Economics and Policy

Analysing World Trade Organisation through the Lens of Global Justice (Part 2)

3.3 Accessibility Crisis

DSU provides an equal opportunity for the member countries to approach the institution for remedies. However, it has been noticed that weak economies are less found or have not been found as any of the complainants in more than  20  years of  DSU.  From the African continent, so far only Egypt has appeared as a respondent in one of the cases and South Africa has had two appearances. While giving a speech at the 50th  anniversary of the GATT, in Geneva Switzerland, Nelson Mandela said, “In the end, we must remember that no amount of rules or their enforcement will defeat those who struggle with justice on their side. When there are manifest inequalities then special and thoughtful measures have to be applied. It is time for us to be frank in our assessment of the outcome of the Uruguay round. The developing countries were not able to ensure that the rules accommodated their realities.”[i]

The fees of the proceedings of the  WTO  is so high and time consuming that the weaker countries are not in a  position to fight against the larger economies.  They weigh the repercussions as well as the return of filing such dispute and in the process absorb the exploitation at the hands of the powerful nations for want of no expertise in the trade field or in fact not a strengthened economy to sustain the burden of such a costly process. For the Arab countries, WTO is inaccessible not because they do not have a share in the volume of world trade, in fact, they have more share in the trade than their counterpart Switzerland. Still, they have least or no appearance in any of the dispute filed so far.[ii]

The mechanism of DSU has come to a level wherein the strong nations can direct its course not only at the time of negotiation of the process but also during the time of the adjudication process and lastly at the enforcement level. During the adjudication process, the losing party have enough opportunity to delay the process. After the report of the appellate body or the panel as the case may be, the losing party has the option to implement the decision within a reasonable period of time. What is a reasonable period of time can be decided either by the parties mutually or by the binding arbitration process within 15 months.[iii] The compliance can either be satisfactory or not will be again decided through the arbitration process.[iv] After all this process the winning party is left with authorization for retaliation which is also of a temporary form only till the time such measures are brought into the compliance with the direction of the adjudicatory body.  In the later segment, the process of retaliation and the issues and concerns surrounding it has been highlighted at greater length.

3.3 Enforcement and Remedial Mechanism under DSU

DSU  does not provide monetary compensation for the violation of its provision to the countries. At best authorization for retaliation can be issued by the DSB. Countries can go for retaliation by increasing the tariffs on the products coming from the losing country. However, there is a three-pronged problem in this kind of arrangement. First, countries like Antigua and Barbuda cannot retaliate against the bigger economy like the US as they are dependent on the essential product supply from the US. Secondly, retaliation would do more harm than good for weaker countries-as retaliation would increase and badly affect their economies. They could not in most of the cases survive by closing down their economies. Thirdly, even if they go for retaliation it would have a minuscule effect on the larger economies like the USA and EU.

This has happened in the case of US Gambling, wherein Antigua and Barbuda won the case against the USA, appellate body declared the provisions of IHA Act in violation of GATS. US decided to not comply with the order of the Appellate body knowing pretty well even if they retaliate it will have the least effect on the huge US economy. Till now these countries did not go for retaliation.  Hence,  it is often criticised that winning a case in the  WTO  is merely a symbolic victory which could not result in any benefit or at least restore the loss suffered by the country due to such violation.[v]

Similarly, Ecuador did not go for retaliation against European Community in the EC Banana dispute, being fully aware that EC is not in a mood to comply and it will have no effect on EC to retaliate rather Ecuador will suffer harm resulting from such retaliation.

On the other hand, large economies like the US and EC are in a privileged position to follow stringent protectionist measures to safe their economies.  US  did not abide by the decision delivered in  US  Sunset  Review  Case and  EU  has refrained to change its position in the EC Hormones case. The US has gone ahead to have followed the zeroing method in measuring Anti- Dumping even when the appellate body has held it wrong in a series of cases including EC Bed Linen, Sunset Review case.

The procedure of enforcement is somewhat designed to promote arm twisting of the less powerful. Somewhat in the name of global order justice has not reached in the den of all the member countries.  Although we are able to jot down the rules of the game if all the players are not equipped with the knowledge, expertise and capacity to play this game, it will not be played fairly whether with or without a referee would be an important consideration only afterwards.

Conclusion

After breaking from the shell of the nation-state and entering into the borderless world with the aspiration to gain from the improvements made by our counterparts we have placed ourselves in an unknown sphere. It was realized that institutional structure can be formed to place the rules of the game which needs to be abided by and not circumvented for reducing the other into ashes as was the case previously in times of the power-based system. The world moved to a positivist approach. It was realised that there has to be a differential treatment given to the developing or least developed nation which are still in a progressing state and hence cannot afford to liberalize the economy in the same manner as the developed counterparts can do.

Although in almost all the covered agreements the provisions for technology transfer, differential treatment for compliance with the global norm, preferential treatment has been given. But, in reality, it has hardly fructified.

The growing divide between the developed and the developing nations can be witnessed in various ministerial conferences which are resulting into a deadlock as countries cannot reach a common point. The zeal for applying unilateral sanctions by the powerful countries on the basis to protect their national interest, even when the bulk of nations complain, it to be not for the global good has proved fatal for global justice.

The time has come to realize the importance of inclusion and creating a just world by creating the terms of the institution by the creation of just terms for this institutional framework.[vi]  As according to John Rawls, “Justice is the first virtue of social institutions, as truth is of systems of  thought.  A  theory  however  elegant  and  economical  must  be  rejected  or  revised  if  it  is untrue;  likewise,  laws  and  institutions  no  matter  how  efficient  and  well-arranged  must  be reformed  or  abolished  if  they  are  unjust.  Each  person  possesses  inviolability  founded  on justice that even the welfare of society as a whole cannot override.”[vii]  He further went on to say that truth and justice are first virtues which cannot be compromised.

Author believes that the area of trade and communication has become quintessential for the survival  of  the  economies  in  the  integrated  world.  Hence,  trade  related  negotiation  at  the bilateral or multi-lateral level is bound to happen. The problem of unilateral sanctions by the powerful economies can be curtailed by collective retaliation. In the recent phase of emerging economies with the China, Brazil, India coming steadily in competition would create a multi- polar world and in these circumstances the might of one country would not work in the fear of collective retaliation.

Meanwhile  there  is  a  need  for  enhanced  cooperation  and  sharing  of  technology  to  make  a level playing field for the weaker economies. WTO as an institution shall be more accessible to these countries. One of the great developments is creation of a group in Geneva which will work for helping the nations which are facing difficulty in understanding the complex laws of WTO.

Global  justice  is  a  sina  qua  for  ensuring  equal  participation  at  the  global  platform.  This utopian concept can be put to practice only with the consent and constant practice towards achieving it. Only when such constant efforts are made, the weaker and least developed nations would get their share in the fruits of global development.


Endnotes:

[i] Address by President Nelson Mandela at the 50th  Anniversary of the GATT, Geneva-  Switzerland, available at http://www.mandela.gov.za/mandela_speeches/1998/980519_gatt.htm.

[ii] Angshuman Hazarika and Pieter Van Vaerenbergh, ‘‘One Rule to Rule Them All’: Rules for Article 25 DSU Arbitration’, in  Maxi Scherer(ed),  Journal of  International Arbitration, (© Kluwer  Law  International;  Kluwer Law International 2019, Volume 36 Issue 5) pp. 595 – 628.

[iii] Article 21.6 of the Dispute Settlement Understanding.

[iv] Article 22.6 of the Dispute Settlement Understanding.

[v] J. H Jackson, International Law  Status of WTO Dispute Settlement Reports, Obligation to Comply or Option to Buy Out, 98, A.J.I.L 2004 at 109.

[vi] John Mandel, “Globalisation and Justice”,  The Annals of the American Academy of Political and Social Science, Vol. 570,Dimensions of Globalization (Jul., 2000), pp. 126-139.

[vii] John Rawls, “Theory of Justice”.

This is the second part of a two-part article by Prachi Acharya, a law student from WBNUJS, Kolkata.

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