Checking RTA Compatibility with Global Trade Rules: WTO Litigation Practice and Implications from the Transparency Mechanism for RTAs

Abstract

With the adoption of a new transparency mechanism for Regional Trade Agreements (RTAs) highlighting a crucial shift from 'examination' of RTAs to their 'consideration', the World Trade Organization (WTO) dispute settlement mechanism remains the only available channel for checking RTA consistency. In practice, however, the WTO adjudicatory bodies have been reluctant to deal with this issue. This may be explained with the (1) complexity of the WTO compatibility test and (2) the lack of clarity in the WTO substantive provisions concerning regional trade. The first hurdle could be overcome with the panel's approach in US - Line Pipe supplemented by an in-depth analysis of only problematic aspects of the RTA identified by the complainant. As for the second constraint, WTO members should put more effort to complete the pending work on the clarification of 'systemic issues' or, failing that, use their exclusive power to adopt authoritative interpretations or encourage the dispute settlement bodies to fully utilize their interpretative authority under the Dispute Settlement Understanding (DSU). In addition to the 'consideration' approach, the links between notification and litigation and between the Secretariat's factual presentations and dispute settlement also have some legal implications for WTO litigation involving RTA issues.