Abstract
This chapter analyzes the contribution of alternative dispute resolution for trade disputes wherein trade barriers were imposed for environmental and public health reasons (T&E disputes). T&E disputes have been channeled through the WTO dispute settlement mechanisms, which contain strong enforcement mechanisms that are expected to deter noncompliance. Nonetheless, empirical evidence suggests that these disputes have a low probability of reaching a settlement and often generate final rulings that are not complied with (Davey, Evaluating WTO dispute settlement: what results have been achieved through consultations and implementation of panel reports?, 2005). The study concentrates on one T&E dispute decided by the WTO, identifies several aspects that distinguish T&E disputes, and argues that an alternative dispute resolution procedure proposed by Brams and Taylor (Fair division: from cake-cutting to dispute resolution, 1996; The win–win solution: guaranteeing fair shares to everybody, 1999), called Adjusted Winner (AW), may increase the chances of compliance and present the parties with a superior outcome. An application of AW based on data from interviews with government officials and policy experts generates a hypothetical outcome, which is subsequently compared to the actual adjudication outcome. The analysis shows that recourse to AW may provide more opportunities for compliance by presenting the parties with an outcome that is more fair in terms of three criteria: efficiency, envy-freeness, and equitability.
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Notes
- 1.
Hard legalization refers to any arrangement where the levels of obligation, delegation, and precision are high, in keeping with the theoretical framework proposed by Abbott, Keohane, Moravcsik, Slaughter, and Snidal. The term obligation conveys the degree to which a commitment is legally binding and mandatory or can be made so through adjudication; delegation refers to whether powers of interpretation, implementation, and/or adjudication have been granted to a third party; and precision signals the degree to which rules and commitments are clearly specified. See generally Abbott et al. (2000).
- 2.
Guzman and Simmons use the term “transfer” to illustrate how certain issues are more fungible than others. For example, an import tariff can be scaled down more easily than an import ban can be removed, and as a consequence tariff negotiations should entail less friction as compared to negotiations over bans.
- 3.
The term “friendly” is used in the literature to differentiate this outcome from a “court settlement,” often referred to only as settlement. While the latter is judiciable, the former is not. In practical terms, a plaintiff can enforce a court settlement through the judiciary, while this option is not available when friendly settlements are concluded.
- 4.
This figure is probably higher, because Leitner & Lester’s data do not include settlements that occur before a WTO panel is established. See generally, Leitner and Lester (2016).
- 5.
The probability of early settlement for non-T&E disputes, also called non-systemic disputes, is 60%, whereas the probability of early settlement for T&E disputes is only 38%.
- 6.
Fontagné et al. (2005) find that “88% of the value of world trade is in products potentially affected by environmental trade barriers, while 39% of the value of world imports is potentially subject to a protectionist use of such measures.”
- 7.
The procedure entails the following steps (based on Brams and Taylor 1999, p. 11): a. the two parties begin by independently (that is, secretly) distributing a total of 100 points across all the items or issues to be divided, depending on the relative value they attach to them; b. each party is (temporarily) given the items or issues on which it places more points; c. items from the party that gained a greater number of points (the initial winner) are transferred—in a certain order—to the party with the lower point total (initial loser) until the totals are equal; d. the order of transfer, which usually requires splitting one item, is determined by comparing the ratio of winner-to-loser points, beginning with the smallest ratio.
- 8.
Steinberg (2006) discusses the limitations of consensus-based decision making in the GATT/WTO. Abbott et al. are among the proponents of this three-fold criteria to assess the process of legalization: obligation, precision, and delegation (2000). For more on the political aspects of the GATT/WTO regime see Barton et al. (2006).
- 9.
Throughout this chapter “friendly settlement” has the same meaning discussed in the introduction.
- 10.
Interview with Nikolaos Zaimis (E.U. Commission). Washington, D.C. 2 August 2005.
- 11.
“The idea of promoting ADR is a good one. In order to make it work, the process has to be taken out of the hands of the lawyers. The policy people are better at negotiating and compromising. They should lead any ADR process. After the lawyers get involved, they convince themselves and everybody else (including the policy people) of their arguments and that they will win the case.” (Interview with Craig Thorn, DTB Associates, Washington, D.C. 2 August 2005.)
- 12.
US Shrimp. WT/DS58/AB/R, 12 October 1998.
- 13.
Interview with Zafar Qadir (Deputy Minister of the Mission of Pakistan), and with Mohammad Saeed (Trade and Environment Counselor—Mission of Pakistan). Geneva, 17 June 2005.
- 14.
European Communities—EC Measures Concerning Meat and Meat Products (Hormones). WT/DS26/AB/R, 16 January 1998.
- 15.
Interview with WTO official. Geneva, 17 June 2005.
- 16.
These very difficult disputes sometimes fulfill secondary goals. For example, when the beef hormones case was filed, Japan and Mexico were considering the adoption of similar bans. The WTO ruling dissuaded them from doing that. In this context, the case had a positive preventive/signaling effect. When we are dealing with a “signaling” case there is no interest in an early settlement, because one of the parties needs a final ruling in order to “send the signal” effectively. (Interview with Craig Thorn (DTB Associates). Washington, D.C. 2 August 2005.)
- 17.
Appellate Body Report, Japan—Measures Affecting Agricultural Products, WT/DS76/AB/R, adopted 19 March 1999, DSR 1999:I, 277.
- 18.
Under the varietal testing requirement, exporters were required to perform a separate battery of methyl bromide fumigation tests on every single variety of apples and prove that a particular concentration of methyl bromide effectively killed all codling moths (Whitlock 2002, p. 750).
- 19.
Interview with Peter Bonner (US Department of Agriculture). Washington, D.C. 20 July 2005.
- 20.
Phone interview with a Japanese government official familiar with SPS cases, 18 July 2005.
- 21.
Interview with United States State Department official. Washington, D.C. 26 May 2005.
- 22.
Interview with an individual familiar with the apple varieties case. Date and location withheld at the respondent’s request.
- 23.
Interview with an individual familiar with the apple varieties case. Washington, D.C. 6 July 2005.
- 24.
Interview with an individual familiar with the apple varieties case. Date and location withheld at the respondent’s request.
- 25.
Interview with an individual familiar with the apple varieties case. Washington, D.C. 6 July 2005.
- 26.
Incidentally, this was the case with the apple varieties dispute analyzed in this chapter.
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Acknowledgements
The author wishes to thank Steven Brams and Jeffrey Dunoff for very useful comments, as well as feedback when an earlier version of this chapter was presented at Prof. Alberto do Amaral Júnior’s Research Seminar, University of São Paulo School of Law.
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Lucena Carneiro, C. (2019). Alternative Dispute Resolution and the WTO. In: do Amaral Júnior, A., de Oliveira Sá Pires, L.M., Lucena Carneiro, C. (eds) The WTO Dispute Settlement Mechanism. Springer, Cham. https://doi.org/10.1007/978-3-030-03263-0_10
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