- 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.
