October 16, 2025
  • The G20 leaders have expressed their commitment to working towards a “fully and well-functioning” dispute settlement system within the World Trade Organization (WTO) by the year 2024.
  • This commitment is a significant development in international trade, as the dispute settlement mechanism of the WTO has faced challenges since the non-functionality of its appellate body in December 2019.

ABOUT WORLD TRADE ORGANIZATION (WTO)

  • The WTO was established on January 1, 1995, by replacing the General Agreement on Tariffs and Trade (GATT).
  • It is an international organisation that promotes and regulates global trade among nations.
  • 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.
  • The main functions of WTO are:
    • 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 the 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;
    • authorise 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.
    • 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, then trade compensation or sanctions, for example in the form of increases in customs duties, may follow.
Print Friendly, PDF & Email

© 2025 Civilstap Himachal Design & Development