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II. Overview on the Dispute Settlement Understanding (DSU)
The DSU contains rules and procedures. A party can initiate the process by the request of consultations to the other party and notify the Dispute Settlement Body (DSB) if the party think that the other WTO Member’s measures are incompatible with the WTO Agreements. Pursuant to Article 4 of the DSU, a Member is to ‘afford adequate opportunity for consultation’ and a Member is to reply within 10 days and ‘enter into consultations in good faith’ within 30 days after the receipt of the request for consultations.[8]
If the consultations fail to settle the dispute within 60 days following the receipt of request for consultations, the complaining party can make a request in writing for the establishment of a panel.[9] The defending party can block the creation of the panel once. However, when the DSB meets for a second time, the appointment can no longer be blocked. Once a panel is established, panellists must be selected within 20 days.[10] The panellists will have a meeting to fix the timetable and working procedure after they are appointed. Panels shall follow the Working Procedures in Appendix 3 of the DSU unless the panel decides otherwise after consulting the parties to the dispute.[11] The function of panels is to assist the DSB to make an objective assessment of the matter concerned and to seek enough information to assist the DSB in making the recommendations or in giving the rulings provided for the covered agreements.[12] Panels shall have the standard terms of reference within 20 days from the establishment of the panel before the panel examination.[13]
The period of examination by the panel cannot exceed six months in cases of urgency three months from the establishment of the panel until the final reports are issued to the parties to the dispute.[14] The panel may suspend its work at the request of the complaining party for a period not to exceed 12 months during the panel procedures.[15] Before the final reports are formed, there is an interim review stage in which the panel shall issue the descriptive (factual and argument) sections of its draft to the parties concerned for written comments. After the due time for the comments, the panel shall issue an interim report to the parties for further comments. On the base of the further comments, the final panel report will be formed and circulated to the WTO Members.[16]
After 20 days for the Members’ consideration of the final report, the DSB will consider for the adoption of the report. Within 60 days after the date of circulation of a panel report to the Members, the report shall be adopted at a DSB meeting unless a party to the dispute formally notifies the DSB of its decision to appeal or the DSB decides by consensus not to adopt the report.[17] The party’s decision of appeal will automatically lead to the procedure of appellate review.
The Appellate Body is a standing institute established by the DSB. The main function of the Body is to hear the appeals from panel cases[18] and to issue the Appellate Body report within 60 days.[19] An Appellate Body report shall be adopted by the DSB and unconditionally accepted by the parties to the dispute unless the DSB decides by consensus not to adopt the report within 30 days following its circulation to the Members.[20]
After the DSB adopt the panel report or Appellate Body report, the adopted panel or Appellate Body recommendations will be implemented under the monitor and surveillance of the DSB within defined reasonable time. At the moment, parties may negotiate compensation pending full implementation. Within 60 days after the expiry of the reasonable period of time, the DSB may authorise retaliation pending full implementation which is regarded as the last procedure of the dispute settlement. So the full course of a dispute to its first report in consultation and panel-decision stages will take about one year. If the dispute is appealed to the Appellate Body, the time period increases to 15 months.[21]
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