WORLD TRADE
ORGANIZATIONTN/DS/W/17
9 October 2002
(02-5428)
Dispute Settlement Body
Special SessionOriginal:  English
NEGOTIATIONS ON THE DISPUTE SETTLEMENT UNDERSTANDING
Proposal by the LDC Group
The following communication, dated 19 September 2002, has been received from the
Permanent Mission of Zambia on behalf of the LDC Group.
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1. To date, no least-developed country (LDC) Member has sought to resolve a trade dispute
through the WTO dispute settlement system (DS).  However, this is definitely not because these
countries have had no concerns worth referring to the DS, but rather due to the structural and other
difficulties that are posed by the system itself.  The negotiations on the review of the DisputeSettlement Understanding (DSU) must address thes e particular difficulties and other concerns by
LDCs if the system is to retain their confidence.  Th e negotiations must result in a system that clearly
facilitates and supports the full participation of LDCs in the DS.
2. The LDC Membership wishes to highlight some of the key problems that need to be
addressed in the review exercise.  In doing so, the LDCs are cognizant of the fact that there has been
no utilization, by them, of the DS and the issues and clarifications raised herein are done on the basis
of the observable operation of the DS. Consequen tly, LDCs would like to highlight the following:
Textual specificity in taking account of difficulties faced by LDCs – Article 4.10
3. Often, the difficulties faced by LDCs are more debilitating than those faced by the rest of the
WTO Membership.  As a result, a level of specificity is needed in addressing their concerns within the
textual provisions of the DSU.  Some of the key provisions conferring rights  and containing other
structurally fundamental provisions of the DSU need to be made LDC specific.  Consequently,
Article 4.10 should be amended to read as follows:
10. During consultations Members should give special attention to the particular
problems and interests of developing countries Members especially those of least-developed
country Members.
It should be remembered that one of the greatest difficulties that LDCs have to cope with in
their participation in the multilateral trading system is an extreme human resource constraint.  LDCs
are often under-represented or not represented in Geneva.  To engage competently in the nature of
consultations envisaged under Article 4.10, there may usually arise a need to involve officials fromthe capitals.  Where a LDC is involved in the cons ultations, due consideration should be given to the
possibility of holding such consultations and other meetings in the capitals of LDCs.TN/DS/W/17
Page 2
The composition of panels – Article 8.10
4. The maxim "Justice must not only be done but also be seen to be done" definitely informed
the thinking of Members’ in crafting Article 8.10.  The confidence of a party to a dispute may be at
risk if it appears that that party has no input in the dispute resolution process and is entirely excluded.Ultimately, this may erode the effectiveness of the DS itself.  Bearing this in mind, LDCs propose a
modification of Article 8.10 to the effect that in any dispute involving a developing country, there
must be at least one panelist from a developing country.  Therefore , the words "if a
developing-country Member so requests" should be deleted from Article 8.10.  Article 8.10 should be
modified to read as follows:
10. When a dispute is between a developing-country Member and a developed-country
Member the panel shall include one panelist from a developing-country Member, and if thedeveloping-country Member so requests, there shall be a second panelist from a developing-
country Member.
10.b. When a dispute is between a least-developed country Member and a developing or
developed country, the panel shall include at least one panelist from a least-developed countryMember and if the least-developed country Member so requests, there shall be a second
panelist from a least-developed country Member.
The need for dissenting opinions in panel reports
5. A careful reading of the accumulated jurisprudence of the DS system thus far reveals that the
interests and perspectives of developing countries have not been adequately taken into account.  The
panels and the Appellate Body have displayed an excessively sanitized concern with legalisms, often
to the detriment of the evolution of a development-friendly jurisprudence.  This stifling approach maybe attributable to the requirement that every pane l or Appellate Body Division should emerge with a
single neat report.  There is no provision for dissenting judgments in the DSU.  This needs some re-
thinking given the inadequacies highlighted in the DS jurisprudence.  Often, and as demonstrated by
judicial practice at the International Court of Justice, and in certain national court systems, dissenting
judgments may bring to the fore usually unheard concerns which may in the long run shape the
evolution of the system.  Dissenting judgments should  be allowed in the DS system through a rule that
the Members of the panel or Appellate Body should each deliver a judgment and the final decision betaken on the basis of a majority.  LDCs understand that this may mean additional resources and work
for the Secretariat.
What should be taken account of in panel reports – Article 12.11
6. LDCs wish to point out that Paragraph 1 of the Final Act Embodying the Results of the
Uruguay Round of Multilateral Trade Negotiations  states that Ministerial Declarations and Decisions
are part of the corpus of the negotiated results that "form an integral part of" the Final Act .  The
Agreement Establishing the World Trade Organization, wh ich is a part of the Final Act, is included in
the "covered agreements" in accordance with Appendix 1 to the DSU.  Consequently, and by virtue of
Article 12.11, panel reports should explicitly indicate the form in which account has been taken of therelevant provisions on differential and more favorable treatment for developing and least-developed
country Members contained in the covered agreements.  Ministerial Declarations and Decisions which
confer specific rights to developing countries including the Decision on Measures in Favour of Least-
Developed Countries  should have legal force and treated as if they were "covered agreements" within
the meaning of the Agreement Establishing the World Trade Organization.  It is imperative for thereto be a balance between the rights, privileges and obligations of developed and developing countries.TN/DS/W/17
Page 3
7. LDCs propose that Article 12.11 should be modifi ed to address not only developing countries
as a whole but to specifically bear in mind their concerns too.  The words " and least-developed
country Members"  should be inserted after the phrase "developing-country Members".
8. In addition, the current requirement in Article 12.11 that the developing-country Member ("or
least-developed country Member") needs to highlight any provisions on differential and morefavorable treatment in the course of the dispute settlement procedures places an unnecessary
additional legal burden on them and falls afoul of the well settled legal principle jura novit curia  (that
the judge or the court is supposed to know the law) .  The panel or Appellate Body Division presiding
over a dispute is vested with the authority to invoke all applicable legal principles.  Consequently,
LDCs recommend that the phrase "…which have been raised by the developing-country Member in
the course of the dispute settlement proceedings" should be deleted from Article 12.11.
Clarity between Article 21.1 and 21.2
9. LDCs agree and are fully supportive of the fact that prompt compliance is a key objective of
the DS.  However, it is conceivable that there are circumstances when, with the most noble and good
faith intentions, prompt compliance may not be possible.  In addition, there are conceivable
circumstances when the imperative and the urgency of prompt compliance multiplies immensely, forinstance, when the lack of prompt compliance is cau sing misery in an LDC.  Matters affecting the
interests of developing countries and least-developed countries need to be borne in mind in such a
scenario.  Hence the qualification to Article 21.1 as introduced by Article 21.2.  There is need for
absolute clarity, however, that Article 21.2 does indeed qualify Article 21.1.  LDCs propose the
addition of a footnote to Article 21.2 to that effect.
10. LDCs also propose the insertion of "and least-developed country Members" after the phrase
"developing-country Members" in Article 21.2.
11. Article 21.7 should be amended to read as follows:
7. If a matter is one that has been raised by a developing-country Member or a least-
developed country Member, the DSB shall take any further [appropriate] action in the
circumstances.
Further, Article 21.8 should be amended to read:8. If the case is one brought by a developing-country Member or a least-developed
country Member, in considering what appropriate action to take , the DSB shall take into
account not only the trade coverage of measures complained of, but also their impact on theeconomy and the development prospects  of the developing-country Members or least-
developed country Members  concerned.
Improving the DS remedies – Article 22
12. The system of remedies under the DS has been the subject of consistent discussions since the
Bananas  dispute.  The Members could not have received a clearer demonstration of the inadequacies
of the system than they did in that dispute.  The question of little or no utilization of the DS by
developing and least-developed country Members has been linked to the inadequacies and structural
rigidities of the remedies available to poor countries that successfully litigate a dispute before the DS.This amounts to disenfranchisement.  LDCs strongly recommend that changes be effected that will
enable LDCs to use the DS meaningfully, should the need arise.TN/DS/W/17
Page 4
13. In the light of the foregoing, LDCs propose that compensation under Article 22.2 should be
made mandatory by the elimination of the phrase "if so requested" in that paragraph.  Additionally, a
strong case for monetary compensation can be made.  This remedy is important for developing and
least developed countries, and for any economy that suffers for the time that an offending measure
remains in place.  There is a need to clarify this provision to the effect that compensation should nottake the form of enhanced market access if this will prejudice other Members and that monetary
compensation is to be preferred.  Such monetary compensation should be equal to the loss or injury
suffered and directly arising from the offending measure or foreseeable under the offending measure.
The quantification of loss or injury to be comp ensated should always commence from the date the
Member in breach adopted the offending measure.  The panels and Appellate Body should be called
upon to put to use the substantial experience of the DS system in calculating the level of nullification
and impairment in effecting a transition to a monetary compensation system.
14. It is imperative that the full implications of a negative finding against an LDC in a case be
fully and properly assessed, in the course of the panel proceedings, and before a final decision is
rendered.  Such an understanding could be used to inspire the parties to reach a mutually agreed
solution, particularly where there is a risk of severe harm to the already fragile economy of the LDC.
Consequently, the standard terms of reference of the panels should be re-written to include amandatory requirement that panels should call for research input on the effects of a negative decision
against an LDC.  The Development and Economic Research Division of the Secretariat, UNCTAD
and UNDP should be consulted for such input.
Collective retaliation15. The lack of an effective enforcement mechanism and the potential negative impact of
retaliatory measures for poor economies is well documented.  LDCs are of the view that one solution
to this handicap is to adopt a "principle of coll ective responsibility" akin to its equivalent under the
United Nations Charter .  Under this principle, all WTO Members would collectively have the right
and responsibility to enforce the recommendations of the DSB.  In the case where a developing orleast-developed country Member has been a successful complainant, collective retaliation should be
available automatically, as a matter of special and di fferential treatment.  In determining whether to
authorize collective retaliation, the DSB should not be constrained by quantification on the basis of
the rule on nullification and impairment.
Special procedures involving LDCs – Article 24
16. LDCs attach great importance to the provisions of Article 24 of the DSU.  Any revision to
their detriment shall be unacceptable.
17. Article 24.1 requires that Members exercise due restraint in matters involving a least-
developed country Member.  There is a need to clarify how to determine whether such restraint was
exercised and what the consequences would be  if it is established that such restraint was not
exercised.  At the outset of a case for instance, panels should have the authority to determine whethera party bringing a complaint against an LDC has a prima facie  case and whether the complainant
exercised due restraint.  Restraint in this sense could include a determination whether it would have
been better in the circumstances to invoke the assistance of the "good offices of the Director-General",
whether due diligence was exercised with the objective of actually settling the dispute and what the
outcome was.  Article 24.2 should therefore be amended by removing "upon request by a least-developed country Member" to make it incumbent on the complaining party to seek the "good offices"
of the Director-General.
18. The paramount objective of the multilateral trading system is the promotion of development
through well regulated and predictable trade relations.  LDCs are the least endowed and mostTN/DS/W/17
Page 5
disadvantaged partners in the system.  They deserve full and benevolent support from the rest of the
Membership.  The potential negative impact of retaliatory action against an LDC cannot be over-
emphasized.  Indeed, even a demand for compensation from an LDC may have severe negative
consequences.  Members should therefore consider the possibility of completely excluding LDCs
from these demands.  In the alternative it could be recognized " a least-developed country Member
against whom a case has been determined shall be expected to withdraw the offending measure ”.
19. In particular, LDCs would like to reiterate that Members should exercise "restraint" in raising
matters when an LDC is involved, as provided for under Article 24.  No compensation should be
sought from an LDC Member.  No retaliatory m easures should be taken against an LDC Member.
LDCs shall be expected to withdraw an offending measure where a case has been established against
them through the DS system.
Responsibilities of the Secretariat to  the parties in a dispute – Article 27
20. The Secretariat is authorized to provide assistance to the panels by Article 27.1. The spectrum
of such assistance is very broad.  It ranges from support on the legal, historical and procedural aspects
of the case to secretarial and technical support.  Often, such support is pernicious and impacts heavily
on the outcome of the case, especially when it takes the form of legal research and other internalcommentary on matters of procedure.  It is the LDCs position that such assistance, particularly the
legal research undertaken by the Secretariat and other commentary prepared in the course of and for
use in the case, should be provided to the parties.  This is important in "completing the picture" as to
how exactly a decision was reached and is part of the quest for openness and transparency of the DS.
21. Article 27.2 provides that the Secretariat "shall" avail legal expertise to any developing-
country Member that requests for such legal assistance.  This is a welcome provision and should be
maintained.  However, the Article goes on to state that the experts shall provide legal assistance in a
manner that ensures the continued impartiality of the Secretariat.  LDCs wish to point out that this
impartiality requirement unnecessarily constrains the legal experts and may prevent them from
offering the full breadth of assistance as envisaged by the Members.  It should be understood thatduring the time an expert is offering legal assistance, he or she should be allowed to discharge such
duties without undue impartiality constraints, he or she should be allowed to assume the full role of
"counsel" as properly understood.  After the tasks for which the expertise was required are completed,
they should then resume their role as Secretariat staff.
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