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Compared with the past GATT 1947 dispute settlement system, several new features of the DSU are as followings:[22]
1. a strict time-frame for every stage of the dispute settlement process is fixed;
2. the DSB was established to minister the operation of the DSU;
3. explicit procedures for consultations were established;
4. panels can be formed automatically if the parties fail to settle the dispute within 60 days of consultations;
5. standard terms of reference can be used and impartial panels are established expeditiously;
6. perhaps most importantly, panel and Appellate Body reports are automatically adopted unless there is a consensus to the contrary by the DSB;
7. the Appellate Body was created to review legal issues and interpretations of panels;
8. a provision was introduced requiring the losing party to implement the DSB recommendations and rules within a reasonable period of time or the complaining party would be automatically entitled to retaliate; and
9. Members are to abide by the rules and procedures of the DSU on issues pertaining to the WTO agreements and are not to take unilateral actions.
III. Proposals on Dispute Settlement Procedure
1. Consultation
Consultation is thought as a form of negotiation in settling disputes.[23] Proposals as to consultation submitted by the WTO Members focus on discussing the function of the consultation as mutually satisfactory solution and fact-finding between parties to the dispute. But there is weakness which is referred to affect the function of consultation during the negotiation.
Under the DSU, the WTO Members prefer a negotiated “solution mutually acceptable to the parties to a dispute and consistent with the covered agreement”.[24] The mutually acceptable solution may be obtained from consultations or “further action” [25] including panel proceeding and Appellate Body proceeding. During the consultation procedure, the effectiveness of these consultations depends solely on the parties’ willingness “to engage in these procedures in good faith in an effort to resolve the dispute” as required by the general provisions section of the DSU.[26] WTO Members expressly affirmed their resolve to strengthen and improve the effectiveness of the consultation procedures in the DSU.[27] But the DSU does not provide enough provisions to guarantee the effectiveness. It is easy for any Member to abuse the flexibility inherent in the dispute settlement mechanism to avoid or delay real consultation or further action. Under the DSU, there are no express obligations on the complainant in this aspect. It is enough for the complaining party only to submit a request for consultations and possibly hold an initial meeting. The only remaining requirement to request the establishment of a panel is to wait the response of the defendant party and the expiry of the regulated period after submitting the request for consultations.[28] Such regulations easily reduce the consultation phase to a mere formality, which is really a hurdle in the way of panel proceeding when a party wants to enter the panel proceeding quickly.
The consultations section in Article 4 of the DSU just sets forth the terms and simple procedures of consultations. The obligations on the Members in the section are vague and rely heavily on good faith.[29] Any party to the dispute may easily use the consultation phase as a mere formality to avoid a treaty obligation, such as “good faith” principle and best efforts obligation. So considerable discretion is left to the parties. The adjustment proposed in a number of submissions tries to make up the weakness to make it possible to review the consultations by the panel. Increasing the obligations and thus limiting the flexibility in consultation stage are main methods mentioned in lots of proposals.
Holding at least two meetings and requirement of written evidence are common recommendations in proposals. Article 4.4 of the DSU requires that the request is in writing and gives reasons including identification of the legal basis of the complaint. An indication of the legal basis would no longer suffice.[30] The complainant’s case should be stated adequately and unambiguously. The European Communities go even further by proposing that any legal claim in the request for the establishment of a panel should be included in the consultations, or rose during the consultations, confirmed in writing, and followed by new consultations unless the defending party agrees otherwise.[31] These proposals set the trend for the formalization of the procedure whereby the efforts of the parties have to be evidenced in writing.
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