v14_2003b - 1 NON-COMPLIANCE AND ULTIMATE REMEDIES UNDER...

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Journal of Public and International Affairs , Volume 14/Spring 2003 Copyright 2003, the Trustees of Princeton University http://www.princeton.edu/~jpia 1 N ON - COMPLIANCE AND U LTIMATE R EMEDIES U NDER THE WTO D ISPUTE S ETTLEMENT S YSTEM Asim Imdad Ali, LL.M. Asim Imdad Ali is a mid-career Master of Public Affairs candidate at the John F. Kennedy School of Government, Harvard University ( asim_ali@ksg03.harvard.edu ). This article examines the question of non-compliance and ultimate remedies under the WTO dispute settlement system. When two members have a trade dispute settled by the WTO, the dispute settlement body issues a formal binding ruling; however, if a member does not comply, final enforcement remains problematic. The WTO authorizes countermeasures to be taken by individual states. These retaliatory provisions, however, fail on many counts: on effectiveness; on defeating the foundational principles of the WTO, such as free trade; by causing “double-injury” to those who win the case; on being “the epitome of mercantilism”; and lastly, on favoring a power-based system and undermining the rule-based system of adjudication. Arguably, the WTO has the best dispute settlement system of any international organization. Nevertheless, the WTO does not have the best compliance system. Reform is an urgent necessity for the continued stability and predictability of the entire regime.
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2 I. I NTRODUCTION 1 In the current age of globalization many factors, such as macroeconomic spillovers, global public goods and international externalities, foster international cooperation. States increasingly realize that they can be made better off by entering international cooperation agreements that curb their own behavior, or by establishing international organizations that have some power of governance and coercion. No organization has gone as far in this direction as the World Trade Organization (WTO). In addition to the rapidly increasing membership and the breadth of subjects covered by the WTO agreements, the most important change brought about by this organization is the attempt to create a strong institutional base to fulfill its mission. In this context the most critical role is played by the WTO’s dispute settlement mechanism. This dispute settlement system is the centerpiece of the WTO and can indeed be considered a “giant leap” in the field of public international law. “The dispute settlement mechanism of WTO is a central element in providing security and predictability to the multilateral trading system” says Article 3(2) of the Understanding on Rules and Procedures Governing the Settlement of Disputes. When the WTO agreement was signed in Marrakesh in 1994, the new procedures of implementing dispute settlement rulings were widely praised as a decisive and historic improvement over the procedures previously codified and practiced under the General Agreement on Tariffs and Trade (GATT), which was established in 1947. In 1997 the then Director-General of the WTO stated that the dispute settlement system is the WTO’s
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v14_2003b - 1 NON-COMPLIANCE AND ULTIMATE REMEDIES UNDER...

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