Bernard M. Hoekman
World Bank and CEPR

and

Petros C. Mavroidis
University of Neuchatel

November 19, 1999

It is frequently argued that one of the major results of the Uruguay Round--especially for developing Countries--was the strengthening of GATT dispute settlement procedures (DSP) and surveillance mechanisms. DSP became a more automatic process, with greatly reduced opportunities for participants in disputes to block the creation of panels and the adoption of reports. The Trade Policy Review Mechanism (TPRM) became a central part of the WTO, and was expected to result in significantly greater transparency of national policies. Many observers were of the view that as a result of these innovations developing countries would be more able to identify potential violations of WTO commitments and have disputes settled in their favor (e.g., Whalley, 1996, Schott and Buurman, 1994; Croome, 1999).

The use of DSP in the first five years of the WTO would appear to support the optimistic expectations. Over 160 requests for consultations were brought to the WTO in its first five years of operation; three times more on a per annum basis than under the GATT. Developing countries are more often involved than in the past--about 25 percent of all cases were brought by or against developing countries. Some developing countries have successfully contested actions by large players (e.g., Costa Rica--US restrictions on cotton textiles; Venezuela and Brazil--US gasoline regulations). However, least developed countries are not involved in the DSP at all: there have been no cases involving sub-Saharan countries (Table 1). As argued below, this may reflect an unwillingness to bring cases, as well as resource constraints. The costs of DSP are disproportionately heavy for developing countries.

Most observers believe that while certainly not perfect, the experience to date suggests the WTO dispute settlement system is working quite well. Most suggestions for reform are therefore incremental and relatively specific.¹ We take a somewhat more systemic view in this paper and argue that notwithstanding the overall satisfaction with the system, there is a need to enhance the ability of--and incentives for--developing countries to use WTO mechanisms to enforce market access rights. To some extent this can be done through changing the rules of the dispute settlement game. As, if not more important, are efforts to enhance transparency. Although much has been done to bolster the surveillance role of the WTO--e.g., the TPRM--we argue in this paper that consideration should be given to developing transparency mechanisms that are parallel to and independent of the WTO. These could involve the private sector and voluntary organizations (NGOs) that have a major stake in the functioning of the trading system. The focus of such mechanisms should be on analysis as much as on surveillance--including the identification of the costs and benefits of alternative methods of implementing WTO agreements. Greater transparency regarding the likely economic effects of alternative policy and rule-making proposals for countries at different levels of development could be a valuable mechanism to increase the relevance and �ownership� of WTO agreements.

WTO DSP have a number of characteristics, four of which are worth highlighting: (i) only governments have standing; (ii) compensation for damages is customarily not requested and awarded; (iii) the ability to enforce rulings is very asymmetric; and (iv) the costs of the process are significant.

Export industries must petition their governments to bring cases to the WTO--first bilaterally through consultations, then to a panel. Only governments have legal standing to bring cases to the WTO DSP. Thus, export interests must operate through a government filter. This affects the incentives for the private sector to bring cases forward. If there is a substantial probability that the government will not be willing to bring the case to the WTO, cases may not be brought forward. Governments may engage in �tacit collusion� by refraining from contesting measures through fear of stimulating counter claims (the �glass house� syndrome). More generally, developing country governments may be unwilling to bring cases if they fear this will have detrimental consequences in non-trade areas (e.g., continued aid flows or defense cooperation). While it is the role of government to determine priorities and to make the tradeoffs it deems most beneficial for the nation as a whole, concerns that bringing a case would �disturb� a country�s relationship with a major trading partner to some extent nullifies the raison d�etre of the WTO--the establishment of a rule-based as opposed to a power-based system of trade relations.

One option to address this problem is to give exporters direct access to the WTO, i.e., �privatize� DSP. Levy and Srinivasan (1996) develop a simple model that explores the possible consequences of such privatization, and conclude that this is a bad idea. They show that: if a government maximizes national welfare it may have good reasons not to pursue a trade case because the expected national return is negative (due to issue linkage by the partner); removing a government�s discretion to decide whether or not to prosecute a case can make it more difficult to make commitments in trade negotiations; and that there is therefore a good case for permitting only governments to bring cases to the WTO. The Levy and Srinivasan analysis illustrates the importance of full information--governments must be able to determine as accurately as possible what the cost to the economy is of not taking action. Domestic consultation and �transparency� mechanisms may need to be strengthened to ensure that the �right� calculation or tradeoffs are indeed being made. Their analysis also suggests there is value in seeking to create multilateral mechanisms that reduce the burden on individual countries of identifying and contesting WTO violations.² These issues are discussed further below.

A government found to be in violation of the WTO is generally told to bring its measures into compliance with the rules. How this is to be done is usually left to the discretion of the losing party. The most panels can do is to make specific suggestions regarding the way a losing party can bring its measures into conformity. The recent Bananas case illustrates that plaintiffs are well advised to request specific suggestions to prevent strategies of �implementation avoidance� (Hoekman and Mavroidis, 1996). If panels limit themselves to standard recommendations to bring measures into compliance, disagreement between the parties as to the adequacy of the implementing measures taken by the losing party may preclude the complainant from obtaining authorization to take countermeasures. Another panel will first have to rule on the adequacy of the implementing measures.

The standard remedies generally obtained in the WTO context do not provide great incentives to the private sector to invoke DSP. The length of time it can take for the DSP to run its course is substantial--up to 2� years. This is a long time for exporters to be subject to a measure that may be a violation of the WTO, especially for countries that do not have a diversified export base. More importantly, standard remedies that require a member to bring its measures into compliance with WTO obligations do not involve any compensation for damages incurred or financial penalties. This reduces the attractiveness of using the system. If damages or financial compensation could be obtained, the �time cost� as well as the resource costs associated with DSP (see below) would become much less important. In principle, there is nothing to prevent countries from seeking compensation--the fact that complainants to not customarily request compensation is rooted in the history of the GATT. Many WTO members, including developing countries, have been unwilling to go down this track, perhaps in part due to uncertainty regarding possible repercussions (e.g., regarding potential liability). Some countries have also argued that their legal systems prohibit compensation.³

Economists often note that there are asymmetric incentives for countries to deviate from the WTO, as the ultimate threat that can be made against a member that does not comply with a panel recommendation is retaliation. Small countries cannot credibly threaten this because raising import barriers will have little impact on the target market while being costly in welfare terms. Thus, pressure to comply with panel rulings is largely moral in nature. In practice the system has worked rather well, in that recourse to retaliation has rarely been required to enforce multilateral dispute settlement decisions (Hudec, 1993). This is largely a reflection of the repeated nature of the WTO �game� and the resulting value that governments attach to maintaining a (reasonably) good reputation. Nonetheless, asymmetry in enforcement ability can affect the incentives to use the system. The classic recommendation by economists to address the problem is to change the rules so that non-implementation of panel recommendations would be punished by withdrawal of market access commitments by all WTO members. Suggestions to this effect have always been resisted (Hudec, 1987). A basic problem with retaliation is that it involves raising barriers to trade, which is generally detrimental to the interests of the country that does so, and to world welfare more generally. Much better from an economic perspective would be to encourage use of the provisions in the WTO for re-negotiating concessions. This would ensure that the net impact of dispute resolution would lead towards more liberal trade, rather than create mechanisms through which trade barriers are raised, as re-negotiation involves compensating members affected by a withdrawal of a concession by reducing other trade barriers.

An issue that is frequently raised by developing countries is that rich countries such as the US, the EU or Canada--the major players in terms of dispute settlement activity (Table 1)--are well equipped with legal talent, are well briefed by export interests, and have a worldwide network of commercial and diplomatic representation that feeds their systems with relevant data. Developing countries, in contrast, have limited national expertise available and find it difficult to collect the type of information that is required to bring or defend WTO cases. The cost of bringing cases to the WTO is substantial and prevents many developing countries from using the system to their full advantage (ACWL, 1999). Although to some extent countries can buy legal expertise,⁴ scarcity of national administrative resources to identify and prepare cases is a major constraint. Developing countries also find it more difficult to supply panelists--the opportunity costs of seconding delegates for panels is much greater than for OECD countries with larger missions in Geneva and more expertise in capitals.

In considering possible options for improving WTO DSP, it is useful to distinguish between �upstream� and �downstream� stages. The former revolves around identification and preparation of potential cases; the latter revolves around the Geneva panel process. From the perspective of many firms it may not be worth the time and effort required at the "upstream" stage to convince the government that a case is worth pursuing. Violations of the WTO often will not be contested because firms and industry associations either do not know that a government is �breaking the law� or lack the incentive to blow the whistle. Frequently there is a collective action problem, and under-provision of the public good (DSP) is likely to result. Solutions require increasing the benefits to firms of collecting data on potentially WTO illegal policies; and reducing the costs of doing so. The former can be pursued by establishing mechanisms to facilitate private sector cooperation, within and across countries to compile information; the latter can be pursued by devising mechanisms to facilitate identification of potential violations and reducing the need to involve governments in the enforcement of WTO commitments.

Enforcement requires that violations of WTO commitments are identified. Information is therefore a critical factor. Frequently this is under-supplied--the government is not told of foreign trade practices that restrict national exports; or conversely, is not confronted with complaints on the part of foreign exporters regarding policies that impede their access to the domestic market. This may be because the affected market is too small to make it worth bringing a case (Hoekman and Mavroidis, 1999), or because traders are unaware that the WTO applies.

One option to deal with the information problem is to create mechanisms through which data on trade and investment barriers is collected and analyzed by a specialized, independent body. Such an approach would reduce the burden on individual enterprises to have expertise on WTO matters, and reduce the cost of collecting, aggregating and analyzing information. Data could be collected through periodic surveys of a representative cross section of companies that are actively involved in importing and exporting, multinationals, trade and industry associations, and consumer organizations. The information that is compiled by the surveying agency would be used to assess the status quo on export markets, as well as policies maintained by the government that have an effect on imports, and help identify potential WTO cases. Firms and other stakeholders (consumer groups, NGOs) have an interest in cooperating across countries as well.

Cooperation among the private and voluntary sector to monitor government policies would help complement the TPRM mechanism. The TPRM process is arguably too infrequent to be very useful for enforcement, as most countries are reviewed only once every six years or more. Resources are centered primarily on the larger traders, who are reviewed every 2 or 4 years depending on size. It can be argued that the frequency of surveillance is the inverse of what is required, given that export interests have the greatest incentives to monitor the policies that are applied by the largest trading countries. However, a counter argument is that high-income nations obtain relevant information from their commercial attaches around the world and their private sector, whereas developing country networks of commercial attaches are much more limited, and their private sector export interests will tend to be concentrated in fewer markets. Thus, the payoff to multilateral surveillance of major markets may be more important for them. A major limitation of the TPRM is that WTO staff do not have a mandate to identify whether policies violate the WTO. Nor does the process center on specific cases or issues that are of concern to the private sector and might become the subject of future negotiations or disputes.

A private cooperative effort to collect information could be a good complement to the TPRM by identifying not only potential violations of WTO commitments but also the costs to business of status quo policies that are WTO consistent. It would not involve direct access by firms and NGOs to DSP--only national governments would have legal standing in the WTO. But more and better information could assist in overcoming unwillingness on the part of governments to pursue cases motivated by foreign policy reasons or by concerns about possible repercussions in other areas of cooperation (e.g., development aid flows). If firms from a large number of nationalities are involved in the information collection and analysis effort and a number of governments are petitioned to take (joint) action, an individual government�s incentive not to take up a complaint may be reduced. Full exploitation of the potential benefits of timely and comprehensive information and analysis requires complementary changes in the "downstream" WTO process. This is discussed below.

To be useful for advocacy and enforcement purposes, the information that is compiled must be analyzed. The economic effects of policies must be ascertained, and the legality of observed measures with WTO rules assessed. Advisory centers to do the latter could be independent from the information collection effort, or be an integrated dimension of the process. Public-private partnerships with a regional dimension could be envisaged--e.g., by building on the institutions that are created in the context of creating and implementing regional integration agreements (Weston and Delich, 1999).

Many fora already exist through which business cooperates and coordinates policy/lobbying positions vis-a-vis governments. The most prominent international body is the International Chamber of Commerce (ICC) located in Paris. The ICC has consultative status in the United Nations system, and is the most visible avenue for international business to express its views on international policy matters. Mention can also be made of the Business and Industry Advisory Committee, which provides business input into the deliberations of OECD bodies, and the Alliance for Global Business. In many countries there are similar institutions, as well as numerous industry-specific bodies. They are primarily focused on lobbying for changes in regulations or policies. Although business associations have become more aware of the potential payoff of investing resources to influence international negotiations, they have done less to compile the type of information and undertake the analysis that would help policymakers identify the key constraints to competition and provide an input into better enforcement of WTO agreements.

A major concern of developing countries regarding the WTO process is the cost-benefit ratio associated with DSP. Costs--both financial and in terms of human resources--are significant; while benefits are generally perceived to be limited due to the relative weakness of the available remedies.

Resource constraints reduce the ability of a developing country government to participate in the multilateral dispute settlement process. Least developed countries in particular are at a disadvantage in bringing cases and defending their rights because of the absence of representation in Geneva and a severe scarcity of both financial resources and relevant expertise (South Centre, 1999). Article 27:2 DSU provides for technical assistance to be given to developing countries by the WTO Secretariat. The WTO�s ability to satisfy this mandate is very limited--legal technical assistance services are provided by two academic experts on a part-time basis. The adequacy of the assistance on offer is further reduced by the DSU requirement that such assistance can only be provided after a Member has decided to submit a dispute to the WTO. Thus, assistance in evaluating whether practices are inconsistent and determining what might be �winning� cases cannot be given, so that technical assistance is mostly used when developing countries are respondents. The consensus among developing countries is that the available assistance is inadequate.

A number of options can be identified to �level the playing field.� One that has been actively pursued by a group of WTO members is to establish an Advisory Centre on WTO Law (ACWL). This entity would be given resources by participating countries to be used to finance technical (legal) assistance for dispute settlement cases on a cost-sharing basis (ACWL, 1999). To date, the interest in this proposal has been limited. Major OECD players such as the US, EU, or Canada, have refrained from indicating a willingness to support (and help fund) an ACWL. Large developing countries such as Argentina, Brazil and India have also been lukewarm. Analogous to the role a �public defender� can play in domestic legal systems to ensure that all citizens are able to defend themselves, an international mechanism to subsidize the ability of poor nations to bring and defend cases may help to �level the playing field� to some extent.⁵ For such a mechanism to be most effective, it is important that the �upstream� part of the DSP chain be strengthened concurrently, as this is crucial in identifying potential cases.

Another dimension of the resource constraint concerns participation in panels by developing country officials. Panels tend to comprise officials. While this cuts costs--officials continue to be paid by their governments--the opportunity costs for developing countries are high given limited representation in Geneva, and limited trade expertise generally. One way of addressing this constraint would be to establish a permanent roster of panelists who would be committed to being available for DSP work, and would be compensated for their time through the WTO budget. Greater professionalization of panels could have a number of additional benefits, including reducing the burden on the WTO Secretariat associated with DSP, more rapid conclusion of cases, and greater consistency in outcomes (Davey, 1999; Hudec, 1999). Moving away from diplomatic representation would also facilitate granting access to panel hearings by NGOs and interest groups, as the scope for such entities to put pressure on panelists would be reduced (because panelists would not be beholden to particular governments). Professionalization will of course have implications for the WTO budget, so there must be a willingness among WTO members to raise the funding required.

Many cases that involve developing countries will generally pertain to relatively small trade volumes. Another way of recognizing resource constraints is to consider adopting �light� dispute settlement procedures for �small� cases brought by developing countries (e.g., where the exports constitute less than one percent of apparent consumption in the importing market). In such cases, a single panelist could be appointed and the judicial review process be required to be completed within three months. This would be beneficial to developing countries by lowering the cost of litigation (indeed, no lawyers may be needed). A related possibility would be to allow �light� procedures to be used in cases where affected exports are large in relative terms for the country or countries bringing the case (e.g., account for more than 5 percent of total exports). For developing countries a small absolute trade flow in dollar terms may represent a large proportion of its total exports, making it particularly important that rapid review is available.

Two remedies-related issues were discussed previously: the problem of ensuring that a losing party effectively brings its measures into compliance with its obligations, and the type of remedies that panels are permitted (encouraged) to suggest. Requesting specific recommendations by the panel can help reduce the scope for �implementation avoidance� disputes of the type that occurred in Bananas. If the panel�s specific suggestions are followed by the respondent, this should automatically create an irrefutable presumption of legality/adequacy as far as implementing measures are concerned. Moving in this direction should be relatively straightforward. Changing the type of remedies will be more difficult. Developing countries can make a strong case that violations of the WTO are disproportionately burdensome for them given the fragility of many of their export industries and the fact that their export base is generally much less diversified than in high income countries. Obtaining compensation for damages can therefore be argued to be more important for developing countries. Provision for granting of compensation for damages could also help offset prevailing resource constraints--legal expertise should be easier to attract, and developing country firms should have a greater incentive to monitor policies and bring cases forward.

Of course, financial compensation for damages incurred will be controversial and opposed by many WTO members. One way to limit the implications might be to restrict the right to demand compensation to countries with a low level of per capita income (such as $1,000). Even then, serious questions will need to be addressed regarding the determination of the appropriate level of compensation. It seems clear that this could easily become a highly contentious matter in itself. It may therefore be preferable not to attempt to mainstream compensation as a remedy. A more practical and less contentious approach to the problem would be create mechanisms that reduce the need for compensation by: (i) identifying potential violations rapidly; (ii) allowing these to be addressed in a timely fashion; and (iii) at lower cost than is currently the case. One possibility discussed below to achieve these objectives is to outsource and strengthen surveillance and to delegate some of the enforcement task to a independent "special prosecutor" that has the mandate to defend developing country interests.

As noted above, the fact that only governments have standing in the WTO may limit the number of cases that are brought, and imposes a relatively greater burden on developing countries. Political realities--asymmetric distribution of power; threats of cross-issue linkages--will always be a powerful force constraining the ability (willingness) of governments to assist national firms defend their rights. This suggests that dispute settlement should be a collective (multilateral) endeavor not only for the reasons emphasized by economists (to increase the power of enforcement threats), but also to reduce the incidence of �self-censorship.� Although governments cannot be obliged to cooperate to bring joint cases, business and NGOs can play a role in lobbying for joint actions to be brought. The International information collection and analysis body proposed above could help provide a focal point for such efforts.

A more effective mechanism that could be considered to �multilateralize� DSP would be the creation of an independent �Special Prosecutor�. This office would be granted the mandate to identify and contest potential WTO violations on behalf of developing countries, using information drawn from private sources--including the information collection mechanism described earlier if this is created--the TPRM, the business and financial press, etc. Such outsourcing of enforcement could help address both the resource constraints and the incentive problems (fear of cross-issue linkage) that may impede developing country governments from pursuing cases. Seeking to move in this direction deserves serious consideration by developing countries as it could substantially increase the probability that developing country interests will be defended. Although cases brought by the special prosecutor could not be backed by the threat of retaliation (as they are not brought by or on behalf of a government), findings against a WTO member would lead to moral pressure to bring measures into conformity. The history of GATT and WTO DSP suggests that this is an important factor in inducing WTO members to abide by the rules of the game.

Although many NGOs argue that one of the major failings of the WTO is inadequate transparency of its operations, great progress has been made on this front in recent years. The best illustration is the WTO internet home page, which provides access to much of the documentation that is prepared by and submitted to the WTO--documents that under GATT procedures were �restricted� and not made available to the public. But much more can be done. Much of the data generated by the WTO is not freely available, significantly reducing the transparency role of the WTO. Examples include the Integrated Database (IDB) of protection and trade flows and the reports of the TPRM, neither of which are freely available for downloading through the web. Such outputs are best regarded as public goods that should be distributed free of charge. Attempts at cost recovery by the Secretariat in this area are counterproductive as they greatly restrict the use and dissemination of very useful information (Francois, 1999). Policies that restrict access to data on trade policies and trade flows is also counterproductive, as it impedes the ability of think tanks and NGOs to analyze policies.

But there is a need to go beyond greater transparency of WTO processes and outputs. A complementary option that might be considered is the creation of an international public interest body that would act as a forum to explore the likely WTO consistency of contested measures in a process. By making this independent of the WTO, it would allow for direct access by non-governmental bodies. Such a �parallel track� would allow all interested parties to explore the facts of a case, determine the economic impact of a given situation, and identify more efficient policy options. A parallel transparency body that is independent of the WTO could also help address demands by NGOs that the WTO should be opened up to greater participation by voluntary organizations and the private sector. Most attention in this regard has centered on DSP, with arguments that panel hearings should be open to the public, and that briefs by the parties be made publicly available. Greater transparency of WTO dispute settlement processes would be beneficial, although as noted above, a necessary condition may be professionalization of panels. But the need for greater transparency extends beyond the downstream dispute settlement process.

A transparency body might help shed light and build consensus by identifying whether there are cross-border spillovers, their size, the economic or environmental impact of policies, including their distributional effects within and across countries, and whether alternative instruments exist that could attain governmental or societal objectives (more) efficiently. Such an entity could be used as a discovery mechanism through which greater understanding could be obtained regarding the effects of national policies on various constituencies and stakeholders, both within and across economies.⁶ It could play a constructive role by acting as a focal point for exploring the pro�s and con�s of potential multilateral rules in new areas, and a forum to analyze the economic and development impact of specific policy measures that have been taken by governments, or which are being proposed by WTO members, NGOs, or other stakeholders. The role of such an international entity could extend to being a forum to determine the scientific basis--or lack thereof--of regulatory policies (standards, bio-tech, SPS, etc.). Such policies are rapidly becoming a major source of tension and controversy, and developing countries in particular could benefit from a neutral and objective forum in which standards-related policies and issues are analyzed.

In short, a transparency entity could help ensure that the development dimension of current and proposed multilateral rules be considered. As noted by Finger and Schuler (1999), developing mechanisms to assess the relevance of WTO agreements for the process of economic development is urgently needed, and is something that to date has not been done by the WTO. Clearly careful thought needs to be given to the appropriate design and governance of a transparency body. In principle it could be a public-private partnership, including industry associations, the International Chamber of Commerce and NGOs among its members, with part of the funding being generated by public institutions. Of great importance is that it have sufficient funding to perform quality work, and be independent of governments and the WTO. Independence and separation will minimize the extent to which discussions and analysis is influenced by strategic negotiating considerations.

The incentive for governments to negotiate and abide by international trade agreements depends in part on the effectiveness of enforcement provisions. Enforcement is particularly important for developing countries, which will rarely be able to exert credible threats against large trading entities that do not abide by the negotiated rules of the game. In this paper we have discussed some of the systemic aspects of the enforcement problem. Since the WTO rests on decentralized enforcement of international obligations (the ultimate remedy being an authorization to adopt bilateral countermeasures), it inherits all of the asymmetries that arise when there are substantial differences in bargaining power. Standard solutions suggested in the economic literature to address this problem include multilateralization of sanctions and the adoption of remedies that deter transgressions (e.g., compensation). Moving in this direction would benefit developing countries, who are mostly �small� in terms of the leverage they can exert. However, moves towards multilateral enforcement or compensation are unlikely to prove politically feasible. Progress may be easier in the two other areas discussed in this paper: enhancing transparency and information, and adopting more efficient and effective DSP procedures. A combination of efforts that focus on these two dimensions of enforcement could significantly improve the incentives for developing countries to participate in WTO DSP and increase their sense of �ownership� of the institution.

Even in the context of the limited �traditional� WTO remedies, reputation costs often are an effective mechanism to induce WTO-compatible behavior. Large traders, if brought to �court� more frequently by developing countries, may therefore be induced to behave in a more WTO-consistent manner. Increased transparency plays a major role in this connection: better and more timely information about applied policies and the merits of a particular case is a precondition for enforcement. In our view the private sector and voluntary organizations must play a much greater role in collecting and transmitting information on the policies that are applied by WTO members. In part this can be achieved through cooperative mechanisms at the national level that reduce the costs of monitoring. Such national efforts could also be coordinated internationally to identify measures that affect groups of countries.

Efforts can usefully also be made to reduce the costs for developing countries of using WTO DSP. Developing countries are at a disadvantage, given their limited resource base. The introduction of less costly �light� procedures in cases where the object of the dispute is below a certain threshold may act as an incentive for developing countries to submit more cases by bringing the cost of litigation down and increasing the likelihood of more rapid redress. Providing legal assistance along the lines that has been proposed by a number of WTO members (ACWL, 1999) would also be beneficial to developing countries. Finally, consideration might be given to the creation of an independent �Special Prosecutor� that is given the mandate to identify potential violations of WTO commitments by members that are detrimental to developing countries and to initiate dispute settlement proceedings.

A major problem with WTO DSP is that only governments have standing. Although there are compelling reasons why governments should continue to have sole access to DSP--with the exception of the proposed �special prosecutor�--consideration could be given to establishing mechanisms through which stakeholders can express their voice and explore the economic and social (distributional) implications of policy proposals. One possibility would be for the private sector and NGOs to cooperate in the establishment of a transparency body that would operate in parallel to the WTO process. Such an entity might not only help defuse specific disputes through a process of analysis of the facts and the economic development dimensions of cases--outside of the regular WTO mechanisms, thereby allowing non-governmental entities to participate--but also be a forum for discussion and analysis of issues that are not (yet) subject to multilateral disciplines.

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Note: Excludes third parties.
Source: Horn, Mavroidis and Nordström (1999).

* We are grateful to Mike Finger, Robert Hudec, Phil Levy, Aaditya Mattoo, Claudia Orozco, David Palmeter, Arvind Panagariya and Diana Tussie for helpful comments and discussions on earlier drafts. The views expressed are personal and should not be attributed to the World Bank.

1 For recent analyses and proposals for improvement by legal experts, see Davey (1999), Hudec (1999) and Jackson (1999).

2 Hoekman and Mavroidis (1999) suggest that strengthening enforcement mechanisms at the national level could also help alleviate the problem, as this channel does not allow threats to be exercised in non-trade areas.

3 Although it can be pointed out that a basic principle of public international law holds that domestic law cannot be invoked to deviate from an international obligation (Art. 26 Vienna Convention on the Law of Treaties).

4 Until Bananas III countries were impeded from bringing non-government, private legal counsel before the panel, but an Appellate Body decision to allow representation by private lawyers removed this constraint as far as the Appellate Body was concerned. A subsequent panel then decided there were no provisions in the WTO or the DSU that prevented a WTO member from determining the composition of its delegation to panel meetings (Palmeter and Mavroidis, 1999).

5 There are two models possible here. One is the ACWL model that has been proposed, which would involve permanent staffing. Another is to provide financing (subsidies) to developing countries, which can be used to hire whatever representation they deem most suited to the task. From an efficiency point of view the second option is preferable.

6 Hoekman and Mavroidis (1994) have argued that such �discovery� is perhaps the most useful dimension of GATT non-violation procedures. Although the recent Fuji-Kodak case illustrated that the process is valuable in getting the facts on the table for discussion, a stand-alone transparency mechanism that is not directly tied to DSP would be a better approach to achieve this goal.