THIRD PARTY INTERVENTION IN THE WTO DISPUTE SETTLEMENT INTERNATIONAL EXPERIENCES AND LESSONS FOR VIETNAM

MINISTRY OF EDUCATION AND TRAINING
FOREIGN TRADE UNIVERSITY

DISSERTATION
THIRD PARTY INTERVENTION IN THE WTO DISPUTE
SETTLEMENT: INTERNATIONAL EXPERIENCES AND LESSONS
FOR VIETNAM

Major: International Trade Policy and Law

Full name: Hoang Hai Van

Ha Noi – 2016


MINISTRY OF EDUCATION AND TRAINING
FOREIGN TRADE UNIVERSITY

DISSERTATION

Third party intervention in the WTO dispute settlement:
International experiences and lessons for Vietnam

Major: International Trade Policy and Law

Full Name: Hoang Hai Van
Supervisor: A. Prof. Ho Thuy Ngoc

Ha Noi - 2016

DECLARATION OF AUTHORSHIP
I, Hoang Hai Van declare that the dissertation with the title below and the work
presented in it are my own and has been generated by me as the result of my own
original research with the supervision of A. Prof. Ho Thuy Ngoc:
Third party intervention in the WTO dispute settlement: International
experiences and lessons for Vietnam.

I confirm that:
-

This work was done wholly or mainly while in candidature for a research
degree at this University;

-

Where any part of this thesis has previously been submitted for a degree or
any other qualification at this University or any other institution, this has
been clearly stated;

-

Where I have consulted the published work of others, this is always clearly
attributed;

-

Where I have quoted from the work of others, the source is always given.
With the exception of such quotations, this thesis is entirely my own work;

-

I have acknowledged all main sources of help;

-

Where the thesis is based on work done by myself jointly with others, I have
made clear exactly what was done by others and what I have contributed
myself;


TABLE OF CONTENTS

CHAPTER 1- INTRODUCTION ......................................................................... 1
CHAPTER 2 – LITERATURE REVIEW............................................................ 6
2.1. Overview of WTO Dispute Settlement mechanism in general and with
the participation of third party.......................................................................... 6
2.1.1. WTO Dispute Settlement Mechanism in general ..................................... 6
2.1.1.1. General Facts ................................................................................... 6
2.1.1.2. The principles of WTO Dispute Settlement ...................................... 15
2.1.1.3. The process of WTO Dispute Settlement .......................................... 17
2.1.2. WTO Dispute Mechanism with the participation of third party ............. 24
2.1.2.1. The procedure to become a third party and the rights of third party in
DSM ............................................................................................................ 24
2.1.2.2. The participation of developed countries, developing countries and
least developing countries as third parties in WTO DSU ............................. 25
2.2. The advantages and disadvantages when joining as a third party in
WTO Dispute Settlement ................................................................................. 32
2.2.1. The Advantages of joining as a third party in WTO Dispute Settlement 32
2.2.2. The Disadvantages of joining as a third party in WTO Dispute Settlement
....................................................................................................................... 34

2.3. The influence of the third party invention on WTO Dispute Settlement
Mechanism........................................................................................................ 35
2.3.1. Lower the possibility of early settlement and raising the cost of
settlement ....................................................................................................... 36
2.3.2. Decrease the discriminatory settlement between complainants and
defendants ....................................................................................................... 37
2.3.3. Lower the winner's pay-off and raising the loser's payoff ...................... 38
2.4. International Experiences of active countries in joining WTO Dispute
Settlement as a third party .............................................................................. 40
2.4.1. China experiences ................................................................................. 41
2.4.1.1. Economy and international policy characteristics ........................... 41


2.4.1.2. China and WTO Dispute Settlement ................................................ 44
2.4.1.3. The participation of China in WTO as third party ........................... 47
2.4.2. Thailand experiences ............................................................................. 50
2.4.2.1. Economy and international policy characteristics ........................... 50
2.4.2.2. Thailand and WTO Dispute Settlement ............................................ 53
2.4.2.3. The participation of Thailand in WTO Dispute Settlement as Third
Party ............................................................................................................ 56
2.4.3. India experiences................................................................................... 57
2.4.3.1. Economy and international policy characteristics ........................... 57
2.4.3.2. India and WTO Dispute Settlement ................................................. 61
2.4.3.3. The participation of India in WTO as third party ............................ 62
CHAPTER 3 – FINDINGS ................................................................................. 67
3.1. The participation of Vietnam in WTO Dispute Settlement as a third
party .................................................................................................................. 67
3.2. Impacts on Vietnam when joining WTO Dispute Settlement as a third
party .................................................................................................................. 70
3.2.1. Positive impacts on Vietnam when joining WTO Dispute Settlement as

the third party.................................................................................................. 70
3.2.1.1. Enhance the legal capacity of the country ....................................... 70
3.2.1.2. Gain public benefits under the principles of Most-Favored-Nation . 71
3.2.2. Negative impacts on Vietnam when joining WTO Dispute Settlement as
the third party.................................................................................................. 73
3.2.2.1. Possible Trade Cross-Retaliation .................................................... 73
3.2.2.2. Resource requirements .................................................................... 73
3.3. Lessons for Vietnam when joining WTO Dispute Settlement as a third
party .................................................................................................................. 74
3.3.1. Government perspectives on the active participation as a third party ..... 74
3.3.2. Develop human resource and ad hoc agencies devoting to WTO Dispute
Settlement ....................................................................................................... 77
3.3.3. Balance between the benefits and the risks when deciding to join in WTO
Dispute Settlement as a third party. ................................................................. 78


3.3.4. Enhance the cooperation between governmental department and private
sectors. ............................................................................................................ 78
3.3.5. Mobilize the resources outside the country. ........................................... 80
CHAPTER 4 – CONCLUSION .......................................................................... 81
ANNEX A ............................................................................................................ 84
ANNEX B ............................................................................................................. 91
ANNEX C ............................................................................................................ 93
ANNEX D ............................................................................................................ 95
BIBLIOGRAPHY ............................................................................................. 101


LIST OF TABLES

Table 1: WTO members involved in disputes, 1995 to 2015 .................................... 8

Table 2: Request for consultations in 2015 .............................................................. 9
Table 3: Active appeals and panels as of 31 December 2015 ................................. 13
Table 4: Time Frame of WTO Dispute Settlement Process .................................... 22
Table 5: China Economy Data ............................................................................... 42
Table 6: Cases involving as a third party, 1995-2015 ............................................. 45
Table 7: Dispute cases involving China 1995 – 2016 ............................................. 47
Table 8: Indicators of Thailand, from 2011-2014 ................................................... 52
Table 9: Dispute Settlement involving Thailand .................................................... 54
Table 10: Cases involving Thailand as the complainants, 1995-2015..................... 55
Table 11 : Cases involving Thailand as defendants, 1995-2015 ............................. 56
Table 12: Economic Facts of India ........................................................................ 59
Table 13: Dispute cases involving India ................................................................ 63
Table 14: Disputes involving Vietnam as third Party ............................................. 68

LIST OF FIGURES
Figure 1: WTO agreements referred to in requests for consultations, 1995-2005
(number of times) .................................................................................................. 10
Figure 2: Dispute Settlement Procedure ................................................................. 23
Figure 3: Participation of Advanced Economies .................................................... 28
Figure 4: Participation of developing countries as third parties .............................. 30
Figure 5: The participation of least developed countries as third parties ................ 31
Figure 6: The most active members involving in WTO dispute settlement, 19952015 ...................................................................................................................... 40


LIST OF ABBREVIATIONS
No

Acronym

Definition

1

WTO

World Trade Organization

2

GATT

General Agreement on Tariffs and Trade

3

DSM

Dispute Settlement Mechanism

4

DSU

Dispute Settlement Understanding

5

ICJ

International Court of Justice

6

The UN

The United Nation

7

TRIPS

The Agreement on Trade-Related Aspects of
Intellectual Property Rights

8

GATS

The General Agreement on Trade in Services

9

GDP

Gross Domestic Product

10

MFN

Most-Favoured-Nation

11

IMF

International Monetary Fund

12

FDI

Foreign Direct Investment

13

ACWL

Advisory Centre on WTO Law

14

US

The United States

15

EU

European Community


CHAPTER 1- INTRODUCTION
Overview
World Trade Organization (WTO) was officially established after the date of
January 1st 1995 as a result of the Uruguay Round (1986 to 1995) with the
predecessor the General Agreement on Tariffs and Trade (GATT 1947). WTO is
considered as a significant success in the development of legal framework in
international trade of the twentieth century with a massive system of treaties and
agreements, the list of tariff concessions which regulate the commercial rights and
obligations of the member states. With the ambition of accelerating the process of
international trade liberalization and settling all the conflicts among member states
of multilateral trade, the operation of WTO has had a huge effect on the long-term
future of the world economy. As calculated, around 95% of commercial activities
in the world nowadays are governed by the Agreement of this Organization.
To ensure the full implementation of the Agreement, WTO dispute settlement
mechanism (DSM) was established. This mechanism is the realization of the legal
trend of the dispute settlement in international trade today, gradually replacing the
old dispute resolution method which was effected by politics and diplomacy. This
dispute settlement was the successor to the provisions on dispute settlements which
had been promoting positive effects in 50 years of the history of the GATT 1947.
Learning from the shortcomings of the old mechanism, some basic improvements in
procedures have been included in the new mechanism, a significant contribution in
improving the judicial nature of this procedure as well as enhancing the binding
decisions of the dispute resolution.
One of countries the positive changes of the DSM of the WTO is a more active
involvement of developing countries (Nguyen Tien Vinh, Foreign experience and
the enhancing of the effective participation of Vietnam in the Dispute Settlement
Mechanism of the World Trade Organization, 2012). Within 47 years of existence

of the GATT, from 1947 to 1995, developing countries took part in just 20% of the
lawsuit as plaintiffs, 80% of the remaining lawsuits was launched by developed
countries. This disparity has changed since WTO came into operation. According to

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the statistics of WTO, by the end of 2015, 185 out of more than 500 requests for
consultations were conducted by developing countries, equivalent to 37% of all
requests. At first glance, this figure shows that the difference does not really matter
compared to the previous situation of GATT. However, if the analysis in each
divided stage, probably we will see more clearly its significant meaning. In
particular, in the first 5 years of the WTO, from 1995 to 2001, on a total of 219
requests for consultations, there were 56 requests made by developing countries,
accounting for 25.6%. In the next 5 years, from 2001 to 2006, in the context of the
total number of disputes dropped to 116 cases, the number of lawsuits started by
developing countries was 59, equivalent to 50.9%. In the last 10 years, from 2006 to
2010, when the total number of disputes continues to drop to 83 cases, the number
of cases this kind of country was still 42, equals to 50.6% (WTO, Annual Report
2015). The figure of this more than 50% proportion is significantly encouraging.
In other aspect, the dispute settlement is usually known as the legal discussion
between two parties, the defendant and plaintiff. However there is a fact that these
two parties seldom negotiate alone, there exists the participation of one or several
other members who are willing to be involved and influence the outcome of the
resolution (Marc L. Busch and Eric Reinhardt, Three is a Crowd, 2006). Until the
1970’s, in the dispute United Kingdom—Dollar Area Quotas, third parties first
participated in the panel procedure instigated by GATT Council. However it was
not officially noticed until the insurance of the Understanding on Notification,
Consultation,

Dispute

Settlement

and

Surveillance

(hereinafter

“1979

Understanding”). From then, this kind of dispute resolution has took three-fifth of
the whole number of dispute settlement, which proves that the popularity of third
parties’ participation on WTO.
After 9 years of WTO membership, Vietnam had an important beginning in
using the dispute settlement mechanism of the WTO to protect the rights and
interests of its enterprises in international trade: On the day of the 1st of February
2010, the Government of Vietnam set a very first step in its WTO mission by
sending a request for consultations to the US government related to the antidumping measures on products frozen warm water shrimp imported from Vietnam.

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From then, Vietnam seemed to realize the importance of using WTO Dispute
Settlement Mechanism as an effective measures to protect the interests of Vietnam
in international trade relations. On the other hand, the use of this mechanism as a
ddefendant or plaintiff requires an abundance of human resources, experiences as
well as financial support. Meanwhile the participation as a third party is very
noticeable because it will be an opportunity to learn and accumulate lessons and

experience in how to take part in a WTO dispute settlement. Moreover, although not
directly involved in the settlement, Vietnam can gain some benefits from the
outcomes of a settlement thanks to the non-discrimination principle of Most
Favoured Nation.
Rationale of the topic
It cannot be denied that being a developing country, as well as the fact that
compared with many other members of WTO, Vietnam is rather weak and short in
dispute settlement experience, it is necessary for Vietnam to pay more attention in
enhancing the ability and capability in disputing a settlement, and joining as a third
party in WTO dispute settlement is one of them.
Therefore, the purpose of this paper is that, through the analysis about WTO
DSM in general and third party intervention in WTO DSM in particular, in addition
to consider the experiences of some countries, identify and withdraw the lessons for
Vietnam in how to be more effective in using DSM and protecting its benefits.
Research questions
In alignment with my interest in studying lessons for Vietnam in joining as a
third party in WTO dispute resolution, this paper contributes to the research by
answering the following research questions.
The first question which should be answered is what the WTO DSM is and
how a third party can intervene in this mechanism. To exactly understand this issue,
WTO Agreements and Dispute Settlement Understanding are the most reliable
information sources to know how the DSM works as well as the rights and
obligations of third parties.

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With the participation of the third party, the outcome of the dispute settlement
is more likely to change compared with the time there are only two parties in the
resolutions. Moreover, by intervening the settlement, a third party holds an

opportunity to enjoy several benefits in both public and private concession.
Understanding more about these issues is the second point which will be discussed
in this paper.
More than 20 years of operation must have seen the success of many countries
in using DSM to protect their rights and interests in international trade. China,
Thailand and India, which have the similar conditions as Vietnam, are all very
active in this kind of settlement and worth being considered as examples for
Vietnam. This paper also analyses these countries to see what make them so
successful in WTO DSM.
After considering examples of other countries, parallel with the factual
situation of Vietnam, the most essential question which should be withdrawn from
this paper is the lessons for Vietnam to have more efficiency in raising capacity in
WTO dispute settlement.
Methodology
Any analysis of this paper will have to take account of two main methodology.
First, the factual record of dispute cases (Who was involved, who began each case
and against whom? Who participated as the third party and what were the results?)
as well as the previous researches around the major issues of WTO DSM. This kind
of methodology which is called Desk Research will help us have the basic
understanding about DSM and give us the foundation for withdrawing findings for
the case of Vietnam. Second, although the invention of third party is not so fresh,
not so many public research discussing about it. At this time, opinions and
comments of several professors who gained a lot of experiences in WTO for
comments and opinions are very essential. This paper will use them as the reliable
reference to analyse this topic. It means that Expert Methodology will be used in
this paper.

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Scope of Research
This paper will discuss around the overview information of the WTO as well
as its dispute settlement such as the general facts about WTO, the principles and
process of WTO DSM. However, it will analyse more detailed about third party
intervention in WTO settlement. Talking about this intervention, the paper will
analyse the procedures to become a third party and the rights of third party in the
dispute proceedings, the advantages and disadvantages of joining DSM as a third
party. Moreover, the influence of third party intervention on WTO DSM is also an
important aspect to research in this paper.
To access the practical view on third party intervention in DSM, this paper
will consider some international experiences. It picks up only 3 examples to
research for this issue which are China, Thailand and India. The reasons of choosing
these members are that they are one of the most active members in joining WTO
DSM as third party, besides they hold the similarities in trade policy as well as the
economic characteristics as Vietnam.
After going through all above research, the paper will withdraw several
findings implicating to Vietnam situation and lessons for Vietnam to have more
effective involvement in DSM as third party.
Structure of the paper
With all of the above reasons and background, this paper will be divided into
three major parts as below:
Chapter 1: Introduction
Chapter 2: Literature review
Chapter 3: Findings
Chapter 4: Conclusions

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CHAPTER 2 – LITERATURE REVIEW

2.1. Overview of WTO Dispute Settlement mechanism in general and with the
participation of third party
2.1.1. WTO Dispute Settlement Mechanism in general
2.1.1.1. General Facts
Formed on the basic of Understanding on Rules and Procedures Governing the
Settlement of Disputes (Dispute Settlement Understanding – DSU), the dispute
settlement mechanism is one of the major successes of the Uruguay Round which led
to the birth of World Trade Organization. Until now, Dispute settlement is the central
pillar of the multilateral trading system, and the WTO’s unique contribution to the
stability of the global economy. Joining the DSM allows the member states to protect
their policies and measures and commercial interests, fight against the principle
violation made by other WTO member countries. That the DSM be used effectively is
the expression as well as conditions for ensuring the full participation, integration and
efficiency of a country into the multilateral trading system of the WTO.
In fact, the complexity of the rules, procedures and legal processes which is
more and more increasingly strengthen the mechanisms, especially the existence of
many of the provisions which are detrimental to the developing countries, least
developing countries, small countries and new entrants are and will continue to be
the significant obstacle to the participation of these countries (Nguyen Tien Vinh,
2012). Currently, besides the more active participation and the effectiveness of a
humble number of developing countries, the majority of developing and least
developing countries remained outside the WTO DSM.
A study showed that from 1995 to the end of 2015, The total of 500 disputes
over the 20-year history of the WTO contrasts with the total of 300 disputes brought
under the dispute settlement system of the General Agreement on Tariffs and Trade
(GATT) — the predecessor to the WTO — over a period of 47 years (WTO, Annual
Report 2015). “There is no doubt that the WTO dispute settlement system has served
the membership extremely well,” said Director-General Roberto Azevêdo. “It is a

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system recognized the world over for providing fair, high quality results that respond
to both developing and developed members”. Table 1 provides further information on
the complainants and respondents involved in disputes since 1995.
Developing country members initiated seven of the 13 new requests for
consultations, the first stage in the disputes process, filed in 2015, compared with
six requests initiated by developed countries. Developing country members were the
respondents in nine disputes and developed countries in four disputes. Among the
developing country members initiating disputes, Chinese Taipei initiated two
dispute settlement proceedings during 2015. In one of the disputes, it has requested
consultations with Indonesia regarding a safeguard measure imposed on imports of
certain flat-rolled iron or steel products. In a second dispute, it has requested
consultations with India regarding anti-dumping duties imposed on imports of USB
flash drives originating in Chinese Taipei. Pakistan has requested consultations with
South Africa regarding provisional anti-dumping duties on imports of Portland
cement products from Pakistan. Indonesia has commenced consultations with the
United States over concerns about the imposition of anti-dumping and
countervailing measures on certain coated paper products from Indonesia. Also in
2015, Viet Nam requested consultations with Indonesia regarding a safeguard
measure on imports of certain flat-rolled iron or steel products from Viet Nam.
Other active WTO members during 2015 included Japan, Russia and the
United States, which have each initiated two disputes in areas ranging from
measures imposed by Brazil that affect taxation and charges in the automotive
sector and the electronics and technology industry (complaint by Japan) to measures
adopted by Korea in the wake of the accident at the Fukushima Daiichi nuclear
power plant. Tables 2 and 3 provide further information on the complainants and
respondents participating in consultations and on the active panels and appeals at
the end of 2015.

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Table 1: WTO members involved in disputes, 1995 to 2015

Source: WTO Annual Report 2016

8


Table 2: Request for consultations in 2015

Source: WTO Annual Report 2016
The disputes at the WTO so far mainly relating to the traditional trade sectors
(WTO, Annual Report 2015). Specifically, out of 500 requests for consultations
carried out, up to 398 requests relating to the GATT, 112 requests relating to Antidumping Agreement and 108 requests relating to Subsidies and Countervailing
Measures agreements at government level. Along with the expansion of multilateral
adjustment for the commercial sector from GATT to WTO, the WTO disputes
arising becoming more and more diverse. By the end of 2015, with the total number
of 500 requests for consultations, there were 34 requests relating to the Agreement
on Trade-Related Aspects of Intellectual Property Rights (TRIPS), and 23 requests
relating to the The General Agreement on Trade in Services (GATS). Although the
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number of disputes around these two agreements was not a large percentage, but
they tended to be on the increase (see Figure 1)
Figure 1: WTO agreements referred to in requests for consultations, 1995-2005
(number of times)

Source: WTO, Annual Report 2015
Regular usage and obvious efficiency of WTO DSM, in comparison with GATT
and other dispute settlement mechanisms (Nguyen Thi Thu Trang, Dispute
Settlement Mechanism, 2010), can be explained by some major reasons:
Firstly, since it was founded in 1995 to present, WTO has become one of the
global international institutions with the participation of almost all the countries in
the world. Looking back to the end of the GATT period, with 128 member countries
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signed, the current number of WTO members are 164 countries with the more
diversity of political systems, economic development levels. The change in the
number and composition of the Member States had a certain contribution to the
increase in the disputes at the WTO in comparison to the previous period.
Secondly, the process of trade liberalization since the Uruguay Round which
led to the establishment of the WTO has made strides. Besides the traditional areas
of trade in goods in GATT, the WTO had extended its area to the field of trade in
services, intellectual property-related trade. Even in the field of trade in goods, the
WTO had also added important subjects such as trade in agricultural products,
textiles and clothing into the multilateral framework. Currently, about 30
agreements of all kinds, a series of decisions and thousands of page documents
containing the commitment of Member States, we can say that the scope the WTO
is extremely large, referring to all aspects of trade activities of the country. In
particular, the birth of the WTO was marked as a shift in the quality of international
trade legal framework: international regulations moved from being mentioned only
the trade measures applied at the country border, to a deeper intervention on “nonborder” policies and measures of the member states; from prohibiting the Member
States to make a number of acts, specific trade measures, to asking the countries
issuing policies, regulations and implementation of national trade measures in line
with the WTO regulations. It was the expansion of the scope, adjustment field and

the change in the approach of the multilateral trade provisions had an important
contribution to the increase in the number of disputes at the WTO.
Thirdly, since coming into operation, the WTO DSM had been evaluated as a
mechanism for resolving international disputes with many outstanding advantages
not only when being compared to the GATT but also with others mechanisms.
Institutionally, the most important improvement was the creation of a permanent
Appellate Body to review the legal issues which had been resolved by a Panel in
case of Appellate request. In terms of procedure, the order and stage, procedural
time limits are specified clearly and more strictly. Especially, the application of the
"negative (reverse) consensus" principle of the Dispute Settlement Body eliminated
the risk of the parties to deliberately slow down or cause a deadlock for the dispute
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resolution process. The changes of the DSU contributed mainly to the strengthening
of the legal element of the WTO DSM compared with the mechanism which mainly
based on negotiation and diplomacy of GATT. DSM successfully built up the trust
of the member countries, especially small and developing countries in proactively
using DSM.
Fourthly, in fact, the trend of a rapid increase in international trade disputes
appeared immediately at the same time with Uruguay Round. Since the WTO was
established, this trend has continued to confirm that fact. After several years of
operation, even though the number of disputes tended to fall, however, if compared
to the GATT, it was still high. DSM has been used as an alternative to solve the
impasse between the Member States. Moreover, some countries also want to take
the dispute to be dealt with at the WTO to pressure, to influence the process of the
Doha Negotiation Round. In this context, the increase in WTO disputes tend to turn
it head to an increase.

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Table 3: Active appeals and panels as of 31 December 2015

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Source: WTO, Annual Report 2015
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2.1.1.2. The principles of WTO Dispute Settlement
WTO DSM was established based on 4 major principles: equitable, fast,
effective, and mutually acceptable (World Trade Organization, Understanding the
WTO, Chapter 3: Dispute Settlement). Disputes in the WTO are essentially about
broken promises. WTO members have agreed that if they believe fellow-members
are violating trade rules, they will use the multilateral system of settling disputes
instead of taking action unilaterally. That means abiding by the agreed procedures,
and respecting judgments.
Equitable
The outcome of the dispute resolution process is the decision and
recommendations of the Dispute Settlement Body. Under the provisions of the
DSU, recommendations and decisions must not increase or decrease the rights and
obligations of the parties which are regulated in the relevant agreements (Clause 2,
Article 3 of the DSU). At the same time the decision on the dispute must not
resolved eliminate or reduce the benefits that any Member may hold in the relevant
agreement (Clause 5, Article 3 of the DSU).
Article 3.2 of the DSU: “The dispute settlement system of the WTO is a
central element in providing security and predictability to the multilateral trading
system. The Members recognize that it serves to preserve the rights and obligations

of Members under the covered agreements, and to clarify the existing provisions of
those agreements in accordance with customary rules of interpretation of public
international law. Recommendations and rulings of the DSB cannot add to or
diminish the rights and obligations provided in the covered agreements”
Article 3.5 of the DSU: “All solutions to matters formally raised under the
consultation and dispute settlement provisions of the covered agreements, including
arbitration awards, shall be consistent with those agreements and shall not nullify
or impair benefits accruing to any Member under those agreements, nor impede the
attainment of any objective of those agreements”
(Source: Understanding on Rules and Procedures Governing the Settlement of
Disputes)
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Fast
Essential issues for the effective implementation of the WTO functions and
maintenance of the appropriate balance between the rights and obligations of
Members lies in the quick resolution of disputes (Article 3.3 of the DSU). So that
once the benefits directly or indirectly of Members under the provisions of the
relevant agreement are violated, the benefits needs to be protected quickly.
Article 3.3: “The prompt settlement of situations in which a Member
considers that any benefits accruing to it directly or indirectly under the covered
agreements are being impaired by measures taken by another Member is essential
to the effective functioning of the WTO and the maintenance of a proper balance
between the rights and obligations of Members”.
(Source: Understanding on Rules and Procedures Governing the Settlement of
Disputes)
Effective
To protect the rights of the parties to the dispute, Members should express
their determination to enhance the effectiveness in resolving the dispute. This view

was confirmed in Article 4.1 of the DSU, according to which the effectiveness is
defined in the consultation stage, the first procedure in the process of dispute
resolution.
Article 4.1: “Members affirm their resolve to strengthen and improve the
effectiveness of the consultation procedures employed by Members”.
(Source: Understanding on Rules and Procedures Governing the Settlement of
Disputes)
Mutually acceptable
Before requesting a dispute, the plaintiff need to review the conditions of
whether their complaints can come into an agreement or not. Because "a solution
where the disputing parties can accept and conform to the relevant agreements will
prevail" (Article 3.7 of the DSU DSU).

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Article 3.7: “Before bringing a case, a Member shall exercise its judgement
as to whether action under these procedures would be fruitful. The aim of the
dispute settlement mechanism is to secure a positive solution to a dispute. A
solution mutually acceptable to the parties to a 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 usually to secure
the withdrawal of the measures concerned if these are found to be inconsistent with
the provisions of any of the covered agreements. The provision of compensation
should be resorted to only if the immediate withdrawal of the measure is
impracticable and as a temporary measure pending the withdrawal of the measure
which is inconsistent with a covered agreement. The last resort which this
Understanding provides to the Member invoking the dispute settlement procedures
is the possibility of suspending the application of concessions or other obligations
under the covered agreements on a discriminatory basis vis-à-vis the other

Member, subject to authorization by the DSB of such measures”.
(Source: Understanding on Rules and Procedures Governing the Settlement of
Disputes)
In addition, WTO still accepts GATT 1947’s principle in settling the disputes
such as: maintenance of proper balance between the rights and obligations,
settlement disputes in good faith, prohibit unilateral application of retaliatory
measures without the permission of the WTO, the most essential principles for the
existence of international trade (Nguyen Thi Thu Trang, Dispute Settlement
Mechanism, 2010). However, these principles do not prevent the members from
unilaterally redressing the violation of other member under WTO laws. Knowing
this point, many advanced countries like US, EU still some private law such as
Super 301 in US Commercial Law, or 384/96 regulation of EU to retaliate other
members.
2.1.1.3. The process of WTO Dispute Settlement
Settling disputes is the responsibility of the Dispute Settlement Body (the
General Council in another guise), which consists of all WTO members. The

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