To comply or not to comply? - Non-implementation problems in the WTO dispute settlement system

Abstract

To date, the World Trade Organization (WTO) dispute settlement procedure (DSP) has been the most successful mechanism for peacefully settling trade disputes among nations in history. However, the nascent success of the DSP system in the past ten years is tainted by occasional non-implementation problems. The successful implementation of WTO panel rulings during the past ten years has dropped from 69 percent in the first five years to 54 percent in the second five years. This decreasing implementation rate was caused by a large number of delayed or disputed implementation cases in which the implementation period was continuously extended or adequate compliance was disputed. Unfortunately, the United States, the founder and largest supporter of the DSP system, has become the most frequent defaulter. Taken captive by the special-interest politics of Congress, the United States has been repeatedly unable to overcome non-implementation problems. Although retaliation is used to force non-complying States to become consistent with VVTO rules, this approach does not always force a State to comply. The monetary payment system, proposed as an alternative to retaliation, may work on a bilateral or regional basis, but it does not seem promising in a multilateral trade environment because it could foster a culture of non-implementation and special-interest politics. Therefore, possible ways to minimize the problem of non-implementation could be sought from a more effective, specific, and fair implementation mechanism, focused on enhanced retaliation. This enhanced retaliation system could improve the cherished DSP enforcement system and play a positive role in promoting compliance in a highly political environment, such as in US politics. © 2007 Kluwer Law International. Printed in The Netherlands.