Making WTO Remedies Work for Developing Nations: The Need for Class Actions

Phoenix X. Cai, University of Denver College of Law

Abstract

Making WTO Remedies Work for Developing Nations: The Need for Class Actions

Abstract

Developing nations comprise more than four-fifths of the membership of the World Trade Organization (“WTO”). Yet, they seldom participate in the WTO’s powerful dispute settlement process. This is problematic because the WTO is essentially a self-enforcing system of reciprocal trade rights that relies on proactive monitoring and enforcement by all members. Use of the self-enforcement mechanism – by initiating cases under the WTO’s Dispute Settlement Understanding (“DSU”) - is critical.

There are five primary reasons why developing nations do not actively invoke the DSU. This Article argues that the most significant of these reasons is that the WTO’s remedies do not provide meaningful redress to developing nations, who remain largely absent from WTO litigation. This Article then contributes a workable proposal to reform the remedies structure of the WTO, particularly in light of the needs of developing nations. The availability of meaningful remedies lies at the heart of any viable legal system.

My proposal entails the use of a litigation strategy for developing nations which relies on a quasi “class action” model. Developing nations would be allowed freer rein to exercise existing third party rights in a manner that allows them to pool their complaints in cases against developed nations. The primary mechanism for this is the regular joinder provision of the DSU. However, the strategy would be strengthened by procedural changes to the right to join as a third party, such as making the right automatic, upon notification to the DSB, for least developed nations.

Each nation would play an active role in the dispute settlement process, but one nation, generally either the nation that is most economically powerful or most experienced in WTO litigation, would take a leading role and serve as the representative plaintiff, much in the way a named plaintiff in a class action might. In the remedies stage, all named parties would benefit. However, all parties would get to aggregate their level of harm, such that the threatened trade retaliation can be equal to the sum of all of the harm suffered by the class. The class can then decide to exercise retaliation collectively, allowing, for instance, the representative plaintiff to impose countermeasures on their behalf. The choice to impose countermeasures individually or in the aggregate would lie with the class. More importantly, the class would have the right to trade the levels of retaliation unevenly within the class. This means that the smaller members of the class could grant the amount of harm they suffered to another class member, allowing that member to exercise retaliation on its behalf.

The strategy can be implemented unilaterally by WTO members with only minimal procedural changes. It has the benefit of not requiring any amendment to WTO documents. Any amendment would be virtually impossible to achieve in the current political climate. It would provide a meaningful way for developing nations to play an active role in dispute settlement. Most importantly, the proposal enables developing nations to have real clout in the trade arena, thereby making them more invested in the international trading system.