Why reforming the WTO dispute settlement mechanism is imperative
WTO at Abu Dhabi renewed the commitment to have a full and well-functioning dispute settlement mechanism (DSM) by 2024, it is yet to be seen if this happens as proposed. A rules-based multilateral trading system like the WTO can work effectively only when there is a robust mechanism in place to resolve disputes that arise among member nations. The DSM has been a key pillar of WTO as it provides a legal framework for resolving trade disputes that arise between member nations of the WTO, thereby lending certainty and predictability to the trading system.
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There are three main stages of dispute settlement process at the WTO. In the first stage, disputes are resolved through consultations between countries in dispute to see if they can settle their differences by themselves. If consultations fail, the complaining country can ask for a panel to be appointed, wherein the panel will submit its report which becomes a ruling within 60 days unless rejected by consensus.
Both sides can appeal the panel’s ruling based on points of law. Each appeal is heard by three members of a permanent seven-member Appellate Body set up by the Dispute Settlement Body. According to the relevant WTO rules, the Appellate Body has the power to uphold, modify or reverse the legal findings and conclusions of a panel, and Appellate Body Reports, once adopted by the Dispute Settlement Body, must be accepted by the parties to the dispute.
The present crisis in the DSM of WTO stems from
