear to answer the above question in the negative. As figures 7, 8 and 9 show, with respect to Latin American
countries, upper-middle income Members and low-income Members have been actively participating in the WTO dispute
settlement system alongside developed and higher-income Members. It should also be noted that, as figure 9 shows, a large
number of middle-income Members have actively participated as third parties in disputes. Among the most obvious reasons for
joining as third parties, other than systemic interests, is the fact that joining as a third party is the best way for new participants
to gain experience and see first-hand what goes on in the process. As regards respondents, it could be argued that regardless of
income, Members are equally prone to commit acts that could be a cause of action under WTO law.
It would thus appear that with respect to Latin American countries, income and state of development do not appear to be
deterrents that would prevent them from bringing a case before the WTO.
Volume of Trade
It could be reasonably assumed that higher volume of trade translates to greater interest to remove trade obstacles, hence,
greater participation in dispute settlement.
10
Table 4.
WTO Members
Brazil
Mexico
Argentina
Chile
Guatemala
Honduras
Panama
Colombia
Costa Rica
Ecuador
Peru
Antigua and Barbuda
Cuba
Dominican Republic
El Salvador
Nicaragua
Uruguay
Venezuela
As complainant
26
23
19
10
9
8
7
5
5
3
3
1
1
1
1
1
1
1
WTO Members
Mexico
Brazil
Venezuela
Argentina
Chile
Colombia
Peru
Ecuador
Trinidad and Tobago
Costa Rica
Guatemala
Bolivia
Dominican Republic
Honduras
Uruguay
Panama
Cuba
El Salvador
Average Goods5
1.90
1.32
0.47
0.45
0.45
0.28
0.23
0.11
0.07
0.06
0.06
0.04
0.04
0.04
0.04
0.03
0.03
0.03
Average Services6
0.42
0.83
0.04
0.34
0.28
0.12
0.10
0.03
0.02
0.12
0.05
0.01
0.14
0.03
0.07
0.16
0.27
0.03
Source: ICTSD combination based on WTO statistics; ITC statistics.
Data with respect to Latin American countries lend support to this supposition. Table 4 shows that the top Latin American traders
use the dispute settlement system more and have initiated more complaints and /or defended more disputes.
Inter and intra-regional disputes vis-a-vis inter and intra-regional trade flow
Statistics7 show that while more than 50 percent of the Asian countries’ total exports were destined for regional partners in 2010,
2011 and 2012, figure 108 reveals that only around 11 percent of complaints initiated by Asian countries were directed against
their regional partners. On the other hand, while only around 20 percent of Latin American countries’ exports were destined for
regional partners in 2010, 2011 and 2012, around 40 percent of complaints initiated by Latin American countries have targeted
their neighbours.
5
Share in world’s export in goods as of 2012.
6
Share in world’s export in services as of 2012.
7
Data available at the International Trade Centre website: http://www.trademap.org
8
WTO website: http://www.wto.org/english/res_e/statis_e/statis_e.htm
11
Figure 10. Inter-Regional and Intra-Regional Disputes
Source: ICTSD combination based on WTO statistics.
The numbers reflect the generally non-litigious approach to dispute settlement among Asian countries. They also reflect the
considerably more proactive approach to dispute settlement by Latin American countries.
Stages of the process
Figure 11 shows the number of disputes initiated by Latin American countries that advanced to the different stages of the dispute
settlement process. It shows that 46% of the consultation requests advanced to panel proceedings stage; 47% of all panels’
decisions were appealed; and 20% of panels advanced to either compliance panel stage or retaliation stage.
Figure 11. Latin American Disputes: Stages
Stage 0: panel lapsed;
Stage I: consultations - stopped or settled at consultations stage or still in consultation stage;
Stage II: panel proceedings - panel report adopted or settled during panel proceedings prior to the adoption of panel report;
Stage III: appeals - Appellate report adopted or settled during appeal proceedings prior to the adoption of Appellate Body report;
Stage IV: implementation panel or retaliation arbitration.
Source: ICTSD combination based on WTO statistics.
12
WTO agreements cited in Latin American disputes
The following data indicate the different agreements cited in Latin American disputes.
Figure 12. Cited by Latin American Complainants
Source: ICTSD combination based on WTO statistics.
As can be seen in figure 12, the GATT 1994 is the most cited agreement followed by the Anti-Dumping Agreement, the Safeguards
Agreement and the Agreement on Subsidies and Countervailing Measures complete the top 5 most cited agreements by Latin
American countries as complainants.
13
Figure 13. Cited against Latin American Respondents
Source: ICTSD combination based on WTO statistics.
With regard to disputes where Latin American countries participated as a respondent figure 13 shows the GATT 1994 is also the
most cited agreement. The Agreement on Safeguards comes second, followed by the Anti-Dumping Agreement, the Agriculture
Agreement and the Agreement on Subsidies and Countervailing Measures.
Top 10 Latin American Participants
Table 5 shows the top ten Latin American participants in the WTO dispute settlement system with Brazil, Mexico, and Argentina
taking the top 3 spots.
14
Table 5.
Latin American Member
Brazil
Mexico
Argentina
Chile
Guatemala
Honduras
Panama
Colombia
Costa Rica
Ecuador
No. of disputes as a
complainant
26
23
19
10
9
8
7
5
5
3
Latin American Member
Argentina
Brazil
Mexico
Chile
Dominican Republic
Peru
Colombia
Ecuador
Guatemala
Nicaragua
No. of disputes as a
respondent
22
14
14
13
7
5
4
3
2
2
Source: ICTSD combination based on WTO statistics.
The top 3 Latin American participants: industry sector
Figure 14 shows the industry sector involved in disputes relating to the top three Latin American participants in dispute settlement,
i.e. Argentina, Brazil, and Mexico. It shows that most disputes intitiated by those three countries are in the agriculture sector.
Figure 14. Top 3 Latin American Complainants: Industry Sectors
Source: ICTSD combination based on WTO statistics.
15
Legal Capacity
Legal capacity is not easily quantifiable in the context of comparing WTO Members participation in dispute settlement. However,
it is clearly one of the major determinants when it comes to countries’ decision-making process on whether to jump from the
cauldron of informal consultations and into the fire of the formal dispute settlement process. The growing complexity in the
cases filed before the WTO could also translate to a significant advantage with respect to countries with the required financial
and human resources, enabling them to keep abreast and keep up with the latest developments. In the same vein, less developed
countries stand to be at a disadvantage if they are unable to present their cases with the same level of sophistication and precision
required by the continuously maturing dispute settlement system.
ICTSD’s capacity building initiatives
ICTSD, in coordination with the WTO and ACWL provides for opportunities for developing countries to boost their legal capacity in
the dispute settlement field and other highly specialized areas. The tripartite programme9 combines the unique strengths of the
three institutions. It was established in 2012, and is aimed at strengthening the legal capacity of developing countries, including
their ability to address selected sectors and agreements that require specialized expertise.
The programme includes a series of regional and sectoral workshops that are aimed at identifying and developing best practices
of developing countries in WTO dispute settlement and other highly specialized areas. By addressing the issue of legal capacity,
the tripartite programme touches upon a critical matter, i.e. the ability of developing countries to manage their trading interests
and, ultimately, their development rights and concerns.
The first of such workshops took place in Geneva in May 2012, entitled South-South Dialogue on Managing Trade Litigation. It was
followed by a regional dialogue entitled, India Regional Dialogue on Managing Trade Disputes10, which was held in New Delhi.
Looking ahead…
Latin American countries, although with varying levels of participation, have been increasingly involved in the WTO dispute
settlement system and have been at both ends of the proceedings. If this is an indication of the WTO dispute settlement climate
in the coming years, the importance and relevance of capacity building in the area of trade law, particularly in dispute settlement
cannot thus be overemphasized.
9http://www.wto.org/english/news_e/pres12_e/pr661_e.htm
10http://www.wto.org/english/news_e/pres12_e/pr683_e.htm
16