Conflicts between Dispute Settlement Mechanisms in Regional Trade Agreements and the WTO — What Should WTO Do?

It was a tremendous pleasure to participate in a symposium that honored one of the giants of the World Trade Organization's (WTO) Appellate Body—Professor Yasuhei Taniguchi. Professor Taniguchi served as a distinguished member of the Appellate Body from 2000 to 2007, during which time he served on the division for twenty-one appeals, many of them addressing landmark issues. In tribute to him, this article focuses on an issue that was a key element in the last dispute on which Professor Taniguchi served as member of the Appellate Body. This dispute concerned Brazil's restrictions on imports of retreaded tires and raised important questions about the relationship between regional trade agreements and commitments to the WTO. The subject of this article—the relationship between the dispute settlement mechanisms of various free trade agreements, customs unions or regional trade agreements (RTAs) and the WTO's Dispute Settlement Understanding—is one that has already seen considerable debate among scholars. This debate is poised to become more relevant and more intense with the proliferation of free trade agreements and RTAs. This article outlines the most common types of dispute settlement mechanisms contained in RTAs and the problems that can arise from the overlap or conflict between these RTA dispute settlement provisions and the Dispute Settlement Understanding of the WTO. This article also discusses the most recent case in which such a conflict arose—the Appellate Body's report in Brazil Tyres. In Brazil Tyres, the Appellate Body examined Brazil's ban on the importation of used and retreaded tires and the exemption from that ban that Brazil adopted to implement an adverse ruling from a decision of an RTA dispute settlement tribunal. Brazil contended that the WTO panel was correct in finding that Brazil's exemption from the ban for certain retreaded tires was permissible because it was mandated by a Mercado Común del Sur (MERCOSUR) tribunal. The Appellate Body reversed the panel, finding that taking action to comply with a MERCOSUR dispute settlement panel did not necessarily provide sufficient justification for Brazil's action. Brazil was still required to meet the requirements of the General Agreement on Tariffs and Trade (GATT) and WTO covered agreements, particularly, in this case, the chapeau of Article XX. This article concludes that there are a number of problems that can arise—or have already arisen—due to the overlap in dispute settlement processes between the WTO and RTAs, and WTO members should take immediate action under the Doha Round mandate to address these conflicts and clarify the legal relationship between RTA and WTO dispute settlement provisions