India seek formal talk at WTO for reform in dispute resolution body

Subject : IR

Section: International organisations

Context: India seek formal talk at WTO for reform in dispute resolution body

More about the news:

India is urging for the prompt commencement of formal discussions to restore the functionality of the World Trade Organization’s (WTO) dispute settlement system.
The US actions caused the system to become non-functional, has initiated informal talks on reforms.
India is advocating for the shift to a formal committee setting to facilitate participation from other WTO members.
While India has not submitted any reform proposals yet, it is emphasizing the need for a two-tier system with an appellate body.
The dispute settlement system has been stalled since 2017 due to the US blocking appointments to the appellate body. This absence of an appeal mechanism has left WTO dispute rulings unenforceable.
The goal is to make the system operational by 2024, with discussions ongoing, leading up to the WTO Ministerial Meeting in February 2024.

What is the Dispute Settlement System of the WTO:

The Dispute Settlement System (DSS) came into existence in 1994.
It came into existence through the 8 year long Uruguay Round negotiations (1986-1994) to govern trade disputes between member states of the WTO.
DSS is termed as the ‘crown jewel’ of the WTO.

What is WTO Dispute Settlement Body (DSB):

The General Council convenes as the Dispute Settlement Body (DSB) to deal with disputes between WTO members.
Such disputes may arise with respect to any agreement contained in the Final Act of the Uruguay Round that is subject to the Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU).
The DSB has authority to establish dispute settlement panels, refer matters to arbitration, adopt panel, Appellate Body and arbitration reports, maintain surveillance over the implementation of recommendations and rulings contained in such reports, and authorize suspension of concessions in the event of non-compliance with those recommendations and rulings.

What is WTO Appellate Body:

The Appellate Body was set up in 1995,
It is a standing committee of seven members that presides over appeals against judgments passed in trade-related disputes brought by WTO members.
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 members of the appellate body are appointed by the DSB for 4-year terms.
A panel for appeals comprises three from the seven-member Appellate Body.
The Appellate Body members are persons with demonstrated expertise in law, international trade and the subject matter of the WTO agreements.
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.

What are the stages in WTO Dispute Settlement:

Once a complaint has been filed with the WTO, there are two main ways to resolve a dispute:
- Mutually Acceptable Solution: The parties reach a mutually acceptable solution, particularly during the phase of bilateral consultations;
- Adjudication: It includes the subsequent implementation of the panel and Appellate Body reports, which are binding on the parties once adopted by the DSB.
The WTO dispute settlement process is divided into three stages:
- Parties’ discussions;
- Adjudication by panels and, if relevant, by the Appellate Body.
- Ruling implementation includes the potential of countermeasures if the losing party fails to implement the ruling.