Dispute Resolution and the WTO

The WTO Dispute Settlement Mechanism

It has been said that if there is no systematic approach to settling disputes arising over trade issues, then any rule-based system will be useless as the rules cannot be enforced. Some might argue that the precursor to the WTO, the GATT, did have a systematic approach. The problem was that it was not compulsory. When the World Trade Organization was established in 1995, its members fully realized the importance of this issue. Members envisaged the WTO dispute settlement mechanism, which was included in the Understanding on Rules and Procedures Governing the Settlement of Disputes (the DSU). The DSU introduced a mandatory structural process with defined stages, i.e., consultation, the establishment of a panel, adjudication, appeal and enforcement. The WTO agreement emphasized that prompt settlement is essential if the WTO is to function effectively. The responsibility for settling disputes is now left to the Dispute Settlement Body (the DSB), which has the sole authority to establish a panel of experts to consider the case, and to accept or reject the panel's findings or the results of an appeal. It monitors the implementation of the rulings and recommendations, and has the power to authorize retaliation against a country that does not comply with a ruling.¹