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Citation: 31 Law & Pol'y Int'l Bus. 773 1999-2000

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TRANSPARENCY IN WTO DISPUTE RESOLUTION

LowI WALLACH*

John Ragosta's analysis of the World Trade Organization (WTO)

dispute resolution system is thoughtful, and refreshingly candid.1 Many
of his recommendations for repair have merit.
Indeed, many of the repairs Ragosta proposes--and some major
ones he does not---aimed at building the WTO's legitimacy must be
accomplished rapidly if the WTO is not to implode on itself. By merit of
its design, and now as substantiated by merit of five years of its
performance, the WTO is an institution with limited prospects. Today,
after the WTO's much-needed exposure to the sunlight of public
scrutiny, as a result of the publicity it received during the 1999 Seattle
WTO Ministerial, the WTO's future is increasingly uncertain.
Having been witness to the negative comments that Ragosta's relatively modest reform package met at the American Bar Association
International Trade division, it seems quite possible that prominent
figures in the U.S. trade bar will be among an array of WTO proponents who will assist in the demise of the WTO. What should be clear by
merit of the record of the WTO dispute resolution system and its rules
of procedure-and vivid after the failed Seattle WTO ministerial-is
that either the WTO will bend (rather dramatically), or it will be
broken.
Yet, both a senior staff member of the Republican Chair of the
Senate committee with jurisdiction over trade and the former top
staffer of the ranking Democratic Member of the House trade committee challenged even the need for such significant reforms and, with
limited specific exceptions, defended the operation of the WTO dispute resolution system as is.
Ironically, from the perspective of numerous non-business-sector
analysts of the WTO dispute resolution system and, perhaps more
importantly, the parliamentarians to whom they relate in numerous
countries, the main problem with Ragosta's reform proposal is that it
does not go far enough.
During the Uruguay Round negotiations and the first five years of
the WTO's operation, Public Citizen has raised many concerns similar
to Ragosta's about the WTO's dispute resolution rules and operation.
* Director of Public Citizen's Global Trade Watch.
1. John A. Ragosta, Unmasking the WTO-Access to the DSB System: Can the WT0 DSB Live UP to
the Moniker 'World Trade Court"?, 31 LAW & POL'Y INT'L Bus. 739 (2000).

LAW & POLICY IN INTERNATIONAL BUSINESS

As noted by Ragosta, the most significant issue is the mismatch

between the role the WTO Dispute Settlement Understanding (DSU)
plays (binding enforcement) and the most basic procedural safeguards
(conflict of interest rules, opportunity for all interested parties to
participate, openness of procedures, and access to documents). Ragosta
puts it quite nicely: either WTO dispute resolution must return to a
consensus-based form so as to reestablish some legitimacy, or the
process must be transformed to make it worthy of issuing binding decisionsnamely by adding even the most primitive due process guarantees.
In a 1999 book reviewing the WTO's five-year record,' Public Citizen
documented some of the actual cases of malfunction in the WTO
dispute resolution system. Included is the inappropriate appointment
of former GATT head Arthur Dunkel to the later-disbanded WTO
panel judging a challenge of the U.S.. Helms-Burton Act,3 even though
the well-known Dunkel at the time was chair of the International
Chamber of Commerce policy group that had launched a campaign
against the Helms-Burton Act, arguing that it violated WTO rules.4
Additionally, Dunkel was on the board of Nest6,5 which had major
interests in Cuba at the time he was appointed.6
Another exhibit of the illness Ragosta accurately diagnoses is the
stalwart resistance by the WTO tribunal judging the U.S. challenge of
the EU's ban on beef hormones 7 to receiving any outside scientific data
from a well-known researcher at a prominent U.S. university8 or amicus

2. See LoRI WALLACH & MICHIELLE SFORZA, WHOSE TRADE ORCANZATION?: CORPORATE GLoaALizATION AND THE EROSION OF DEMOCRACY: AN ASSESSMENT OF THE WORLD TRADE ORGANIZATION (1999).

3. Cuban Liberty and Democratic Solidarity Act of 1996, Pub. L. No. 104-114, 110 Stat. 785
(1996). Title IV of the Helms-Burton Act denies entry into the U.S. to corporate executives who
have acquired from the Cuban government property that was "expropriated" from U.S. citizens
during the Cuban revolution. Title IV enables U.S. citizens whose property was expropriated to
sue foreign investors who later acquire the property from the Cuban government.
4. For the ICC's position on Helms-Burton, see International Chamber of Commerce, ICC
Statement on the Helms-Burton Act (June 19, 1996) (on file with Public Citizen). For a
description of the EU's WTO challenge of Helms-Burton, see WTO Panel Report, United
States-The Cuban Liberty and Democratic Solidarity Act, WT/DS38/1 (May 3, 1996). See also
WALLACH & SPORZA, supranote 3, at 201.

5. See NESTLE, S.A., 1998 ANNUAL REPORT

3 (1999) <http://www.nestle.com/mr1998/
ar1998/01/>. Consolidated accounts of the Nestle Group are also on file with Public Citizen.
6. Members of Nestle's board serve five-year terms. Dunkel was up for re-election onJune 3,
1999. See id.
7. See WTO Dispute Panel Report, EC-Measures Concerning Meat and Meat Products
(Hormones), WT/DS26/R (August 18, 1997) [hereinafter Beef-Hormone]. See also WALLACH &
SFORZA, supra note 3, at 59-61 (1999).

8. See WTO Panel Report, EC-Measures Concerning Meat and Meat Products (Hormones),

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TRANSPARENCY IN WTO DISPUTE RESOLUTION

briefs from U.S. consumer groups9 opposing the U.S. "trade uber alles"
position in the case on behalf of the Cattleman's Association. Apparently, after receiving grief from the WTO Director-General for not
aggressively refusing an unsolicited amicus brief on the Venezuela WTO
challenge of U.S. Clean Air Act regulations on gasoline cleanliness (the
U.S. health and environmental groups who wrote that brief never
heard back from WTO after sending it to Geneva), the WTO legal team
spent a considerable sum to return the consumer groups' Beef-Hormone
brief via registered mail with a nasty note about how such material was
neither welcome nor acceptable at the WTO. 10 Later that year, one of
the panelists on that case-forced to rely on the whims of the WTO
legal staff-wandered into the Washington, D.C., offices of one of the
brief's authors, Public Citizen, and asked if he might get a copy of a
rumored amicus brief on the case. He was on holiday in the United
States and hoped to get a look at the forbidden information. And the
examples go on.
These specific cases do not address the political nature of what was
empowered by the WTO Dispute Settle Understanding to be a binding
adjudicatory system. One example of this point is the WTO Appellate
Body's decision on the Shrimp-Turtle case. 1 ' The lower panel exhibited
the worst tendencies of the WTO Dispute Resolution system; it created
new WTO law by making subjective decisions, including decisions on
issues not raised in the case.' 2 The panel took such a belligerently
anti-environmental tone, delivering an array of dicta on issues not
raised by the case or by the parties to the dispute, that even the
pro-WTO New York Times issued an editorial against the ruling entitled
"The Sea Turtles' Warning. '1s Among other goofy, sloppy, and bizarre
moves, the panel interpreted the Chapeau of GATT Article XX in away
that totally eviscerated the two provisions of GATT Article XX that
might even be used to defend an environmental or health law.' 4 The

Complaint by the United States, WT/DS26/R, Annex 1 211-16 (Aug. 18, 1997) (reproducing
the testimony of Samuel S. Epstein at the Joint Meeting with Experts (Feb. 17-18, 1997).
9. J. Martin Wagner & Patti Goldman, Comments to the Appellate Body of the World Trade
Organization Concerning European Communities-Measures Concerning Meat and Meat Products (Hormones), (Oct. 31, 1997) (unpublished manuscript, on file with Public Citizen).
10. SeeWALLACH & SFORZA, supranote 3,at 202 (1999).
11. WTO Appellate Body Report, United States-Import Prohibition of Certain Shrimp and
Shrimp Products, WT/DS58/AB/R (Oct. 12, 1998).
12. See WTO Panel Report, United States-Import Prohibition of Certain Shrimp and
Shrimp Products, WT/DS58/R (May 15, 1998) [hereinafter UnitedState-Shrimp PanelReport].
13. The Sea Turtles'Warning,N.Y TIMES, Apr. 10, 1998, at A18.
9.1. GATT Article XX reads in
14. See United States-Shrimp Panel Report, supra note 12,

2000]

LAW & POLICY IN INTERNATIONAL BUSINESS

interpretation was based on the tautological whim of the WTO legal

staff or, perhaps, the panelists on the case. Amidst all of this slop, the
panel also specifically ruled that the U.S. law in question did not
conform with WTO requirements or exceptions and had to be eliminated or changed.1 5
In a dramatic display of politics-the politics of trying to save the
WTO from itself-the Appellate Body wrote a remarkably soothingtoned opinion, which, while spouting lots of nice, non-binding, and
green platitudes, ruled that the U.S. law requiring all shrimp sold in the
United States to be caught in nets equipped with turtle escape devices
violated WTO rules and had to be changed. The Appellate Body ruling
was such a sophisticated piece of political writing, as far as trying to
soothe enraged legislators and environmentalists, that the Clinton
Administration got away with using selected portions of the opinion to
spin the press such that the case was a win for them and a reversal of the
lower panel.1 6 Of course, once the actual ruling was made public (after
the Clinton Administration press spin was completed), it became clear
that the bottom line was the same: the U.S. law had to be changed or
eliminated.
More recently, similar political machinations have affected the Canadian challenge of France's ban on asbestos. 17 First, the case was
mysteriously delayed so that the ruling that was expected before the
relevant part:
Subject to the requirement that such measures are not applied in a manner which
would constitute a means of arbitrary or unjustifiable discrimination between countries
where the same conditions prevail, or a disguised restriction on international trade,
nothing in this Agreement shall be construed to prevent the adoption or enforcement
by any Member of measures:... (b) necessary to protect human, animal or plant life or
health; ... (g) relating to the conservation of exhaustible natural resources if such
measures are made effective in conjunction with restrictions on domestic production or
consumption.
General Agreement on Tariffs and Trade, Oct. 30, 1947, 61 Stat. A60-61, 55 U.N.T.S. 262-264.
Significantly, the Endangered Species Act requirements being challenged applied equally to both
foreign and U.S. shrimp trawlers. See Endangered Species Act, 16 U.S.C. 1537 (1994).
15. See United States-Shrimp Panel Report, supra note 12, 11 8.1-8.2.

16. See, e.g., Marc Selinger, WTO FishingDecision Both Good, Badfor U.S., WAsH. TIMEs, Oct. 13,
1998, at B7 (quoting U.S. Trade Representative Charlene Barshefsky, "The ruling by the WTO's
appellate body 'does not suggest that we weaken our environmental laws in any respect, and we do
not intend to do so. The appellate body has rightly recognized that our shrimp-turtle law is an
important and legitimate conservation measure, and not protectionist."').
17. See European Communities-Measures Concerning Asbestos and Products Containing
Asbestos, VVT/DS135/1 (June 3, 1998) (request for consultations by Canada).

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TRANSPARENCY IN WTO DISPUTE RESOLUTION

1999 Seattle WTO Ministerial is still awaited. Second, there is a major

lobbying campaign underway by WTO boosters to convince the panelists and the WTO legal office to throw the case--ignoring the strict
interpretation of the Technical Barriers to Trade Agreement which,
perversely, would support Canada's claim that France's nondiscriminatory ban on the deadly substance violates WTO rules' 8-- in favor of a
politically expedient ruling against Canada.
Obviously, a highly politicized and arbitrary dispute resolution system relying on the personal whims of an ever-changing cast of characters is no way to operate the enforcement of the most powerful
international agreement now in force.
This brief voyage through some of the more picturesque WTO
dispute resolution foibles leads naturally to the question of what
changes are needed. There are two approaches: either the WTO system
must restore the safeguard of requiring consensus approval of panel
decisions, or it must transform its current system. In the latter scenario,
many of the changes described by Ragosta are vital: (1) instituting
meaningful conflict of interest rules; (2) professionalizing the WTO
legal department; (3) ensuring that all WTO Members have equal
functional access to the system-meaning that not only the rich countries have the ability to use the system; (4) opening up the process so
that documents and proceedings are accessible to all interested parties;
and (5) providing means for all interested parties to get their information in front of decision-makers.
A few of the additional steps that would be required under this
scenario are: (1) empowering other institutions to provide substantive
expertise to which dispute panels are bound (for instance, the World
Health Organization, through a public process, and not three trade
lawyers meeting in secret, should determine whether a country's
pharmaceutical compulsory-licensing system or parallel-importing system actually serves a public health goal); (2) instituting venues for
outside-of-WTO appeals of WTO panel reports; and (3) explicitly
forbidding decisions on the merits of non-commercial claims (for
example, the notion of three trade lawyers making subjective judgements about the quality of the science on beef hormone residues).
However, while agreeing with Ragosta's critique and many of his
suggestions for change, what must be made clear is that procedural
reforms of the WTO dispute resolution system cannot deliver the main
benefits Ragosta argues would accrue with such procedural reform.

18. SeeWAlAmH & SFORzA, supra note 3, at 181-86.

20001

LAW & POLICY IN INTERNATIONAL BUSINESS

Mainly, improvements in public perception of the WTO and some

repair of that institution's current crisis of legitimacy (the latter is my
terminology, not Ragosta's) can only be achieved if there are also
significant changes in the WTO's substantive rules. Most simply, backwards, anti-public-interest substantive WTO rules, even if implemented
through an open and well-designed system, will still result in bad
outcomes for the lives of many.

[Vol. 31