|Demand of the question |
Introduction. Contextual Introduction.
Body. Mandate of WTO in dispute resolution. Struggling WTO in dispute resolution.
Conclusion. Way forward.
The dispute settlement system is important to uphold the rights of Members and to ensure higher levels of security and predictability. Rather, like other judicial systems, the priority of WTO dispute settlement is to settle disputes, through a mutually agreed solution that is consistent with the WTO Agreement. The World Trade Organisation’s (WTO’s) dispute settlement mechanism is going through a crisis.
Mandate of WTO in dispute resolution:
- In 1994, the WTO members agreed on the Understanding on Rules and Procedures Governing the Settlement of Disputes or Dispute Settlement Understanding (DSU).
- Pursuant to the rules detailed in the DSU, member states can engage in consultations to resolve trade disputes pertaining to a “covered agreement” or, if unsuccessful, have a WTO panel hear the case. The priority, however, is to settle disputes, through consultations if possible.
- The WTO Appellate Body, is a standing committee of seven members that presides over appeals against judgments passed in trade-related disputes brought by WTO members.
- With over 500 international disputes brought to the WTO and over 350 rulings issued since 1995, the organisation’s dispute settlement mechanism is one of the most active in the world, and the Appellate Body is the highest authority in these matters.
- Countries involved in a dispute over measures purported to break a WTO agreement or obligation can approach the Appellate Body if they feel the report of the panel set up to examine the issue needs to be reviewed on points of law.
- The Appellate Body can uphold, modify, or reverse the legal findings of the panel that heard the dispute. Countries on either or both sides of the dispute can appeal.
- The WTO’s dispute settlement procedure is seen as being vital to ensuring smooth international trade flows. The Appellate Body has so far issued 152 reports. The reports, once adopted by the WTO’s disputes settlement body, are final and binding on the parties.
Struggling WTO in dispute resolution:
- The body is struggling to appoint new members to its understaffed Appellate Body that hears appeals in trade. Over the last two years, the membership of the body has dwindled to just three persons instead of the required seven. This is because the United States, has been blocking appointments of new members and reappointments of some members who have completed their four-year tenures.
- The understaffed appeals body has been unable to stick to its 2-3 month deadline for appeals filed in the last few years, and the backlog of cases has prevented it from initiating proceedings in appeals that have been filed in the last year.
- With the Appellate Body unable to review new applications, there is already great uncertainty over the WTO’s dispute settlement process.
- While new appointments to the Appellate Body are usually made by a consensus of WTO members, there is a provision for voting where a consensus is not possible.
Thus WTO need to be reformed if it want to continue as a dispute settling body wrt trade. It is important for developed countries to understand and cooperate developing nations on the important issues and is important to prevent disputes among nations.