WTO dispute settlement mechanism

WTO dispute settlement mechanism

Subject :IR

Context:

The US Trade Representative has convened a meeting of trade ministers of G20 countries in Bali to discuss World Trade Organisation’s (WTO) dispute settlement reforms.

Issue?

US blocked appointments of members in the appellate body (AB).

Concept:

WTO dispute settlement mechanism:

There are two main ways to settle a dispute once a complaint has been filed in the WTO: 

• The parties find a mutually agreed solution, particularly during the phase of bilateral consultations; and
• Through adjudication, including the subsequent implementation of the panel and Appellate Body reports, which are binding upon the parties once adopted by the  Dispute Settlement Body.
  • In the first stage for adjudicating trade disputes, a panel would decide cases brought before it by the members. 
  • Rulings issued by the panels can be appealed at the Appellate Body. 
  • The Appellate Body can uphold, modify or reverse the legal findings and conclusions of a panel. The Appellate Body’s decisions are final and adopted within 30 days by the dispute settlement body. 
  • Sanctions can be imposed on a member in case of its failure to comply with the Appellate Body’s rulings.

There are three main stages to the WTO dispute settlement process:

(i) consultations between the parties;

(ii) adjudication by panels and, if applicable, by the Appellate Body; and

(iii) the implementation of the ruling, which includes the possibility of countermeasures in the event of failure by the losing party to implement the ruling.

WTO’s Appellate Body:

• The Appellate Body, set up in 1995, is a standing committee of seven members that presides over appeals against judgments passed in trade-related disputes brought by WTO members.
  • The dispute settlement mechanism requires at least three members to function.
• 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.
• However, existing evidence is not re-examined but legal interpretations are reviewed.
• 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.