In what ways did this dispute show the WTO was a well-designed institution and in what ways did the dispute show there were problems with the WTO mechanisms which need to be resolved?

            Introduction

This dispute involved Japan as the plaintiff and The United States as the defendant while Brazil, Korea Canada, Chile and European Community acted as interested parties. In 1999, Japan requested The United States, Departments of Commerce and International Trade Commission on anti-dumping concerning investigations on their certain products of hot rolled steel. The United States was had banned the importation of those certain hot-rolled steel products on the ground that Japan was the imports as a conduit to dispose of their under-valued steel in The United States economy. Japan on its response by accusing The United States of violating some set agreements set by World Trade Organization (W.T.O). An appellate panel Dispute Settlement Body (DSB) was founded in May 2000 to hear and try to resolve the dispute. The Dispute Settlement Body consisted of a Director General who was the overhead manager of all operation from the time when the hearing started all the way to the end when he was required to give a comprehensive verdict. The panel also a secretary whose responsibility was to take groups minutes for reference and filing. There were also arbitrators and advisory experts who represented who ensured legal and economical frame lines are observed and no violations of them adhere to all through. The Brazil, Korea, Chile, Canada and European Communities also requested to be enjoined with the dispute hearing as it was their rights as enshrined in WTO constitution that any member state is at liberty to be enjoined with a case of interest. The panel came up several findings. Both Plaintiff and Defendant were found with violations of WTO rules. Also, some changes and amendments to some Acts were made. It was from this dispute, that we try extract the strengths of WTO in solving, articulating its mandate and the weakness that will require attention. The research begins with the strengths and weakness of the mechanism.

The WTO has a well-established settlement process. After receiving a complaint from the plaintiff, the Dispute Settlement Body official files it and informs the defendant about the matter. The Dispute Settlement Body further enlightens both parties of the available avenues of resolving their dispute. WTO has two ways of solving disputes. The first method is through a mutual agreement between the plaintiff and Defendant whereby both parties agree on a mutual solution during the bilateral solution. The second way is through a panel and an appellate body whereby a special body is formed by Dispute Settlement Body to hear and resolve the dispute. Under this, the case undergoes three stages: Parties Consultation, Panel and Appellate Body reports adjudication, Implementation of the report findings. It further puts some countermeasures in case the loser of the case fails to adhere to the agreed verdict. In this case, Japan finds it easy to use Second Avenue, through a panel and appellate body. Upon receiving the claimant, Dispute Settlement Body formed a panel and an appellate body which resolve the dispute. The United States is further notified of the dispute ahead. According to Becroft (2012) on 20th March 2000, the process of composing a panel was started; Brazil, Canada, Chile, Korea and European Communities request was accepted. Japan was notified about the panel composition as per its request. On 24th May 2000, the panel was fully formed ready for the task. Within the shortest problem, the panel came up with a report. The report was distributed to all its members to allow transparency. Both plaintiff and defendant were given the verdict and given adequate time to appeal in case not satisfied. Both Japan and The United States request time modifications so that they can adjust on their sides so as to meet the agreed verdict. After everything was agreed on by both parties, implementation process was initiated. Japan’s right concerning authorization of concession and other obligations in relation to Act 22.6 of Dispute Settlement Understanding, to be retained. The United States agreed to comply with Article 21.6 of DSU (Stirk, 2001 p.13).

Secondly, WTO has a well-structured Dispute Settlement Body. The body elects a panel which comprised a Director General, Secretariat, arbitrators, and advisors. The Director-General oversees and ensures that the whole process was carried on as expected and a quality-satisfactory solution had been attained. He or she takes the requests from either the party to the resolution. Japan makes a lot of requests to the Director-General. The body also has a WTO Secretariat who ensures that every minute of the meeting had been captured in and file accordingly (Stirk, 2001 p.15). There is also an advisory member who nourish the panel with restrictions and that may be modified or not modified. The panel also consists of arbitrators from different member states who provide the panel with the legal framework. This makes the panel to be more articulate and maintain high standards while carrying on their obligation. According to the dispute between Japan and United State, the panel is seen having given a satisfactory resolution; this is because both parties are satisfied with the ruling. The panel also allows adjustment such as time to ensure that there is flexibility. This made the parties in dispute to have a feeling of representation within the organization.

Thirdly, WTO has a rule-based system that ensures that disputes are solved according to rules of the organization. WTO derives its judgment conclusion from both prevailing and precedence rules. Such rules are General Agreement on Tariff and Trade, Tariff Act 0f 1930, Annexes among other Anti-dumping agreement laws set by the organization. This ensures clarity, equality, integrity, communication, and prudence of the organization. This improves trust and transparency among the member states. This also aids in the general corporate image. Referring to the dispute, several laws have quoted in making the judgment. The panel quoted Tariff Act of 1930 Section 735 (c) to rule that The United States violated the law for falling to harmonize Marrakesh Agreement and Anti-dumping Agreement in determining rates (Becroft, 2012 p.22). The panel also used Annexes of Anti-dumping agreement to rule against that The United States also violated the laws when applying their rule concerning Japans Nippon, NKK and Kawasaki steel companies.

Fourthly, the WTO has many other departments that help the Dispute Settlement Body to articulate its mandate. They comprise of the council for trade in goods, council for trade in services, council for trade-related intellectual property rights and the committee. Each bodywork with a common goal; making the body to make comprehensive decisions. According to our case, a department such as trade-related intellectual property, the council of trade in goods and the general committee was actively involved in the case. This was because Japan was claiming back it’s right on importing its iron products to The United States where Department of Commerce and International Trade Commission of The United States had violated (Becroft, 2012 p.23). Fifthly, there is liberty and inclusion at giving of the whole dispute solving process. All decision is made of members’ views and perception toward the problem. Interested member states are served with papers concerning the dispute as soon as the panel is formed. After the circulation of the orders, the members are allowed some time so that they can thoroughly go through and scrutinize it. A feedback is expected from each state as it was served. It is from this feedback that the Dispute Settlement Body will form their solution to the dispute. This creates an environment of participation and members feel associated with the group. According to our case, Brazil, Canada, Chile, Korea and European Communities are served with the case documents and a feedback was expected from them (Becroft, 2012 p.22). The panel based their solution on those feedbacks.

Dispute Settlement Body allows time flexibility to its members. This is done in a reasonable time so that it may allow any adjustment to take place. It makes the parties in the dispute have time to make consultations with other related parties within their governments (Becroft, 2012 p.23). This leads to a more comprehensive report. Also, the body allows time adjustment in its implementation program. This can be evidently seen in our case, Japan request more a reasonable time period to be granted so that implementation of recommendations to determine binding arbitration articles. The United States requested permissions on 22nd November 2002 to implement the report found. For example, it had requested modification of time for implementation since it will promote principal aim of dispute settlement. This enabled the disputing nation to have a smooth run. WTO also promotes peace, stability while reducing tension. After resolution by the Dispute Settlement Body panel, both Japan and The United States agreed to abide by the resolution findings (World Trade Organization, 2010 p.26). This reduced the hostility among the two nations thus promoting peaceful coexistence. The economies of both nations and their affiliates also enjoyed a state of stableness since the trade between the two continued as earlier. After the dispute settlement, it is a rule by WTO that a country to comply with the findings before filing an appeal. This reduces tension and fear of unknown among those nations which trade with the one at the bar

WTO also promotes good correlation with other none governmental organization such United Nation, World Health Organization, International Monetary Fund among others. This is because it ensures that harmony has been maintained within the member states (World Trade Organization, 2010 p.26). Disputes concerning trade are well solved without going into war. This ensures that there is a good correlation via the organizations such United Nations Organs. Organizations such as International Monetary Fund, World Bank and African Development Bank find it smooth to disburse their mandate on time since there are good trade relations among nations that had been ensured by this organization. Referring to this case, the dispute between Japan and The United States was resolved without any conflicts, arguments and within the shortest time possible (World Trade Organization, 2010 p.27). A more comprehensive solution was found. This made a state of economic consistency to exist for all involved nations. In the end, all mention organs were able to carry on their business as usual. Unfinished projects were finished without any interruptions.

Despite WTO being a well-designed institution, it also has some problems that make its operation hard to operate and articulate its mandate. One of the problems that emerged via this case was that WTO makes the judgment using a consensus of decision making. This means that WTO bases their verdict over the member’s agreement toward a problem. This makes the less developed member states disadvantages because their opinions are taken lightly (World Trade Organization, 2010 p19). The superpowers countries also take the advantaged of the situation to exercise their superiority thus equality is put on jeopardy.  According to this dispute, the panel circulates the paper to its member states and expect solutions from them. Only Brazil Canada, Korea, Chile and European Communities were enjoined to the case. Each country’s verdict may have been influenced by their relation with either The United States or Japan. Therefore when forming a judgment, WTO could have given a wrong solution. Also, Brazil and Chile being third world communities, their opinion may have been overruled by that of Korea, Canada and European Communities.

The second problem was that Dispute Settlement Body takes long to find a solution. It takes a long process to solve a dispute. The plaintiff raises his claim to the Director-General in writing. Director General notifies the defendant by serving him with a copy of the said dispute. This takes a maximum of sixty days. Any member states who are interested in the case are requested to submit their request on time. A panel which will resolve the dispute is formed. Copies are distributed to members for consultation. The members are expected to give a feedback for implementation after nine months. From there, the implementation process starts. This means that the process takes approximately a year to find a solution. From our case, we can see that the case started with Japan raising their claim on 18th November 1999 and by 7th July 2005, the implementation process was still going on. This means that the process took approximately six years (Krauss & Pempel, 2004 p.9).

Thirdly, member’s states surrender their freedom of judgment to an outside executive body that is WTO. All members are the government who are sovereigns thus they have the liberty to make their own decision. They have legal, economic and parliamentary bodies which are mandated to solve and find a solution. On the other hand, WTO being a multilateral organization has its set rules and regulations for one to join and be a member (Krauss & Pempel, 2004 p.11). One of the rules is that for a state to be a member, it should abide by a resolution made by the Dispute Settlement Body no matter how harsh the decision may be to them. If not satisfied, a member should first abide by the findings and then raises an appeal afterward. This means one has to accept the judgment no matter how hard it may be. Relating to our case, both The United States and Japan lose their rights to make their own judgments to WTO. This resulted in The United States being forced to accept the panel verdict as per WTO agreement. It also continued to report to Dispute Settlement Body concerning the status of the implementation as one way of compliance with the pact. It was agreed that The United States will not seek to block Japan rights to authorization to suspend concessions or any other obligation.

Fourthly, there is lack of clear guidelines that assist in the selection of the dispute panel and processes. The panel to Dispute Settlement Body is selected solely by the Director-General. There are no set procedures that are laid down to be followed by Director General during panel formation since each member has an equal voting power and therefore qualifies to be on the panel. This might be wrong since a panel can consist of parties with a common interest and allied to one dispute party. There is also lack of clear set guideline on to how the process will be articulated to the end especially the duration of how implementation stage should take place. According to our dispute case, Japan requests the director to form a panel to listen to their dispute on 11th February 2000 and on 20th March 2000, the panel was formed. This shows that the Director-General was taking directives from one party Japan in a way (Becroft, 2012 p.8). There were no rules that restricted Japan from doing so. This might have taken a hand in the resolution arrived. Also during the implementation stage, Japan is persistence on making sure. The United States is implementing resolutions given. Japan had even requested the panel to make The United States implement the resolutions without delaying any more. This makes the organization lose its authoritative muscle power since it was seen as being controlled by Japan to make some of its decisions. This was because there were no rules that prohibited Japan from doing so the organization.

The other problem is that the organization's secretariat is too small. The secretariat has a group of six hundred and thirty staff headed by the Director-General. These staffs are not able to handle all the duties on time and as per requirement. Some dispute had to wait for more time to be allocated in order for them to be carried on. This is because the secretariat body would not be able to handle them at the same time. According to our case, the dispute had to wait until the panel select arbitrators and advisers who are not members of the secretariat. Because of this, the case had to delay before resolutions had been made.  This makes the body lack some muscles to articulate its agenda as required.

The organization also suffers from constricting budget that limits it from articulating its duties.  The budget of the organization comes from contributions of member states. Each member’s contribution is calculated on member’s volume of trade. This means that the bigger the volume of trade the higher the contribution. So if a ‘large’ member state fails to remit their contribution, then the organization will suffer financially. By this, a country like the two disputing powerful nations may use that channel to form allies and be defiant of contributions (Krauss & Pempel, 2004 p.9). This will affect the organization extremely. The other problem is that not all contribution goes to Dispute Settlement Body as some are allocated to international trade centre.

Some member states join together forming blocks and acquire one member voting right. This makes some members more superior than others and put in jeopardy the rule of all members have equal voting rights. This is because when one within that group is affected, they will gang up together as a sign of solidarity. This will make the resolution process more difficult due to the imbalance. Such alliances are The Great 20 which comprises Japan, The United States, Germany, China, and Russia among others, The Cotton Four which is formed by Sub-Saharan countries, European Community currently known as European Union and comprises all nations of Europe except Britain, The Association of South East Asia Nations such as Malaysia, Brunei, Cambodia to name least, MERCOSUR, South Common Market like Argentina, Uruguay, Peru, Ecuador, Colombia, Bolivia, Venezuela and Chile, North America Free Trade Agreement like The United States, Canada and Mexico, finally  Cairns Group which are Thailand, Uruguay, Indonesia, South Africa, Argentina among others (Krauss & Pempel, 2004 p.17). In our case, we are having only one block that is interested and that is European Communities but also other blocks may have had a share in the process since some of their parties are represented by certain member states. States such as The United States may have influenced a block such as North America Free Trade Agreement to be interested.

In conclusion, WTO Dispute Settlement Body is more benefit than limitation. This is because of several factors cited out. To start with, Dispute Settlement System is well organized and articulate it mandate very well. Each member nation has a liberty of raising alarm if it feels that the decision made by the system is justifiable. This makes the spirit of inclusivity among member states to coexist among them. The well-structured bodies of the organization also aid in day to day running obligations one of it being dispute solving. They ensure that everything is carried on as per the set rules. The organization also help in promoting peace among the member states and this enables the trade among member states and over other world nations to enjoy smooth flow of their business operation. The time flexibility gives the party in dispute and interested parties to consults more before giving their verdicts so they give a more comprehensive report back to the panel. This makes it easier for the panel to arrive at a strong solution that has equality in its judgment. The process also involves a long way and more time is taken to arrive at a conclusion. This helps in allowing an amendment to be done and thus give a comprehensive statement. The body also makes follow up on to whether its verdicts are being articulated as per the agreement by the parties in dispute. Even though the body exhibits benefits it also showed weakness, the body infringes freedom of states making their own decision. It has reduced sovereign states to robots. States have to abide by its report whether in agreement or not. There is inequality in their decision-making process as some states may gang up to fight a common state. The blocks also make it too hard to arrive at an equality judgment since they appear to control the body in a way. This is because the body uses the member’s reports to form an opinion. This is some of the problems that the organizations have to solve to make it more prudent, integral and practice equality.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

References

 

Becroft, R. (2012). The standard of review of WTO dispute settlement: Critique and development. Cheltenham, UK: Edward Elgar.

Krauss, E. S., & Pempel, T. J. (2004). Beyond bilateralism: U.S.-Japan relations in the new Asia-Pacific. Stanford, Calif: Stanford Univ. Press.

Stirk, J. D. (2001). United States-Anti-Dumping Measures on Certain Hot-Rolled Steel Products from Japan: Possibilities and Predictions for Compliance with the Appellate Body's Report. Law & Pol'y Int'l Bus., 33, 683.

World Trade Organization. (2010). Dispute settlement reports 2008: Volume 1. Cambridge: Cambridge University Press.