CHINA’S EXPERIENCE IN DEALING WITH WTO DISPUTE RESOLUTION AND LESSONS FOR VIETNAM

MINISTRY OF EDUCATION AND TRAINING
FOREIGN TRADE UNIVERSITY

MASTER THESIS

CHINA’S EXPERIENCE IN DEALING WITH WTO DISPUTE
RESOLUTION AND LESSONS FOR VIETNAM

International Trade Policy and Law

FULL NAME: DANG THI TRANG

Hanoi, 2019


MINISTRY OF EDUCATION AND TRAINING
FOREIGN TRADE UNIVERSITY

MASTER THESIS

CHINA’S EXPERIENCE IN DEALING WITH WTO DISPUTE
RESOLUTION AND LESSONS FOR VIETNAM

Major: Economics
Specialization: International Trade Policy and Law
Code: 8310106

Full name: Dang Thi Trang
ID: 1606060020
Supervisor: Dr. Nguyen Binh Minh

Hanoi, 2019


REASSURANCE
I hereby declare that my work is the result of my personal research and study
under the support and supervision of Dr. Nguyen Binh Minh.
In the whole content of the thesis, what is presented is either personal or
aggregated from multiple sources of references which are legible and legally cited.

Hanoi, April 2019

Dang Thi Trang


ACKNOWLEDGEMENT
First and foremost, I would like to express my sincere gratitude to my advisor
Dr. Nguyen Binh Minh for the continuous support of my graduation master thesis,
for his patience, guidance and knowledge. Hardly could I complete my work
without his enthusiastic guidance and suggestions throughout the past five months.
Beside my advisor, I would like to thank all professors and lecturers in
Foreign Trade University, especially professors and lecturers teaching in Master
Program of International Trade Policy and Law, who spent all enthusiasm and
dedication to bring knowledge to students. The knowledge acquired in the learning
process is not only necessary for me to finish my thesis but also the luggage that I
would confidently carry into the outside world.
My special thanks also goes to my family, my best friends and my classmates
for the encouragement and spiritual supports they gave me to overcome hardness
when doing my master thesis.

Hanoi, April 2019

Dang Thi Trang


TABLE OF CONTENT
REASSURANCE ........................................................................................................ 1
ACKNOWLEDGEMENT .......................................................................................... 2
LIST OF ABBREVIATION ....................................................................................... 5
LIST OF TABLE ........................................................................................................ 6
LIST OF FIGURE ....................................................................................................... 6
LIST OF DIAGRAM .................................................................................................. 6
LIST OF MAP............................................................................................................. 6
INTRODUCTION ....................................................................................................... 1
CHAPTER 1: MECHANISM OF DISPUTE RESOLUTION IN WTO .................... 7
1.1. Definition of Dispute resolution .......................................................................7
1.2. Procedure of Dispute Settlement Mechanism ..................................................9
1.2.1 Procedure of Dispute Settlement Mechanism .............................................9
1.2.2. WTO Dispute Mechanism with the participation of third party ..............15
1.3. Overview of WTO dispute settlement mechanism .........................................19
CHAPTER 2: CHINA’S EXPERIENCES IN DEALING WITH DISPUTE
RESOLUTION UNDER WTO ................................................................................. 24
2.1. Overview about China’s economy and policy ................................................24
2.1.1. China’s economy and policy ....................................................................24
2.1.2. Overview of China in dispute resolution under WTO .............................27
2.2. China’s experience in dealing with WTO dispute resolution as a complaint.29
2.2.1. China’s experience in dealing with WTO dispute resolution as a
complaint in “Acceptance” period .....................................................................29
2.2.2. China’s experience in dealing with WTO dispute resolution as a
complaint in “Consolidation” period..................................................................31
2.2.3. China’s experience in dealing with WTO dispute resolution as a

complaint in “Activation” period .......................................................................34
2.3. China’s experience in dealing with WTO dispute resolution as a respondence
...............................................................................................................................37


2.3.1. China’s experience when being the respondence during the “Acceptance”
period ..................................................................................................................37
2.3.2.

China’s experience

when

being

the

respondence

during the

“Consolidation” period and “Activation” period ...............................................39
2.4. China’s experience in dealing with WTO dispute resolution as a third party 42
2.5. Experiences from China in dealing with WTO dispute resolution .................45
2.5.1. China’s characteristics in dealing with WTO dispute resolution .............45
2.5.2. Experiences from China in dealing with WTO dispute resolution ..........48
CHAPTER 3: LESSONS FOR VIETNAM IN DEALING WITH WTO DISPUTE
RESOLUTION .......................................................................................................... 50
3.1. Overview about Vietnam’s economy after WTO accession ..........................50
3.2. Vietnam participates in WTO dispute resolution ...........................................51

3.2.1.Vietnam in dealing with WTO dispute resolution as complaint ...............52
3.2.2. Vietnam in dealing with WTO dispute resolution as a respondence .......56
3.2.3. Vietnam in dealing with WTO dispute resolution as a third party ..........58
3.3. Advantages and challenges of Vietnam in WTO disputes resolution after
WTO accession ......................................................................................................59
3.3.1. Advantages ...............................................................................................59
3.3.2. Challenges ................................................................................................60
3.4. Lessons for Vietnam when joining WTO Dispute Resolution .......................60
CONCLUSION ......................................................................................................... 67
LIST OF REFERENCES .......................................................................................... 70
APPENDIX ............................................................................................................... 72
APPENDIX 01: CHINA INVOLVING IN WTO DISPUTE SETTLEMENT AS
COMPLAINT ........................................................................................................... 72
APPENDIX 02: US – CHINA TRADE WAR ......................................................... 74
APPENDIX 03: VIETNAM INVOLVING IN WTO DISPUTE SETTLEMENT AS
THIRD PARTY ........................................................................................................ 81


LIST OF ABBREVIATION
Number

Abbreviation

Expansion

1

ACWL

2

DSB

Dispute Settlement Body

3

DSM

Dispute Settlement Mechanism

4

DSU

Dispute Settlement Understanding

5

GATT

General Agreement on Tariffs and Trade

6

GATS

General Agreement on Trade in Services

7

GDP

Gross Domestic Product

8

IMF

International Monetary Fund

9

US

United State

10

TRIPS

Trade-Related Aspects of Intellectual Property Rights

11

VCCI

Vietnam Chamber of Commerce and Industry

12

VASEP

13

WTO

Advisory Center on WTO Law

Vietnam Association of Seafood Exporters and
Producers
World Trade Organization


LIST OF TABLE
Table 1.1: Leadtime for processing a dispute ........................................................... 10
Table 2.1: China: Structure of the Economy 2017.................................................... 24
Table 2.2: China economy data, 2017 ....................................................................... 25
Table 3.1: Vietnam economy data, 2018 ...……….……………………………….50
Table 3.2: Vietnam participates in WTO dispute settlement as a complaint ............ 43
Table 3.3: WTO members participate in dispute settlement as a respondence ……57

LIST OF FIGURE
Figure 1.1: WTO agreements referred to in requests for consultations,
1995 - 2016 ............................................................................................................... 21

LIST OF DIAGRAM
Diagram 1.1: Process of solving a case in Dispute settlement mechanism .............. 11

LIST OF MAP

Map 1.1: Map of disputes between WTO Members, 2019 ....................................... 20
Map 2.1: China involving in WTO dispute settlement ............................................. 28
Map 3.1: Vietnam participates in WTO disputes settlement .................................... 52


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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. WTO dispute settlement mechanism (DSM) is one
of the systems which was established to protect the rights and interests of WTO
members in international trade. 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.
On 11 December 2001, China became a Member of the World Trade
Organization (WTO) after seventeen years of tough negotiations. This was an
important step towards making the WTO a truly world organization. China
considers that its ability to use dispute settlement mechanism to defend its rights
and interests which is an important benefit of its WTO membership.
Regarding to Vietnam, after 12 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. From then, Vietnam seemed to realize the importance of using WTO
Dispute Settlement Mechanism as an effective measure to protect the interests in
international trade relations. On the other hand, the use of this mechanism as a
defendant or plaintiff requires an abundance of human resources, experiences as


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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.
It cannot be denied that being a developed country, as well as the fact that
compared with many other members of WTO, China is becoming the country who
use the dispute settlement mechanism effectively. 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, by learning lessons
from China like joining as a third party in WTO dispute settlement. Therefore, the
purpose of this paper is that, through the analysis about China’s experience in WTO
dispute settlement in particular, give the lessons for Vietnam in how to be more
effective in using DSM and protecting its benefits.
Literature review
China in dealing with Dispute settlement in WTO has attracted domestic and
foreign researchers. From 2001 to 2012, there are many researches analyze about
the participation of China in WTO and how China using Dispute settlement
mechanism to protect themselves. However, these researches only point out the

facts of China in dealing with WTO dispute settlement and attitude for this problem.
That study only went into understanding the general and basic issues of WTO
dispute settlement mechanism and offering some solutions to overcome difficulties
and obstacles and improve the efficiency in the process dispute resolution. The
analysis of the reasons for winning and lessons learned from China has not yet been
drawn.
The Chinese expert who first studied this problem who we have to mention is
Dr. Ji Wenhua - an official in charge of dispute settlement activities at China’s
WTO Mission in Geneva. He was the one who contributed and advised the Chinese
government on how to face international dispute resolution in the integration


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process: Wenhua JI and Cui HUANG, “China’s Experience in Dealing with WTO
Dispute Settlement: A Chinese Perspective”, (2009). Besides, we also can mention
many researches about this issue: Jessica C. Liao, “China’s Reluctant Usage of The
WTO Dispute Settlement System”, (2011)
Regarding to the foreign experts, there are many experts choosing this field for
their research. Since China joined WTO, Henry Gao has followed closely the
process of China in dealing with WTO dispute settlement. He has many in-depth
articles on this issue. In 2007, he had an analysis of China's experience participating
in the international dispute resolution process at the time of joining. Subsequently,
in 2010 Mr Henry Gao continued to work with Hanyu Liu to study about the WTO
dispute settlement, including an analysis of China's current international dispute
settlement process. In 2011, Henry Gao continued to make certain judgments about
China's use of the international trade dispute settlement system, assessing China's
transformation in acquiring the trade disputes in WTO, from passive reception at the
first stage to active making comments and rules in the WTO’s intergration.
Henry S. GAO, “Taming the Dragon: China 's Experience in the WTO Dispute

Settlement System”, (2007)
Hanyu liu & Henry S. GAO, “Dispute settlement at the WTO”, 2010
Henry S. GAO, “China in the WTO dispute settlement system: From passive
rule-taker to active rule-maker?” (2011)
In additions, there are many researches about this field, “China’s Evolving
Role in WTO Dispute Settlement: Acceptance, Consolidation and Activation” by
Bryan Mercurio and Mitali Tyagi at The Chinese University of Hong Kong in 2012.
This research also has a very profound analysis of China's attitude towards the
international dispute settlement mechanism after its accession to the WTO in 2012.
The article divided time into 3 stages: “Acceptance, consolidation and activation”
which clearly analyze the attitudes of China at this stage through each specific
situation. However, the article has not given China's experience and reasoning and
arguments in each case, it only shows the Chinese attitude.


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Research questions
In alignment with my interest in studying lessons for Vietnam in joining as a
member of WTO and using the WTO dispute settlement mechanism effectively, this
paper contributes to the research by answering the following research questions.
The first question which should be answered is what the WTO Dispute
Settlement Mechanism is. To exactly understand this issue, WTO Agreements and
Dispute Settlement Understanding are the most reliable information sources to
know how the Dispute Settlement Mechanism works.
With nearly 20 years of in using DSM to protect their rights and interests in
international trade. China, which have the similar conditions as Vietnam, is very
active in this kind of settlement and worth being considered as an example for
Vietnam. The changes in Chinese attitudes from the start of WTO accession until
they became very popular users of the international dispute settlement system gave

Vietnam a lot of lessons. This paper analyzes China's experience when dealing with
international dispute resolution for nearly twenty years from which it draws lessons
for Vietnam.
The second question is how China participate in WTO dispute settlement
mechanism and point out that how they becoming get on well and successfully
using it. After that, 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 will help us have the basic understanding about DSM and
give us the foundation for withdrawing findings for the case of Vietnam.


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Second, although the invention of third party is not so fresh, not so many
public researches 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
analyze this topic. It means that Expert Methodology will be used in this paper.
Scope of Research
This paper will discuss around the overview information of the WTO as well
as its dispute settlement like: what is dispute settlement, the procedure of WTO
dispute settlement and overview of dispute settlement in WTO now.
This paper will analyze detailed about China in using Dispute Settlement
Mechanism to protect their rights and interests as a complaint, respondence, a third

party from which to make the most objective assessments of China’s attitude to
getting the experiences for each certain period.
Along with the development of the economy and the participation in WTO,
through analyzing China’s participation in the dispute settlement system one can see
that three distinct phases emerge, namely an Acceptance, Consolidation and
Activation (Bryan Mercurio and Mitali Tyagi, 2012). Through these three distinct
phases, the article describes how China has transitioned from a timid new member
lacking the confidence and understanding to fully utilise the dispute settlement
system to become on the most prolific users of the system – in short, China now
fully embraces the ‘aggressive legalism’ model of using the multilateral dispute
settlement process as a ‘shield’ and a ‘sword’ to defend and promote its trade
interests.
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.
Structure of the paper
With all of the above reasons and background, this paper will be divided into
three major parts as below:


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Chapter 1: Mechanism of Dispute Resolution in WTO
Chapter 2: China’s experience in dealing with WTO dispute resolution
Chapter 3: Lessons for Vietnam in dealing with WTO dispute resolution


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CHAPTER 1: MECHANISM OF DISPUTE RESOLUTION IN WTO

1.1. Definition of Dispute resolution
Dispute resolution or dispute settlement is the central pillar of the
multilateral trading system, and the WTO’s unique contribution to the stability of
the global economy (World Trade Organization). A dispute arises when
one member country adopts a trade policy measure or takes some action that one or
more fellow members considers to a breach of WTO agreements or to be a failure to
live up to obligations.
Disputes in the WTO are handled by the dispute settlement system, in which
the dispute settlement body is the highest body to regulate the system.
According to the DSU 3.2: “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”
The basic objective of the WTO dispute settlement mechanism is to "achieve a
positive solution to the dispute", and prioritize the solutions agreed by the parties to
the dispute and suitable with the related Agreements. To a greater extent, this
mechanism aims to provide multilateral procedures for resolving disputes in place
of unilateral actions by member states that exist injustice, affect the general
operation of international trade rules.
When being a member of WTO, this is mandatory for this country to
participate in WTO dispute settlement, whereby each member has a complaint and
dispute with another member who is forced to bring the dispute to deal with the
mechanism. There is no choice for members state, they must accept participation in
dispute resolution according to the procedures of this mechanism. This is the point


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of creating the difference and effectiveness of WTO's dispute settlement mechanism
compared to the existing traditional mechanisms for international dispute resolution.
The dispute settlement body (DSB) is essentially the WTO general assembly,
which includes representatives of all member states. The DSB has the right to
establish a Panel, through reports of the Panel and the Appellate Body, to
supervise the implementation of decisions, to recommend dispute settlement, to
allow the suspension of performance of obligations and concessions (retaliation).
However, the DSB is only an agency that approves the decision, not directly
considering the dispute settlement. The decisions of the DSB are adopted on the
principle of veto consensus. This is a new principle whereby a decision is not
passed when all DSB members vote not to pass. This means that the DSB's
decisions are almost automatically passed because it is difficult to imagine a
decision that can be voted against by all DSB members. This principle overcomes
the fundamental disadvantage of the dispute settlement mechanism in GATT 1947
where the principle of traditional consensus applies - all decisions are passed only
when all members vote through (every member has the right to veto the decision) a barrier in approving the decision of the dispute settlement agency.
• Panel: According to the World Trade Organization, “Dispute Resolution,
panels are like tribunals. But unlike in a normal tribunal, the panelists are usually
chosen in consultation with the countries in dispute. Only if the two sides cannot
agree does the WTO director-general appoint them. Panels consist of three
(possibly five) experts from different countries who examine the evidence and
decide who is right and who is wrong. The panel’s report is passed to the Dispute
Settlement Body, which can only reject the report by consensus. Panelists for each
case may be chosen from an indicative list of well-qualified candidates nominated
by WTO Members, although others may be considered as well, including those who
have formerly served as panelist. Panelists serve in their individual capacities.
They cannot receive instructions from any government. The indicative list is
maintained by the Secretariat and periodically revised according to any
modifications or additions submitted by Members”

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• Appellate body: In differences with Panel, the appellate body is also
established by the DSB, but the Appellate Body is a permanent body. The appellate
body consists of 7 members who are experienced and reputable law, international
trade and not representing any government. Members of the appellate body are
appointed by the DSB for a term of four years and can be extended once. Members
of the appellate body working by DSB under a rotating regime, each case will be
reviewed by 3 members (Article 17 DSU)
1.2. Procedure of Dispute Settlement Mechanism
1.2.1 Procedure of Dispute Settlement Mechanism
Dispute resolution is the responsibility of the Dispute Settlement Body,
including all WTO members. The dispute settlement agency has the sole authority
to set up expert panel of experts to review the case and accept or reject Council
findings or appeals. It oversees the implementation of decisions and
recommendations and reserves the right to allow retaliation when a country fails to
comply with the ruling.
The WTO dispute settlement body includes the Panel and the Appellate Body.
The DSB is not directly involved in the adjudication process, but is a political
decision-making body in the WTO dispute settlement. The Panel and Appellate
Body act as legal institutions to assess the legal aspects of the dispute. The DSB is
the General Assembly of the WTO, which has the highest decision-making
authority of the organization during the time between ministerial meetings. All
WTO members are naturally members of the DSB and have the right to participate
in all DSB activities. In the WTO dispute settlement mechanism, the most important
official functions belong to DSB (article 2 DSU).
These approximate periods for each stage of a dispute settlement procedure
are target figures – the agreement is flexible. In addition, the countries can settle

their dispute themselves at any stage. Totals are also approximate:


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Table 1.1: Leadtime for processing a dispute

Time allows

Process

60 days

Consultation, mediation, etc

45 days

Panel set up and panellists appointed

6 months

Final panel report to parties

3 weeks

Final panel report to WTO members

60 days

Dispute Settlement Body adopts report (if no appeal)

Total = 1 year

without appeal

60-90 days

Appeals report

30 days

Dispute Settlement Body adopts appeals report

Total = 1 year 3 months
Source: World Trade Organization
Below is the process of solving a case in Dispute settlement mechanism


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Diagram 1.1: Process of solving a case in Dispute settlement mechanism

Source: WTO publication


12

First stage: consultation (up to 60 days). Before taking any other actions the
countries in dispute have to talk to each other to see if they can settle their
differences by themselves. If that fails, they can also ask the WTO director-general

to mediate or try to help in any other way.
Second stage: the panel (up to 45 days for a panel to be appointed, plus 6
months for the panel to conclude). If consultations fail, the complaining country can
ask for a panel to be appointed. The country “in the dock” can block the creation of
a panel once, but when the Dispute Settlement Body meets for a second time, the
appointment can no longer be blocked (unless there is a consensus against
appointing the panel). Officially, the panel is helping the Dispute Settlement Body
make rulings or recommendations. But because the panel’s report can only be
rejected by consensus in the Dispute Settlement Body, its conclusions are difficult
to overturn. The panel’s findings have to be based on the agreements cited. The
panel’s final report should normally be given to the parties to the dispute within six
months. In cases of urgency, including those concerning perishable goods, the
deadline is shortened to three months.
The agreement describes in some detail how the panels are to work. The main
stages are:
Before the first hearing: each side in the dispute presents its case in writing
to the panel.
First hearing: the case for the complaining country and defence: the
complaining country (or countries), the responding country, and those that have
announced they have an interest in the dispute, make their case at the panel’s first
hearing.
Rebuttals: the countries involved submit written rebuttals and present oral
arguments at the panel’s second meeting.
Experts: if one side raises scientific or other technical matters, the panel
may consult experts or appoint an expert review group to prepare an advisory report.


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First draft: the panel submits the descriptive (factual and argument) sections

of its report to the two sides, giving them two weeks to comment. This report does
not include findings and conclusions.
Interim report: The panel then submits an interim report, including its
findings and conclusions, to the two sides, giving them one week to ask for a review.
Review: The period of review must not exceed two weeks. During that time,
the panel may hold additional meetings with the two sides.
Final report: A final report is submitted to the two sides and three weeks
later, it is circulated to all WTO members. If the panel decides that the disputed
trade measure does break a WTO agreement or an obligation, it recommends that
the measure be made to conform with WTO rules. The panel may suggest how this
could be done.
The report becomes a ruling: The report becomes the Dispute Settlement
Body’s ruling or recommendation within 60 days unless a consensus rejects it. Both
sides can appeal the report (and in some cases both sides do)
Third stage: Appeals
Either side can appeal a panel’s ruling. Sometimes both sides do so. Appeals
have to be based on points of law such as legal interpretation — they cannot
reexamine existing evidence or examine new issues. Each appeal is heard by three
members of a permanent seven-member Appellate Body set up by the Dispute
Settlement Body and broadly representing the range of WTO membership.
Members of the Appellate Body have four-year terms. They have to be individuals
with recognized standing in the field of law and international trade, not affiliated
with any government. The appeal can uphold, modify or reverse the panel’s legal
findings and conclusions. Normally appeals should not last more than 60 days, with
an absolute maximum of 90 days. The Dispute Settlement Body has to accept or
reject the appeals report within 30 days - and rejection is only possible by consensus.


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Forth stage: Implementation and enforcement
If a country has done something wrong, it should swiftly correct its fault. And
if it continues to break an agreement, it should offer compensation or suffer a
suitable penalty that has some bite.
Even once the case has been decided, there is more to do before trade
sanctions (the conventional form of penalty) are imposed. The priority at this stage
is for the losing “defendant” to bring its policy into line with the ruling or
recommendations. The dispute settlement agreement stresses that “prompt
compliance with recommendations or rulings of the DSB is essential in order to
ensure effective resolution of disputes to the benefit of all Members”. If the country
that is the target of the complaint loses, it must follow the recommendations of the
panel report or the appeal report. It must state its intention to do so at a Dispute
Settlement Body meeting held within 30 days of the report’s adoption.
If complying with the recommendation immediately proves impractical, the
member will be given a “reasonable period of time” to do so. If it fails to act within
this period, it has to enter into negotiations with the complaining country (or
countries) in order to determine mutually-acceptable compensation - for instance,
tariff reductions in areas of particular interest to the complaining side.
If after 20 days, no satisfactory compensation is agreed, the complaining side
may ask the Dispute Settlement Body for permission to impose limited trade
sanctions (“suspend concessions or obligations”) against the other side. The Dispute
Settlement Body must grant this authorization within 30 days of the expiry of the
“reasonable period of time” unless there is a consensus against the request.
In principle, the sanctions should be imposed in the same sector as the dispute.
If this is not practical or if it would not be effective, the sanctions can be imposed in
a different sector of the same agreement. In turn, if this is not effective or
practicable and if the circumstances are serious enough, the action can be taken
under another agreement. The objective is to minimize the chances of actions
spilling over into unrelated sectors while at the same time allowing the actions to be

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effective. In any case, the Dispute Settlement Body monitors how adopted rulings
are implemented. Any outstanding case remains on its agenda until the issue is
resolved.
The various stages a dispute can go through in the WTO. At all stages,
countries in dispute are encouraged to consult each other in order to settle “out of
court”. At all stages, the WTO director-general is available to offer his good offices,
to mediate or to help achieve a conciliation.
The most striking features of the WTO dispute settlement system is the Short
Time Frame within which the proceedings of both panels and Appellate Body must
be completed. The time frame for consultations and implementation are also strictly
regulated. As per that time frame the panel proceedings should be completed within
nine (9) months (Article 19 of the DSU). In effect, panel proceedings often exceed
this time limit. On an average, panel proceedings extend approximately to twelve
months Appellate Body proceedings shall not exceed ninety days. In practice,
Appellate Body keeps this time limit. No other international court or tribunal
operates under severe time limits. These time limits have been severely criticized as
being, too short and demanding for both the parties to the dispute and the Appellate
Body.
(Source: />1.2.2. WTO Dispute Mechanism with the participation of third party
1.2.2.1. The procedure to become a third party and the rights of third party in DSM
As mentioned above, WTO dispute settlement starts when a party make a
request for consultations, in which the complainant brings a case to defend a trade
measure of another country, the defendant which they consider as a violation of
WTO DSU. These parties firstly are encouraged to use the negotiation method to
reach a mutual agreement percent of the cases are successful at this stage. If a
consultation does not work, the complainants can request a legal judgment which
will be adjudicated by a “panel” composed of three, exceptionally five experts

selected on an ad hoc basis. If the decision of the Panel cannot satisfy either of the


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parties, the case can be appealed by one of them, yielding a ruling by WTO
Appellate Body.
The third party can originally take part in the dispute settlement process
starting from consultation stage under article 4.11 of DSU, which gives rights to the
parties which have substantial trade interest in the matter by notifying consulting
members and the Dispute Settlement Body within 10 days since the request of
consultation being made. Article 10.2 of the DSU states "Any WTO member having
a substantial interest in a matter before a panel and having notified its interest to
the DSB shall have an opportunity to be heard by the panel and to make written
submissions to the panel. These submissions shall also be given to the parties to the
dispute and shall be reflected in the panel report". It means that a Member that has
“a substantial interest in a matter before a panel” qualifies as a third party to the
dispute. This is different than qualifying for third party participation in
consultations, which must be approved by the respondent, for consultations, under
DSU Article 4.11, a potential third party must show a “substantial trade interest.”
However, very few requests to join consultations are rejected.
If a Member wishes to exercise third party rights at the panel stage, it must
notify the DSB of its interest in the dispute, in writing, within 10 days of the
establishment of a panel. The 10 days rule comes from the GATT Council
Chairman’s Statement of June 1994, though in practice Members have made third
party notifications after the 10-day period, so long as “the selection and composition
of the panel” is not “adversely affected” and “the panel process had not been
hampered” late notification has been accepted, though it is generally discouraged.
If the case comes into the appeal stage, the DSU Article 17 gives third parties
the reserved rights at the panel stage similar access to proceedings before the panel.

However, provisions for third party rights at the Appellate stage is very limited.
Article 17.4 mentions that third party doesn’t have rights to appeal and only the
parties who took part in the previous panel stage therein can have right to join in
Appellate Body proceeding. According to the same article, a third party who are
interested in joining in Appellate Body should notify its interests no later than 21


17

days of the filing of the Appeal. And as the result, the third party still remains the
right to be heard and to make written submission during Appellate stage. There are
only three types of third parties which can take part in in Appellate stage, the only
difference is that whether those members file a written submission or notify the
Secretariat of their intent to appear in the oral hearing and whether they want to
affect the outcomes of the Appellate proceedings. The first type is the countries who
want to “actively” influence the result of the appellate review. They need to provide
all the legal and factual arguments in writing to support to their intent. This kind of
third party has to make an oral statement and/or respond the questions addressed to
them. The second type is the member who notifies the Secretariat of its intent to
“passively” appear at the oral hearing (Article 24.2 of the DSU). This kind of third
party is free to decide whether it wishes to make oral statement or not.
1.2.2.2. Benefits of participating in dispute settlement as a third party
It is entirely possible that the complaint being brought against a respondent
addresses a similar measure that another Member maintains. Therefore, the Member
would have a direct interest in the outcome of the proceeding, particularly if it feels
the measure is justified. Also, the Member may have a high volume of trade in the
covered product or services at issue, or the measure at issue may be something the
Member also wishes to challenge, but may not have the capacity to raise a
complaint. Here, third party participation allows Members a say without the high
costs of bringing the complaint themselves, this is particularly useful for developing

country Members.
Perhaps most importantly, acting as a third party gives members the ability to
see the panel process up close, but also to have their opinion on the measure at issue
given consideration in the course of the proceedings. Article 10.2 of the DSU states
that third parties “shall have an opportunity to be heard by the panel, and to make
written submissions to the panel. These submissions shall also be given to the
parties to the dispute and shall be reflected in the panel report.”
Therefore, when joining in WTO dispute settlement, the third party will be
granted the rights to: