GATT COOPERATION PRINCIPLE

• GATT 1994 had fostered cooperation through its principles such as non-discrimination principle. The elimination of discrimination has played a fundamental role in international trade and investment relations. Non-discrimination of foreign nationals, goods, services and investments operates on two levels: equal treatment on the international level by extending benefits granted to one state to trade or investment relations with another state. This is known as most-favoured-nation treatment. The application of most-favoured-nation treatment depends on the scope of its application and context. 
• Another level is in relation to equal treatment in a domestic context by granting national treatment to nationals, goods, services and investment of other states. According to article III: 4 of the GATT provides national treatment for foreign products: The products of the territory of any contracting party imported into the territory of any other contracting party shall be accorded treatment no less favourable than that accorded to like products of national origin in respect of all laws, regulations and requirements affecting their internal sale, offering for sale, purchase, transportation, distribution or use.
• Cooperation through GATT has also aided developing countries to get favourable conditions in trade on the international stage. For instance in November 1979, Members of the GATT adopted the decision on Differential and More Favourable Treatment, Reciprocity and Fuller Participation of Developing Countries. As an exemption (‘waiver’) from MFN treatment, this decision gives goods from developing countries a competitive advantage. It provides: 

' Notwithstanding the provisions of Article I of the General Agreement, contracting parties may accord differential and more favourable treatment to developing countries, without according such treatment to other contracting parties.'

• The provisions of paragraph 1 apply to the following: a. Preferential tariff treatment accorded by developed contracting parties to products originating in developing countries in accordance with the Generalized System of Preferences; Differential and more favourable treatment with respect to the provisions of the General Agreement concerning non-tariff measures governed by the provisions of instruments multilaterally negotiated under the auspices of the GATT;  Regional or global arrangements entered into amongst less-developed contracting parties for the mutual reduction or elimination of tariffs and, in accordance with criteria or conditions which may be prescribed by the Contracting Parties, for the mutual reduction or elimination of non-tariff measures, on products imported from one another;  Special treatment on the least developed among the developing countries in the context of any general or specific measures in favour of developing countries.
• GATT with its several agreements had aided in technology transfer through agreements such as Sanitary and Phytosanitary Measures Agreement (SPS). This agreement had aided countries to cooperate in ensuring food security. Essentially this agreement applies sanitary and phytosanitary measures sets out the basic rules for food safety. This agreement prepared way for setting up of the World Trade Organization (WTO).
• Through GATT via cooperation members states were able to resolve trade disputes via GATT council.

DISPUTE SETTLEMENT DURING 1950-1960S

• At the beginning of this period, that is, in the 1950s, dispute between the parties was resolved through a process which involved the disputing parties having to table a request for ruling to the chairman of the GATT Council. The first chairperson of the dispute settlement platform was Mr Dana Wilgress of Canada. During this time, there was also appointment of the Working Parties; whose nature resembled that of a committee of persons. The purpose of the Working Parties was to consider requests for ruling and report back to the contracting parties.
• Whenever a dispute arose, each disputant would choose a representative who was to be from a country that was not involved in the dispute in any way; either directly or indirectly. This method was successful and in other instances it was not, since the report of the Working Parties set out the view of the disputants plus the views of other members of the Working Parties. This led to irrational decision making, because the contracting parties could not amicably resolve their dispute, due to interference of the Working parties with their views. 
• For example, The complain by Chile against Australia (1949), the working parties moved in the direction of third adjudication ,in that, the report prepared by the GATT secretariat reflected a unanimous view of “neutral” members that supported Chile’s position and rejected that of Australia. On the basis of the report of the working parties, the contracting parties recommended that Australia should end the objectionable practice and report back at the next session. Though the Australian representative wrote a dissent to the Working party’s report, Australia did follow the recommendation and abandoned the challenged practice. 
• In 1952, a new chairman of the Contracting Parties was appointed and he established a panel to replace the Working Parties. The difference was that, while the Working parties included the disputants and all members meeting together throughout the proceeding, a panel involved the disputants and the panelists meeting among themselves and the secretariat preparing their report. The panel worked as a decision making body and needed to have a positive consensus. The panellists would be seated at a head table, with the parties at loggerheads, but on either side or observers at the back. In the 1960s there were a lot of confrontations challenging some of the policies of GATT by European Community.

Challenges experienced during this period 

• In 1960s, dispute settlement was affected by several major changes which included, increase in membership of GATT due to the emergence of new states, which had just gained independence. This became a challenge in that, management of GATT became cumbersome and decision making became so slow.
• The second challenge was the emergence of European Economic Community, which was powerful in international economy; it was equal to the US. Its determination was to insult some of the policies of GATT, notably; the common agricultural policy which gave rise to the “chicken war”. The chicken war was a trade dispute between the US and the EEC over new tariffs introduced in Europe 
• Also, there was the emergence of Japan and EC as economic super powers. This changed GATT from an organization dominated by the US into one with three recognizable power centers. They did not view a formal dispute settlement to be in their interest, as they were all trying to advance their interests at the expense of other contracting parties. This made them disregard and act inconsistently with the GATT provisions in a bid to overpower each other economically. 

Dispute settlement during the 1970s

• This period experienced a lot of deterioration on the dispute settlement system. This was due to the increased complains about various aspects of the panel  process and disagreements among GATT members over whether the dispute settlement panel  was to function as a judicial body or an alternative dispute resolution body, whose agenda was to negotiate settlement through conciliation. As a result of this, dispute settlement became an issue of concern which led it to be a subject in two rounds, which shall be intensively discussed below;

Dispute settlement in the Tokyo Round 

• During this period, dispute settlement procedure was only applicable to the signatories of the Tokyo Round code. This round led to the adoption of an understanding on dispute settlement, which stated that the traditional dispute settlement procedure that was used in GATT was to be applicable. This meant that the panel process was to be applied during this period.
• The complainant had some leeway for forum –shopping and forum duplication in that, he would choose the agreement and the dispute settlement mechanism that proved to be beneficial to him. This was biased in that; the complainant’s aim was not to have an amicable dispute resolution but to manipulate justice to favour his case. The panel report under this round was not enforceable until it was first adopted by the Council on behalf of the contracting parties.
• The Tokyo round dispute settlement was only made in relation to the aspects addressed by the round they included: dumping, subsidies, safeguards, technical standard and customs valuation. An example of a dispute settled during this round is Disc case in 1973 the EC brought a complaint against the US statute designed to induce US-based companies to export more from the US by granting a complex set of tax deferrals to Domestic International Sale Corporation or disc. The US agreed not to block the adverse finding concerning the disc law if the European countries unblocked the reports concerning their law, subject to an understanding that the European law would not need to be changed.

Weakness of the GATT dispute settlement 

• The GATT council frustrated dispute settlement in that, when the report by the panel was forwarded to it, it took long to have it adopted. This was due to the high number of members, as the council was made up of all members of GATT. This led to slow decision making process. Also, decision making was to be through positive consensus in the council and therefore, the losing party tried to block the adoption of the report by voting no.
• Some parties would use their veto powers to counter the measures imposed by GATT. This weakened GATT dispute settlement in that the parties seemed to be more superior to GATT. This made parties to lose hope in the ability of GATT to settle their disputes. They opted to take unilateral action against the respondent state, in a bid to enforce their rights.

Dispute settlement during the Uruguay Round 

• During this time the number of cases was increasing and the causes of dispute were more contentious. Moreover, the subject matter of the complaints was not only economic injuries but also entailed issues that were not clearly stipulated under GATT; dispute mechanism could be used to establish new precedence. This was so because the rules given in the cases were not laid down in the existing agreement. Dispute resolution under GATT was generally failing as there was little drafting, other states could not adhere to the rules which became difficult to enforce the rules.
• The Uruguay round established World Trade Organization. Some of the most unique contributions of the round in dispute settlement unit were that it aimed to cure the ills of dispute settlement under GATT.