Is There a Sequencing Problem in the Dsu of the Wto

IS THERE A 'SEQUENCING PROBLEM' IS THERE A 'SEQUENCING PROBLEM' IN THE DSU OF THE WTO? By Wasif Majeed Advocate High Court, Lahore I would hereby embark upon to express my disagreement with the proponents of the 'sequencing problem' in Articles 21 and 22 of the Understanding on Rules and Procedures governing the Settlement of the Disputes (the "DSU) under the World Trade Organization and in elucidating thereto I would interpret Articles 21 and 22 of the DSU in accordance with the principles for the interpretation of treaties contained in Article 31 of the Vienna Convention on the Law of Treaties2 (VCLT"). Assuming, arguendo, that the sequencing problem holds field, it leads to an interpretation of certain paragraphs of Articles 21 and 22 of the DSU which is not only absurd, but also renders those paragraphs to inutility. It was held by the Appellate Body in the US-Gasoline3 that an interpreter is not free to adopt a reading that would result in reducing whole clauses or paragraphs of a treaty to redundancy or inutility4. I believe the genesis of this pretext stems out of the omission to properly interpret various terms, as mentioned infra, with reference to the context in which they have been employed in the relevant paragraphs of the aforesaid Articles. In this regard, I would start with Article 21:3 of the DSU that envisages in relevant part: "If it is impracticable to comply immediately with the recommendations and rulings, the Member shall have a reasonable period of time in which to do so". (emphasis added) The above text takes care of a situation where a Member signifies its inability to immediately comply with the recommendations and rulings, and therefore it shall do so within the reasonable period of time. In particular the words in 'which to do so' expressly provide that compliance shall be made within a reasonable period of time. Once the reasonable period of time has been determined the countdown to its expiry would begin. Article 21:5 of the DSU provides in relevant part: "Where there is disagreement as to existence or consistency with the covered agreement of measures taken to comply with the recommendations and rulings." It can be argued that if the respondent Member takes measures within a reasonable period of time to comply with the recommendations and rulings, and it considers the compliant measures to be consistent with the covered agreements, it shall declare its compliance. The countdown to the expiry of reasonable period of time would stop there and then at once. Now, if the complaining Member still considers the measures taken to be non-compliant, it shall so inform the respondent Member. If there is a disagreement, it may ensue into the Article 21:5 proceedings. The term 'disagreement' is critical in distinguishing between Articles 21:5 and 22:2. The opening clause of Article 22:2 lends credence to this argument. It provides in relevant part: "If the Member fails to bring the measure found to be inconsistent with the covered agreement into compliance therewith or otherwise comply with the recommen dations and rulings within the reasonable period of time determined pursuant to paragraph 3 of Article 21, such Member shall, if so requested, and not later than the expiry of the reasonable period of time enter into negotiations with any party having invoked the dispute settlement procedures, with a view to developing mutually acceptable compensation". (emphasis added) The language presupposes that there is no disagreement between the parties as to non-compliance with the recommendations and rulings, which would entitle any party to the dispute to request consultations upon the expiry of the reasonable period of time. The term no later than the expiry' seems to aid the respondent Member to declare compliance till the last moment, absent which, Article 22 would come into play. In addition, the words 'within 90 days after the date of referral of the matter to it' employed in Article 21:5 as opposed to the words 'after the date of expiry of reasonable period of time' in Article 22:2 imply that a disagreement may arise at any time even beyond the expiry of reasonable period of time that would entitle the complaining Member to commence Article 21:5 proceedings. By way of illustration it is assumed that pursuant to Article 21:3 (a) the reasonable period of time proposed by the Member and accepted by the Dispute Settlement Body (the "DSB") is 10 months. The responding Member declares compliance during seventh month, which is followed by a agreement between the parties and consequently to the Article 21:5 proceedings. The panel will have 90 days to issue the report, and if it is appealed, then the time taken by the Appellate Body to issue its report would be added to the 90 days time period, which inevitably would run beyond the expiry of the reasonable period of time. The question is whether Article 22:2 would become redundant in this situation. The answer resolutely would be 'no'. If the Appellate Body rules the measures to be in compliance, Article 22 would simply not apply, but if it rules the measures to be non-compliant, then the respondent Member shall have a reasonable period of time to comply with the recommendations and rulings. It may be recalled that Article 21:5 provides recourse to dispute settlement procedures, which would also encompass Article 21:3. Conversely, if the respondent Member fails to comply with the recommendations and rulings within the reasonable period of time then Article 22 would come into play. At this juncture, I would also like to, in particular refer to Article 3:7 of the DSU that provides the hierarchy of desired compliant measures. Suspension of concessions and obligations has been envisaged as the last resort that a complaining Member may employ. There are various other provisions within the DSU that buttress this last resort option. Since Article 22:2 and on account of its express reference in Article 22.6, a Member as a last resort may only employ the remedy of suspension of concessions and obligations provided in the aforesaid Articles. Furthermore, Article 23 of the DSU obliges Members to amongst others make declaration of violation or nullification or impairment except through recourse to dispute settlement in accordance with the rules and procedures of the DSU. Thus, where a respondent Member takes steps to comply with the recommendation and ruling of the DSB, but the complaining Member considers measures akin to failure of the respondent Member to comply with the recommendation and rulings. Consequently within 20 days of the expiry of the reasonable period of time unilaterally declares the failure of the respondent Member to comply with the recommendation and ruling of the DSB, and invokes Article 22.2; this would not only be against the spirit of Article 3:7 and the DSU, but also in contravention to Article 23 of the DSU. The argument I want to make is that how can a Member have recourse to last resort without first exhausting the other options, i.e. Article 21:5 proceedings. Therefore, I believe that Article 22:2 and therefore Article 22:6 would apply where there is failure on the part of the respondent Member to take any compliance measure at all, and there is no disagreement to this effect. By the same token, I reiterate that Article 21:5 excludes the applicability of Article 22:2 and/or Article 22:6. This would entitle the complaining party to have recourse to the last resort. However this interpretation raises the question of indefinite deferral of the application of Article 22. As a counter-argument, reference may initially be made to the. US-FSC (DS-108)5 where the EC had recourse to Article 21:5 proceedings twice. Despite the conclusion of a sequencing agreement between the US and the EC in that dispute, it signifies that approach to Article 21:5 can be made more than once. If Article 21:5 is interpreted in accordance with my interpretation, it can be argued that certain provisions of DSU tend to make this interpretation workable. During any successive Article 21:5 proceeding, if the panel or the Appellate Body finds the new measure to be inconsistent with measures to be inconsistent with the covered agreements, it may suggest ways in which the Member concerned could implement the recommendation and rulings under the auspices of Article .19:2. Furthermore, Article 21:3 can be applied by the DSB or an arbitration panel to curtail the reasonable period of time pursuant to the Article 21:5 proceedings. However, if the sequencing problem is interpreted to hold field, there is no provision in the DSU to support it. It can, therefore, safely be argued that Article 21.5 excludes the applicability of Article 22.2 and vice versa. Since Article 22.6 expressly refers to paragraph 2 of Article 22, it implies that Article 22.6 would apply when the conditions provided in Article 22.2 have matured. Therefore, in a similar vein, it can be said that Article 21.5 excludes the applicability of Article 22.6 and vice versa. Hence, this contextual interpretation gives effect to all the paragraphs of Articles 21 and 22 in particular Article 21:5 and Article 21:6 of the DSU, and is reasonably in consonance with Article 31 of VCLT. 1. Annexure 1-B to the WTO Agreement. 2. Vienna Convention on the Law of Treaties Done at Vienna on 23 May, 1969. Entered into force on 27 January, 1980. Article 31: General Rule of interpretation: i. A treaty shall be interpreted in good faith in accordance with the ordinary meaning to be given to the terms of the treaty in their context and in the light of its object and purpose. ii. The context for the purpose of the interpretation of a treaty shall comprise, in addition to the text, including in its preamble and annexes: (a) any agreement relating to the treaty which was made between all the parties in connection with the conclusion of the treaty; (b) any instrument which was made by one or more parties in connection with the conclusion of the treaty and accepted by the other parties as an instrument related to the treaty. 3. There shall be taken into account, together with the context: (a) any subsequent agreement between the parties regarding the interpretation of the treaty or the application of its provisions; (b) any subsequent practice in the application of the treaty which establishes the agreement of the parties regarding its interpretation; (c) any relevant rules of international law applicable in the relations between the parties. 4. A special meaning shall be given to a term if it is established that the parties so intended. 5. United States Standards for Reformulated and Conventional Gasoline (WT/DS2, WT/DS4) (US-Reformulated Gasoline). 6. Page 22/3. 7. United States-Tax Treatment for "Foreign Sales Corporations" (WT/DS 108).