WTO Dispute Settlement System

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Overview:

The G20 leaders recently expressed their commitment to conduct discussions for having a "fully and well-functioning" dispute settlement system of the World Trade Organisation (WTO) by 2024.

What is World Trade Organization (WTO)?

  • WTO is an international organization that promotes and regulates global trade among nations.
  • The WTO was established on January 1, 1995 by replacing the General Agreement on Tariffs and Trade (GATT).
  • Objective: Its main objective is to promote free and fair trade by eliminating barriers to trade, such as tariffs and quotas, and by ensuring that trade disputes are resolved through a transparent and predictable process.
  • Functions: The WTO is responsible for:
    • setting the rules of international trade;
    • negotiating and implementing trade agreements;
    • providing a forum for trade negotiations;
    • monitoring national trade policies;
  • The WTO also works closely with other international organizations, such as the World Bank and the International Monetary Fund, to promote global economic development and reduce poverty.
  • It is headquartered in Geneva, Switzerland, and operates on a consensus-based decision-making process.

 

About WTO Dispute Settlement Mechanism:

  • The Dispute Settlement Understanding (DSU) is the main WTO agreement on settling disputes.
  • The General Council of WTO convenes as the Dispute Settlement Body (DSB) to deal with disputes between WTO members.
  • 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;
    • authorize suspension of concessions in the event of non-compliance with those recommendations and rulings;
  • Process:
    • Ideally disputes are resolved through negotiations.
    • If this is not possible, WTO Members can request the establishment of a panel to settle the dispute. 
    • The panel will issue a report, which can subsequently be appealed before the WTO's Appellate Body on questions of law.
  • The Appellate Body:
    • Appeals are handled by the permanent seven-member Appellate Body which is set up by the DSB and broadly represents the range of WTO membership.o   It hears appeals from reports issued by panels in disputes brought by WTO members.
    • The Appellate Body can uphold, modify or reverse the legal findings and conclusions of a panel.
    • If a WTO member does not comply with recommendations from dispute settlement, than trade compensation or sanctions, for example in the form of increases in customs duties, may follow.

 


Q1) What is G20?

The Group of Twenty, commonly referred to as the G20, is an international forum of major economies that brings together 19 individual countries and the European Union. The G20 was established to promote international economic cooperation and financial stability. It serves as a platform for discussions and coordination on a wide range of global economic and financial issues.

Source: Fully Functional WTO Dispute Settlement System By 2024: G20 Leaders