WTO Dispute Settlement Body: Revival Faces Delays over Country Differences

What’s in Today’s Article?

• Why in News?
• About the World Trade Organisation (WTO)
• What is the Dispute Settlement Body (DSB)?
• Why does the WTO DSB Remain Defunct?
• Highlights of the GTRI Report

Why in News?

• According to an economic think tank GTRI report, restoring a fully functional WTO dispute settlement body may take longer due to significant differences between developed and developing countries on the issue.
• This comes as the 164-member WTO is set to gather next month in Abu Dhabi for the 13th ministerial conference (MC).

About the World Trade Organisation (WTO)

• It is an intergovernmental organisation (that describes itself as a “member-driven”, “consensus-based” organisation) that regulates and facilitates international trade between nations.
• It is the world’s largest international economic organisation (headquartered in Geneva, Switzerland), with 164 member states representing over 98% of global trade and global GDP.
• It officially began operations on January 1, 1995, in accordance with the 1994 Marrakesh Agreement (marks the culmination of the Uruguay Round), thus replacing the 1948 General Agreement on Tariffs and Trade (GATT).
• The highest authority of the WTO is the Ministerial Conference, which is composed of all member states and usually convenes biennially (every two years) and consensus is emphasised in all its decisions.
• The daily work is handled by three bodies whose membership is the same. The only difference is the terms of reference under which each body is constituted.
  • The General Council
  • The Dispute Settlement Body
  • The Trade Policy Review Body

What is the Dispute Settlement Body (DSB)?

• The General Council convenes as the 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.
• 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
  • Authorise suspension of concessions in the event of non-compliance with those recommendations and rulings.
• Only the DSB has the authority to make these decisions, panels and the Appellate Body can only make recommendations.

Why does the WTO DSB Remain Defunct?

• WTO dispute settlement is in the midst of a serious crisis because its appeals mechanism is not functioning.
• This is because the US (over the issue of judicial overreach) blocked appointments of new judges to the Appellate Body.
• This has led to most panel reports being appealed “into the void” and leaving the dispute unresolved.
• As a result, it is extremely difficult right now for WTO members to enforce WTO obligations through complaints against measures they believe are in violation.

Highlights of the GTRI Report

• Protectionism has been on the rise due to the lack of a functional dispute settlement body.
• Balancing India’s demands for an appellate body, S&DT provisions, and fairness while addressing other members’ concerns, including transparency and legal certainty, will require significant compromise and negotiation.
• Reaching a consensus on reform of the dispute settlement system is complex, with developed and developing countries holding different priorities and concerns.
• The proper functioning of the WTO Appellate Body has a disproportionate impact on the US because more than one-quarter of all disputes at the WTO have been challenges to US laws or other measures.

Q1) What is the General Agreement on Tariffs and Trade (GATT)?

The GATT, signed in 1947, is a treaty minimising barriers to international trade by eliminating or reducing quotas, tariffs, and subsidies. GATT was expanded and refined over the years, leading to the creation in 1995 of the WTO.

Q2) What are the WTO S&DT provisions?

The WTO agreements contain special provisions which give developing countries special rights and allow other members to treat them more favourably. These are “special and differential treatment (S&DT) provisions”.

Source: WTO dispute settlement body revival faces delays over country differences: GTRI | WTO | IISD