Dispute Settlement

Book by the South Centre, 2020

WTO reform and the crisis of multilateralism – A Developing Country Perspective

About the Book:

The WTO has not been able to recover since the collapse of the Doha Round in July 2008. Several ministerial conferences including the Buenos Aires meeting in December 2017 failed to reach agreement. The US Trump Administration launched a campaign to reform the WTO in 2018 and 2019. This book argues that the Trump Administration reform proposals have been much more aggressive and far-reaching than the Obama Administration before it, threatening to erode hard-won special and differential treatment rights of developing countries. By blocking the appointment of new Appellate Body members, the US has effectively paralysed the Appellate Body and deepened the crisis of the multilateral trading system. Developing countries have responded to the proposals and called for the WTO to be development-oriented and inclusive. This book provides a critical analysis of the US-led reform proposals and seeks to build a discourse around an alternative set of concepts or principles to guide the multilateral trading system based on fairness, solidarity, social justice, inclusiveness and sustainability.

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Research Paper 115, July 2020

Special Section 301:US Interference with the Design and Implementation of National Patent Laws

By Dr. Carlos M. Correa

The continuous application of Special Section 301 by the Office of the United States Trade Representative (USTR) undermines the rule of law as a fundamental principle of a multilateral system based on the sovereign equality of states and the respect for international law. Interference with foreign countries’ national intellectual property (IP) policies—which have significant socio-economic effects—negates their right to determine independently the level and modalities of protection of such property within the framework and policy space allowed by the international law. This paper examines the patent-related claims made by the USTR in relation to the developing countries on the USTR Priority Watch List. It argues that the regulations and practices identified by the USTR show a legitimate use of the flexibilities provided for by the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), and that the ignorance of the public interests of the countries concerned (for instance, with regard to access to affordable medicines) has contributed to the discredit (and ineffectiveness) of the Special Section 301.

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Policy Brief 79, June 2020

Articles 7 and 8 as the basis for interpretation of the TRIPS Agreement

By Thamara Romero

Articles 7 and 8 of the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) play a central role in assuring the members of the World Trade Organization (WTO) the right to implement public health measures. The Doha Declaration on the TRIPS Agreement and Public Health is also an important element for the interpretation of any provision of the TRIPS Agreement that may have public health implications. The most recent and prominent example of the use of articles 7 and 8 for interpretation in WTO law can be found in the WTO Panel decision of 2018 on the Australia – Tobacco Plain Packaging dispute.

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Research Paper 109, May 2020

Non-Violation and Situation Complaints under the TRIPS Agreement: Implications for Developing Countries

By Nirmalya Syam

While the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) provided for the applicability of non-violation and situation complaints to the settlement of disputes in the area of intellectual property (IP), when the World Trade Organization (WTO) agreements were adopted in 1994, a moratorium was put in place until WTO Members could agree on the scope and modalities for the application of such complaints. However, for more than two decades, discussions in the TRIPS Council on the subject have remained inconclusive. The biannual WTO Ministerial Conference has granted extensions of the moratorium with regularity. This paper reviews the debate on the applicability of non-violation and situation complaints under the TRIPS Agreement, including the arguments consistently held by two WTO Members that if the moratorium is not extended by consensus, non-violation and situation complaints would become automatically applicable. This paper argues that a consensus decision by the WTO Ministerial Conference is required to determine the scope and modalities and, hence, the applicability of such complaints under the TRIPS Agreement. Even if the moratorium was not extended, the WTO Ministerial Conference should still adopt a decision calling on the TRIPS Council to continue examination of the scope and modalities of such complaints. It also argues that in the absence of an extension of the moratorium on initiating such complaints—and although they would not be applicable—a situation of uncertainty would be created that may lead to a de facto limitation in the use of flexibilities allowed under the TRIPS Agreement.

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Policy Brief 72, February 2020

US-China trade deal: preliminary analysis of the text from WTO perspective  

By Peter Lunenborg

The long-awaited ‘Phase 1’ trade deal between the United States and China, officially termed the ‘Economic and Trade Agreement between the Government of the United States of America and the Government of the People’s Republic of China’, was signed on 15 January 2020. It will enter into force on Valentine’s Day, on Friday, 14 February 2020.  This deal is a result of US exercise of political power and unilateral World Trade Organization (WTO)-inconsistent tariffs in order to extract trade concessions, an expression of the most pure protectionism that the WTO is supposed to prevent. Nevertheless, the WTO was unhelpful in addressing the US economic aggression against China. This failure to protect a Member from illegitimate unilateral measures is, perhaps, one of the most significant manifestations of the often-mentioned ‘crisis’ of the WTO, and actually is one of the subjects on which the proposed ‘reform’ of the organization should focus.

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Policy Brief 70, December 2019

Lights Go Out at the WTO’s Appellate Body Despite Concessions Offered to US

By Danish and Aileen Kwa

As of 11 December 2019, the Appellate Body (AB) of the World Trade Organization (WTO) has been rendered non-functional. This policy brief provides a summary of the issues discussed amongst WTO Members in the last two years, in their valiant efforts to address the US’ concerns regarding the AB. The issues include: the use of AB Members’ services to complete an appeal after their term has officially expired; timelines for issuance of AB reports; the meaning of municipal law; advisory opinions; precedence-setting; and overreach by the AB. After much effort by Members in the ‘Walker process’ of negotiations, concessions have been proposed to the US in the draft General Council Decision of 28 November 2019. Language was provided limiting the scope of appeals to questions of law, even though there are situations where the boundary between issues of law and fact are difficult to draw. The text also provides that ‘precedent’ is not created through WTO dispute settlement proceedings. In the area of anti-dumping, the language inserted by the US into the anti-dumping agreement to protect their zeroing practices is confirmed. Nevertheless, the US has rebuffed these offered concessions. It seems determined to amplify its leverage by taking the WTO’s Appellate Body hostage, to extract still more from other Members, including in terms of far-reaching ‘WTO Reforms’.

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Policy Brief 69, December 2019

Crisis at the WTO’s Appellate Body (AB): Why the AB is Important for Developing Members

By Danish and Aileen Kwa

The World Trade Organization (WTO)’s Appellate Body (AB) will be made dysfunctional by 11 December 2019. A disabled AB means that the WTO’s dispute settlement system loses its enforcement mechanism. Even though many smaller developing countries are not major users of the dispute settlement system, nevertheless, they are beneficiaries of the rule of law, and a more predictable trading environment. Several stop-gap measures have been suggested. None are satisfactory. The right to appeal is an important right for all Members which was part of the Uruguay Round package. If this right is removed, why should other parts of that package also not be changed? The future is uncertain – between a much weakened multilateral trading system similar to the days of the General Agreement on Tariffs and Trade (GATT); or deep reform of the WTO, in ways that primarily benefit the US and its partners, whilst foreclosing important policy choices for the developing world.

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Research Paper 85, April 2019

Access to Medicines: Experiences with Compulsory Licenses and Government Use – The case of Hepatitis C

By Dr. Carlos M. Correa and Dr. Germán Velásquez

This South Centre research paper discusses first, the limitations of the current research and development (R&D) model and its implications for access to medicines. Second, it considers the tension between intellectual property rights applied to medicines and States’ observance of the fundamental right to health. Third, it examines the case of access to medicines for the treatment of Hepatitis C, illustrating the barriers to access created by intellectual property and the high prices normally associated with its exercise. Fourth, it presents the background, main aspects and obstacles to the achievement of the objectives of the Doha Declaration on the TRIPS Agreement and Public Health (2001). To conclude, this paper examines the experiences of compulsory licensing and government use of patents in Latin America (particularly in Ecuador, Peru and Colombia).

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Research Paper 86, September 2018

US’ Section 301 Actions: Why They are Illegitimate and Misguided

By Aileen Kwa and Peter Lunenborg

This research paper examines the US’ Section 301 unilateral actions against China, stemming from the US’ concerns over China’s ambitious industrial policies and its rapid technological advancements. It outlines the accusations of the US regarding China’s conditions for technology transfer and what the US sees as overly intrusive Chinese government involvement in investments. It looks in detail at why the US’ actions are in fact illegitimate and misguided. (more…)

Pager, 24 August 2018

US’ Section 301 Actions are Illegitimate and Misguided

On 23rd August, the US Administration imposed yet another set of discriminatory tariffs on China under its Section 301 Trade Act covering US$16 billion of its imports from China. This is in addition to the additional tariffs imposed on 6 July 2018 on US$34 billion of its imports from China. According to the US, these actions are supposedly because of China’s unreasonable or discriminatory practices relating to technology transfer, intellectual property and innovation.

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Investment Policy Brief 10, February 2018

How international investment agreements have made debt restructuring even more difficult and costly

International investment and trade agreements are legally binding international treaties which give investors an additional layer of legal protection on top of the host country law and contract law.  However, little efforts have been made in ironing out the interface between these different laws and treaties. Inconsistencies and even contradictions have emerged in dispute settlement decisions, sometimes at the expense of public good, sovereignty and financial and economic stability. An asymmetry seems to exist in the allocation of risks and benefits between investors and recipients of investments. (more…)

Policy Brief 38, April 2017

Implications of a US Border Adjustment Tax, Especially on Developing Countries

A new protectionist device, the US “border adjustment” tax, is being planned that could devastate the exports of developing countries and cause American and other foreign companies to relocate. This policy brief explains the complexities and implications  of this proposed measure and the major question of whether such a measure will violate the rules of the WTO is also examined.

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