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Challenges for the Upcoming WTO Negotiations and
Agendas for Future Japanese Trade Policy

Appendix 7
Strengthening Dispute Settlement Procedures

We commend the fact that the Uruguay Round led to better dispute settlement procedures by, for example, improving the decision-making methods of dispute settlement institutions, clarifying procedural timeframes and establishing an Appellate Body, marking substantial improvement in dispute settlement functions compared to former procedures.

However, a number of issues have arisen in the four or so years during which the dispute settlement mechanism has been in place, such as inadequate remedy for injured companies.

Dispute settlement is an important function in ensuring the effectiveness of the WTO Agreement. As the number of cases increases and the content of these becomes more complex, the dispute settlement mechanism and its functions will need to be further strengthened to allow the early resolution of disputes with as little politicization as possible. Strengthening the dispute settlement mechanism should also deter member countries from initiating protectionist trade measures.

1. Consideration of the Introduction of Remedies

Even where trade measures taken by the defendant country cause injury to complainant country companies during dispute proceeding period, the rules as they stand do not allow relief to be sought for this damage. For example, where another country was to impose unilateral measures as part of a trade dispute with Japan, exports by Japanese companies would be severely damaged over the course of dispute settlement procedures. Consideration should be given to introduction of a system whereby the complainant country companies can seek remedies for the damage sustained from the point of application for panel establishment up until implementation of the recommendations adopted by the Dispute Settlement Body.
Remedies could comprise measures such as retroactive remedies for damages after panel and Appellate Board reports have been adopted (reparation by equivalent) or bringing back to the original state as before the defendant country took the measures in question (restitution in kinds), and provisional suspensionary measures whereby the measures in question would be temporarily suspended at the point when a claim was made to the WTO or on panel establishment.
The introduction of such remedies should prevent countries from jumping to implement protectionist measures. It would also be an incentive for the parties involved to shorten the period of dispute settlement procedure.

2. Elimination of Standards of Review

The standards of review introduced for cases relating to the Anti-Dumping Agreement are creating problems in that they greatly narrow the possibilities of dispute settlement procedure referral. Given the continued protectionist use of anti-dumping measures, the Anti-Dumping Agreement standards of review should be abolished. Also, while some member countries have argued that standards of review should be widened to apply under other agreements, we strongly oppose this on the grounds that such a move would greatly damage the credibility and effectiveness of dispute settlement functions.

3. Organization Expansion

With disputes likely to become more numerous and more complex, the Appellate Body and panels should be reinforced through staff increases and by making positions full-time, also increasing the number of legal staff in the Secretariat.
As factors behind disputes are also becoming more specialized, forward-looking consideration should be given to enhancing the degree of panel specialization and establishing expert review groups to provide panels with specialist advice (Article 13.2, Understanding on Rules and Procedures Governing the Settlement of Disputes).

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