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WTO’s Dispute Settlement Mechanism Crisis



  Feb 05, 2024

WTO’s Dispute Settlement Mechanism Crisis



What is the dispute settlement mechanism in the WTO?

The World Trade Organization’s dispute settlement mechanism (DSM) is a two-tiered process comprising a panel and an Appellate Body (AB). It is designed to resolve trade disputes between member countries.

Why is there a crisis in the WTO’s DSM?

The crisis stems from members avoiding compliance with adverse rulings and the U.S. blocking the appointment of new AB members, which has led to its functional paralysis since December 2019.

What are the implications of the DSM crisis?

The crisis threatens the WTO’s ability to adjudicate trade disputes effectively, undermining the predictability and enforceability of international trade rules.

What solutions are being proposed for the DSM crisis?

Three main solutions have been proposed:

1. A European Union-led multi-party interim appeal arbitration arrangement (MPIA).
2. A United States proposal for an AB with limited powers.
3. A suggestion by scholars Robert Howse and Weihuan Zhou to resurrect the AB in its pre-2019 form.

What challenges do developing countries face due to the DSM crisis?

Developing countries may struggle to assert their trade rights effectively and could be disadvantaged in trade disputes without a functional DSM.

What is the significance of resolving the DSM crisis?

Resolving the crisis is crucial to maintaining the integrity of the WTO’s rules-based trading system and ensuring that trade disputes are settled fairly and consistently.

What is the Appellate Body (AB)?

The AB is the WTO’s appellate tier for trade disputes, meant to review and potentially reverse panel findings. However, its function is currently suspended.

What is the MPIA?

The MPIA is a temporary arrangement by some WTO members to resolve appeals during the AB’s paralysis. It aims to replicate the essential features of the AB’s process.

Has the AB been dissolved?

No, the AB hasn’t been dissolved, but it’s currently unable to function due to the lack of appointed members.

What role does the U.S. play in the DSM crisis?

The U.S. has played a significant role by blocking the selection of new AB members, citing concerns over its functioning and interpretations of trade agreements.

Is there a permanent solution to the DSM crisis on the horizon?

While discussions continue, a permanent solution has yet to be agreed upon by all WTO members.

How does the DSM crisis affect global trade?

The crisis could lead to a weakening of the multilateral trading system and a rise in unilateral and protectionist measures, potentially leading to trade wars and reduced global trade cooperation.

SRIRAM’s


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