Optimising the dispute resolution process for trade remedies in the EAC
William Mwanza, tralac Researcher, discusses trade remedies and dispute settlement issues in the East African Community (EAC)
Anti-dumping measures, countervailing duties, and safeguards are trade policy instruments that countries can implement to address unfair trade practices (dumping and subsidies) and import surges. Trade remedies and safeguards are provided for in multilateral and some regional trade agreements. The question as to whether a particular trade remedy measure constitutes an appropriate response to a legitimate policy concern, or whether it is simply a measure to protect local industries or firms has resulted in trade remedy disputes representing the highest percentage of disputes in the World Trade Organisation (WTO).
The East African Community (EAC) is a regional integration arrangement that has attained considerable levels of liberalisation, in a process that is underpinned by a robust legal framework. Anti-dumping measures, countervailing duties and safeguards are provided for in the EAC customs union through the EAC Treaty and its Protocol on the establishment of the EAC customs union. The investigation of anti-competitive practices and application of each of these trade remedies is then further provided in annexes to this protocol, namely the anti-dumping regulations, subsidies and countervailing duties regulations, and safeguard regulations.
Of importance to this discussion are also the dispute settlement mechanism (DSM) regulations of the customs union protocol. When these regulations are considered closely, it is noted that they provide for two different tracks of dispute settlement with regard to the respective trade remedies.
The DSM regulations first provide for consultations through the use of good offices, conciliation and meditation. If this is not successful, the Committee on Trade Remedies (or ‘the Committee’) can then be requested to establish a panel. After consideration of the matter, the panel presents a report with recommendations to the Committee, which makes final determinations on the matter that are final and binding on the parties. It is also provided that if deemed to be more expeditious than this panel process, parties may have recourse to arbitration. This process is provided to apply to anti-dumping measures, countervailing duties, as well as safeguards.
When the individual regulations on these matters are considered, however, it is noted that only the safeguard regulations provide that the DSM regulation process will apply in the resolution of disputes. The anti-dumping and subsidies and countervailing duties regulations provide for a different process of dispute settlement. Partner States can first engage in consultations, and if no mutual agreement is reached can refer the matter to the Committee. The Committee would then examine the matter based on facts presented by the national investigative authority of the party that brought the dispute. It then submits a final report to the parties and circulates the same to all parties. The EAC Council adopts this report unless it is formally disputed. If the report is appealed, the Council issues a decision on the matter in the form of directives.
In itself, the possibility for similar matters to be open to two dispute resolution processes potentially creates inconsistency and unpredictability in the use of the prescribed trade remedy measures in the region. That said, the two tracks also have inherent challenges of their own.
On the one hand, the panel process provided in the DSM regulations culminates in a final determination by the Committee, without prior consideration of its decision by the respective parties and the EAC’s wider membership. This removes an element of due process that is important for the integrity of decisions in this area.
On the other hand, the process provided in the anti-dumping and subsidies and countervailing duties regulations provides for such consideration, whereby the report of the Committee is adopted by the Council after consideration by all Partner States. Where this report is disputed, however, the Council provides final determination on the matter. Final resolution through such a political arm can potentially be problematic, as different interests may come into play.
The ideal scenario would be to integrate these two processes into one hybrid process with aspects of both. This can first be done by subjecting the anti-dumping regulations and the subsidies and countervailing duties regulations to the DSM regulations process, so that it indeed applies to these two areas as well as to safeguards, as provided for in the DSM regulations themselves. The second step would then be to enhance the panel process provided in the DSM regulations. This would be by first by providing that final panel reports be circulated to respective Parties to the dispute and all EAC members, and adopted by the Council if they are not disputed. In the event that they are disputed, provision should be made for another panel of appeal to be established, as is the case in the WTO. Such an approach would ensure that disputes regarding the different trade remedies are resolved through a process that is rules-based and devoid of any political interests that may come into play. It would also ensure that the matters are determined by experts in the respective fields, after taking into account possible objections from all the Partner States.