Dispute
settlement at World Trade Organisation (WTO)
Due to the participations of may nations and subsequent different
interpretations of WTO agreements trade frictions are bound to arise and WTO has a build in mechanism of dispute
settlement to deal with trade friction without disturbing free trade flow or affecting relations between nations. The increasing number of disputes can be stated as the outcome of expanding
The Dispute settlement process is focused on interpreting agreements and commitments in the light of emerging trade issues to ensure compliance by countries in their trade policies. It thereby helps in maintaining stability & peaceful co-existence.
The importance of dispute settlement mechanism lies in the fact that without it the rules-based
multilateral trading system would be less effective because the rules could not be enforced. The system is based on clearly defined rules, with timetables for completing a case. First rulings are made by a panel and endorsed or rejected by the WTO’s full membership. Appeals based on points of law are possible.
The early days of the World Trade Organisation’s (WTO) dispute settlement system were dominated by unfinished business from the General Agreement on Tariffs and Trade (GATT) period, notably between the EU and the US.
WTO promised a system in that could not be maneuvered by few economic powers to their advantage and ensure implementation of those rules, which favor them.
A procedure for settling disputes did exist under the old GATT but since it had no fixed timetables therefore rulings were easier to block and many a times cases dragged on without any hope for settlement. WTO system is considered far superior and powerful than its predecessor, more specifically in terms of the clarity of its procedures and institutional set up.
The WTO dispute settlement system has brought in security and predictability of the multilateral trading system that was missing in old GATT and it was pre--requisite for WTO to be successful.
There are some areas of concerns as well. Dispute settlement process is very costly and the problem becomes more acute in case of least developing countries, which often lack expertise and resources. But still the benefits far out number the concerns and are felt by all the members.