RESTRICTEDWORLD TRADE
ORGANIZATIONWT/GC/W/162
1 April 1999
(99-1332)
General Council Original:  English
PREPARATIONS FOR THE 1999 MINISTERIAL CONFERENCE
The Dispute Settlement Understanding (DSU)
Communication from Pakistan
The following communication, dated 26 March 1999, has been received from the Permanent
Mission of Pakistan.
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Pakistan considers that even though the dispute settlement mechanism has been on the whole
working satisfactorily, there is room for further improvement.  The following proposals are submitted
for further examination, clarification and modifi cation of some of the provisions of the DSU.
I. SELECTION OF PANEL MEMBERS
1. Article 8 of the DSU provides that panels should be composed of "well qualified
governmental and/or non governmental individuals".  The Article further provides that in order to
assist the selection of panelists "the Secretariat sh all maintain an indicative list of governmental and
non governmental individuals possessing qualifications" outlined above.  Such a list is prepared by
the Secretariat by requesting Member countries to nominate qualified individuals for inclusion in the
list.  The names recommended are included in the list only after they are approved by the DSB.  The
Article further provides that the parties to the dispute should not oppose nominations except forcompelling reasons.  It is only in cases where parties to the dispute cannot reach agreement on the
names suggested by the Secretariat within 20 days of the establishment of the panel that the Director
General is expected to appoint a panel.  In doing so, he is expected to consult the Chairman of the
DSB and the Chairman of the relevant Council or Committee.
2. The basic thrust of the procedures is to ensure that panelists for settlement of disputes brought
to WTO are selected from well qualified government and non government experts.  Based on this.
Pakistan therefore considers that basic principles on which the system for selection of panelists is
based should not be changed.  However, the selection of panelists should be from a pool of candidates
representing a broad range of expertise ensuring a balance between panelists from developed and
developing countries.
3. To enable the DSB to examine this issue and the solution that could be found to the practical
problems that arise as a result of delays in the selection of panelists, Pakistan would suggest that the
Secretariat should be requested to prepare a paper e xplaining the procedures followed at present in the
preparation of the Indicative List and providing the following information:
- Names of the individuals who were selected to work as panelists since the establishment of
WTO, their nationality, background and experience (e.g. whether member of the Mission,
official from national capital or non governmental expert).WT/GC/W/162
Page 2
- In cases where the individual appointed was a non governmental expert, was his name
included in the Indicative List of experts?  If not, what criteria were used in selection of the
individual?
- The number of cases where the Director General had to decide on the composition as parties
were not able to agree on the names suggested by the Secretariat.
- The number of cases where the same individual  was selected to work on different panels.
II. THE ROLE OF THE APPELLATE BODY
A. AUTHORITY FOR REMAND
4. Under the DSU the Appellate Body is expected  to examine only "issues of law" covered by
the panel report.  However, it has no authority to send back for examination by the panel, where it
considers that the panel:
- has failed to examine fully the facts of the case;  or,- has, in interpreting law, not taken into account some of the provisions of the covered
agreements.
5. This situation has resulted in the Appellate Body examining de novo facts of the case, or
"making" a finding on legal issues which were not addressed by the panel (See Appellate Body Report
in the US Shrimp Turtle case).
6. Pakistan considers that in all such cases in order to ensure that the disputes are settled on the
basis of fuller examination of both issues of fact  and law, the Appellate Body should be required to
"remand" the case to the panel for reexamination.  To avoid the settlement of disputes being
unnecessarily delayed as a result of such remand, it may be provided that the panel should complete
its examination within a period of one month.
B. N
EED TO CURB APPLICATION OF EVOLUTIONARY APPROACH TO THE INTERPRETATION OF LAW
BY THE APPELLATE BODY
7. In some of the recent cases the Appellate Body has adopted an "evolutionary" approach in
interpreting the provisions of the covered agreements .  In the US Shrimp Turtle case, for instance, it
has observed that in interpreting the terms and wo rds in legal instruments "drafted some fifty years
back" the treaty interpreter "must read the treat y in the light of contemporary concerns of the
community of nations" even though such concerns may not have existed when the treaty was adopted.
8. Pakistan completely disagrees with the broad in terpretation given by the Appellate Body to its
mandate.  Article 3 of DSU clearly stipulates that recommendations and rulings of the panels and
Appellate Body "cannot add or diminish the ri ghts and obligations provided in the covered
agreements".  The broad interpretation given by the Appellate Body in the Shrimp Turtle case to the
provision of Article XX (g) that the term "exhaustible natural resources" which was originallyintended to cover "physical resources" must now be broadened to cover "living resources" taking into
account the contemporary concerns of the community for environmental protection has, by
significantly increasing the possibility of the prov isions of Article XX being invoked to justify
restrictive trade measures, resulted in diminution of the rights available to the member countries under
GATT.WT/GC/W/162
Page 3
9. In the view of the delegation of Pakistan such customary law on interpretation applies only to
treaties which are negotiated on a once and for all basis.  Such treaties need to be distinguished from
WTO Agreements, which contain provisions for surveillance of their operations on a continuous
basis.  It would therefore be necessary to clarify the relevant provisions in the DSU to make it clear
that the responsibility for clarifying or modifying the provisions of the WTO Agreements clearly restswith the WTO Member countries and that it would not  be appropriate for the Appellate Body to usurp
these functions under the guise of interpreting law on the basis of contemporary developments.  In all
cases, where the Appellate Body considers broader or  different interpretation would be justifiable and
equitable taking into account contemporary developments, it should refer the matter to the General
Council for consideration and for making such modifications in the relevant rules as the Member
countries consider appropriate.
C. A
MICUS BRIEFS :  PARTICIPATION OF NON-GOVERNMENTAL ORGANIZATIONS :
10. The participation of Non-Governmental Organisations in the dispute settlement process has
not been authorised by the Members.  It is therefore troubling that in a recent dispute, legal
submissions from NGOs were reviewed by a Panel and the Appellate Body and with this a question
has arisen whether panels should take into account "amicus briefs" submitted to it by public interest
groups and NGOs.  The relevant applicable provisi ons of the DSU are contained in Article 13.2 which
reads as follows:
"Panels may seek information from any relevant source and may consult experts to obtain
their opinion on certain aspects of the matter.  With respect to a factual issue concerning a
scientific or other technical matter raised by a party to a dispute, a panel may request an
advisory report in writing from an expert review group".
11. The ruling given by the Appellate Body in the Shrimp-Turtle case goes to suggest that the
panels could, under the above provisions, take into account in giving rulings "unsolicited" information
or briefs submitted by non-governmental organisations.  In view of the uncertainty created by the
Appellate Body's decision, it would be necessary to  clarify that the provisions of Article 13.2 would
not permit panels or the Appellate Body to take into account "unsolicited information" including"amicus briefs" from private parties.
III. COMPENSATION AND SUSPENSION OF CONCESSIONS
A. C
ROSS RETALIATION
12. Article 22.3 provides that where the erring party fails to modify the measures to bring them in
conformity with the recommendations of the panel and the negotiations between parties to the dispute
for "satisfactory compensation" fail, the complainin g party may take retaliatory action by suspending
concessions or other obligations.  Such retaliatory action can be taken by suspending obligationseither under the Agreement in which the panel and Appellate Body has found a violation or other
nullification or impairments or under any other covered agreements.  In essence these provisions
imply that for a perceived lapse in the area of services and intellectual property by a developing
country, retaliatory action against it could be taken in the goods sector.
13. Since cross retaliation across agreements may affect more seriously the developing countries,
it may be desirable to provide that retaliatory actions against developing countries, under the
provisions of the Article, should be taken only through suspension of obligations under the same
agreement in which they have been found to be in violation, and in all fairness this situation calls for
removal of the provision for cross retaliation.WT/GC/W/162
Page 4
B. FINANCIAL COMPENSATION
14. It would be useful to clarify that the term "compensation" used in Article 22 includes grant of
financial compensation to the complaining party by the country which has been found to be in
violation of the rules.
15. Panels should be authorised to recommend payment of such financial compensation in
disputes between developed and developing countries where they find that as a result of WTO
inconsistent measures taken by developed countries, the developing country has lost its trade in the
affected product.  The amount of financial compensation should be independent of the requirement to
remove the offending measure and should be determined taking into account such factors as the
impact of the inconsistent measure on trade, the duration for which it was applied, and the time it
would take to develop exports after the measure was removed.
C. COSTLY NATURE OF PROCESS
16. The dispute settlement process is often very costly for developing countries.  This is
particularly so for two reasons:
- First, the work of panels has become extremely technical.  Thus, the process of preparation of
a case, the presentation before the panel and response to the queries of the panel needs legal
expertise which may not be available in developing countries.  Hence, for an effectivepreparation of a case, developing countries often bank upon the law firms of the developed
countries.  This is a costly undertaking.
- Second, very often the preparation of such cases requires the collection of information from
other countries entailing much expense.
17. In our view the ever increasing legal costs call for specific provisions in the WTO budget to
assist developing countries meet the costs involved in the dispute settlement mechanism.
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