Switzerland and the dispute settlement system
Description of the procedure
Dispute settlement is a central element in providing security and predictability to the multilateral trading system. Under the dispute settlement provisions, WTO members agree not to take action unilaterally outside of the agreed procedures if they believe there has been a violation of WTO rules. Switzerland has a clear interest in having rules-based trade relations and thus a WTO dispute settlement system as a means of resolving trade disputes conclusively.
When a WTO member initiates proceedings against another member, it first calls for consultations. If consultations fail to produce a satisfactory solution within 60 days, the complainant member state may ask the WTO's Dispute Settlement Body to establish a panel of experts to adjudicate the case. The WTO's Dispute Settlement Understanding (DSU) sets out the rules and procedure by which the ruling will be enforced. If one party fails to implement the ruling, the aggrieved member state may request permission to impose retaliatory trade measures (such as a suspension of concessions or other obligations).
Appellate review process: blockade of the Appellate Body and the MPIA
The Dispute Settlement Understanding gives each party the right to appeal a panel ruling to the WTO's Appellate Body. However, since December 2019 the Appellate Body has been unable to hear new cases: following the US government's decision to block the reappointment of Appellate Body members, the number of members now stands below the three-member quorum.
Given these circumstances, a number of WTO members, including Switzerland, have adopted a Multi-Party Interim Appeal Arbitration Arrangement (MPIA). The MPIA procedure is based on existing WTO rules (Art. 25 DSU) and applies between participating members only until the Appellate Body is again fully functional. The Federal Council decided on 3 April 2020 that Switzerland should join the agreement.
The MPIA provides for the creation of a pool of 10 arbitrators. Each appeal is heard by three arbitrators selected from the pool.
Switzerland nominated Professor Emeritus Thomas Cottier as a candidate; he was subsequently elected by consensus to the final pool of 10 arbitrators.
For the MPIA to enter into effect, the WTO's Dispute Settlement Body was formally notified on 30 April 2020. As of 4 August 2020, 25 WTO members had participated in the MPIA: Australia, Benin, Brazil, Canada, Chile, China, Colombia, Costa Rica, Ecuador, the European Union, Guatemala, Hong Kong, Iceland, Macao, Mexico, Montenegro, New Zealand, Nicaragua, Norway, Pakistan, Peru, Singapore, Switzerland, Ukraine and Uruguay. Other interested WTO members are free to join the MPIA at any time.
Federal Council press release of 30 April 2020 DE FR EN
Procedures with Switzerland's participation
As the complainant (2018)
US − Steel and Aluminium Products (Switzerland) (DS556)
Since 23 March 2018, the US has imposed additional import duties of 25% on certain steel products and 10% on certain aluminium products, citing national security reasons. On 9 July 2018, Switzerland initiated dispute settlement proceedings at the WTO against the import restrictions imposed by the US on certain steel and aluminium products, claiming that these measures were inconsistent with WTO rules. Switzerland – and eight other WTO members – thus initiated WTO dispute settlement proceedings in 2018. The procedure was delayed as a result of the COVID-19 pandemic and took more than four years in total. The panel notified the WTO of its ruling on 9 December 2022, concluding that the US measures violated certain provisions of the GATT and were not justified by the security exception invoked by the US.
Status: Panel report of 9 December 2022
Panel report of 9.12.2022 - FR / EN
Link to web page on dispute settlement EN / FR / ES
As a third party (since 2018)
If a WTO member is involved in a dispute as a third party, it has the right (but not an obligation) to be heard by the panel and may submit written comments on the substance of the dispute. As a third party, the member state will also receive the initial written submissions of the parties, may attend a meeting with the panel and the parties (third party meeting) and make an oral statement there, and may respond to the panel's questions. Any member having a substantial interest may participate as a third party in a panel procedure, although in practice any member invoking a systemic interest is also admitted.
