This study analyzes the problems of the trade dispute resolution procedure under the General Agreement on Tariffs and Trade (GATT), and discusses possible improvements and solutions. A number of problems have been pointed out in association with the GATT trade dispute resolution procedure, with developed and developing economies alike converging on the need to either reform or strengthen the procedure. The European Community (EC), for instance, points out that, while the GATT procedure has helped 90 percent of the cases to reach satisfactory settlements, it is inherently limited to solve the political disputes at stake in the remaining 10 percent. Japan may not be as forthright as the EC in its objections, but is also quite passive in embracing the GATT procedure and its strengthening. On the other hand, the majority of developing countries, including Hong Kong and Mexico, as well as a handful of advanced economies like Australia and New Zealand, advocate the strengthening of the current GATT procedure, with the support from the United States, which also emphasizes the need to reinforce the formal rules and constraints of the procedure.
The criticisms of the GATT procedure can be mainly divided into two types. One points out the de-facto compromise of interests that the procedure forces upon the litigating parties, the lengthy periods of time it requires to settle disputes and the unfairness of the panel report writing process. The other points out the absence of measures to implement the recommendations of the Board of Trustees with a binding force of law. Although the current regime allows litigating parties to take retributive actions when litigated parties fail to carry out the arbitration results, numerous litigating parties are able to take full advantage of this exemption due to their economic weakness and struggles with negotiation skills.
The Cabinet Declaration of 1982 indicates that the Korean government is in favor of strengthening the monitoring procedure of the GATT regime to expedite the settlement procedure and facilitate the implementation of the recommended settlements. The increase in the volume of Korea’s trade with other countries will likely increase the nation’s exposure to trade disputes that will be subject of the GATT procedure, so the Korean government needs to consider both positions for reforming and strengthening the procedure. Korea has not been involved in a dispute subject to the GATT procedure until now. It therefore needs to survey and study the experiences of other countries, and particularly those of Japan, which has been a litigated party until now but is increasingly turning into a litigating party as of late. The proper position Korea should support is the maintenance and strengthening of the principles of free and fair trade in the GATT regime. As Korea will likely to run into an increasing number of disputes with both developed and developing economies, it will need a more rational, consistent, and impartial dispute settlement procedure with clearly defined formal rules and constraints.
GATT 무역분쟁해결절차의 문제점과 개선방안(Problems of the GATT trade dispute resolution procedure and suggested improvements)
|Series Title; No||정책연구시리즈|
|Subject Country||South Korea(Asia and Pacific)|
|Subject||Economy < Trade|
|Holding||KDI; KDI School|