Many WTO (World Trade Organization) member countries have used the
WTO dispute resolution mechanism. Nonetheless, the debate over the effectiveness
of this mechanism continues, and it is an important topic to discuss. The
purpose of this article is to explain the effectiveness of the World Trade
Organization's dispute settlement mechanism. Its timeline, participation
(particularly from developing countries), and accomplishments are used to assess
its effectiveness. This article concludes that the WTO's dispute settlement
mechanism effectively resolves member disputes.
Introduction To WTO Dispute Mechanism
Disagreements and differences have always "been a part of human society. With
the advent of World War II, there was a growing desire for a unified system for
regulating the global trading system. The proposal to establish an International
Trade Organization was tabled at the Bretton Woods Conference. The very goal of
this organization was to regulate international trade, but it was unable to do
so for long.The charge for achieving the very objective of this organization was
further carried out by the GATT. This became the principle agreement for
regulating the multilateral trading system for almost three decades.
the increasing participation of the nation in international trade the
complexities also grew with the passing time. There were the provisions in the
GATT mandated to regulate the trading system but it couldn't fare the interest
of the developing member nation to the fullest because of certain drawbacks and
deficiencies within it. Hence with the aim and intention of revitalizing and
regulating the global trading system the whole new organization was established
in the Uruguay Round negotiation i.e. World Trade Organisation."
Dispute Settlement Mechanism under WTO
After the breakdown of ITO, "the GATT became the principle agreement for
regulating international trade with the basic goal to promote free international
trade. However there are many provisions in the GATT but Article XXII and XXIII
are the primary provisions which initiate the proceedings of dispute settlement
under GATT. Article XXII of GATT provides a platform for consultation to the
disputing parties to accord their differences.
Article XXIII, further provides for amicable forum for consultation of any GATT
matter irrespective of whether a benefit under GATT is denied. It provides
dispute resolution in cases where a benefit accruing to contracting party under
the GATT is nullified or impaired, or the achievement of any such objective
under GATT is impeded. Nullification or impairment of a benefit under the GATT
may follow from the following actions of a contracting party.
the failure to carry out its obligations under the GATT by infringing specific
provisions of the GATT on the application of any measure, whether or not it
conflicts with GATT provisions or the existence of any other situation
The parties first try to settle their differences through negotiations, however,
if it fails, they may resort to GATT Article XXIII, which is GATT's basic
dispute settlement procedure. Article XXIII is the core of the GATT dispute
settlement which introduces the ̳nullification or impairment' of benefits
expected under the GATT or the impediment of any of its objectives as the
grounds of complaints in the GATT dispute settlement. Once the complaint is made
the process of consultation gets started and by any means if consultations fails
to settle a dispute within sixty days,than the parties can request for
establishing a panel to chairman of contracting working parties.
Evolution and Development of Dispute Settlement System under WTO:
The "Uruguay Round of negotiation marks a significant change in the multilateral
trading system. As the GATT was known for its passive participation of the
members in one hand and in the other, the WTO was seen as an organization of
maximum participation of member nations. The signing of the Marrakesh Agreement
on 15 April 1994 represented the end of the UR and the establishment of the WTO,
an institution with legal personality to deal with trade issues among its
Members arising from the application of the WTO Agreement and" the Annexed
The WTO legal framework is considered to be the major improvement in the
international trading system for developing and developed countries alike..
Defects in GATT affecting the participation of developing nations:
GATT "was the first agreement which elucidated the concern for resolving
disputes by way of designing the provisions for consultation and ensuring the
platform for its resolution. But however it had certain birth defects which
affected the interest of member nations. The very creation of GATT was laid on
the foundation of agreement, which does not give any effectiveness to the
dispute settlement system.The General Agreement was not a treaty among nations
but was, instead, a simple agreement that each country acceded by means" of the
protocol of Provisional Application.
- Consensus Rule:
The major defect which affected the significance of GATT is consensus rule. The
decisions in the GATT were taken by way of consensus by virtue of which the
defendant parties could block any decision at any stage i.e. establishment of
the panel or adoption of the panel report. The consensus rule under GATT worked
as Veto Power in the UN Security Council. Consequently, developing countries
experience power tactics practiced by developed countries.
- Lack of Transparency affecting developing nations:
Under GATT 1947, smaller trading nations often perceived a lack of transparency
concerning agreements reached between the major players. The developing nations
were the participator to the system but were not a rule maker. The system was
predominated by the developed member nations and had regulated the system within
their own chambers of interest. The agendas were not firmly placed, rather it
was dictated to the sub-ordinate member nations.
C-Poor standing of developing countries as compared to developed nations
It has been argued that the GATT was unsuccessful in providing equal status to
the developing nations as compared to developed nations. The major role was
played by the economic consideration which placed the developed nation in a
better position to use the system. The unequal economic powers between the two
sides meant that the ability of developing countries to impose an effective
suspension of concessions against developed countries was very limited and had
very little impact. The GATT dispute settlement system failed to adopt any
procedure that compensated developing countries for their limited retaliatory
Effectiveness of WTO dispute mechanism: A brief overview
In order to bolster the claims that state, an explanation of the successful and
unsuccessful cases seems to be an important component of this discussion. There
are still some cases that have taken a long time to resolve or where there has
been no final ruling, even though many cases have been successfully settled
using the WTO dispute settlement procedure.
Successful cases in which WTO was able to resolve dispute effectively
Costa Rica's Successful Case:
Restrictions on Imports of Cotton and Man-Made Fibre Underwear (Dispute
DS24). Costa Rica filed the complaint in this case, and the United States and
India were the respondents. Since this case demonstrated how the dispute
resolution procedure operated under a legal power approach, which successfully
solved the issue, scholars have hailed it as a successful case.
On December 22, 1995, Costa Rica re-requested talks with the US regarding US
import restrictions on Costa Rican textiles. These limitations, according to
Costa Rica, were against the ATC agreement. Due to Costa Rica's request, the DSB
(Dispute Settlement Body) created a panel at its meeting on March 5 1996
"First: ATC Art. 6.10 (transitional safeguard measures - prospective
application): The Appellate Body reversed the Panel's finding and concluded that
in the absence of express authorization, the plain language of Art. 6.10 create
a presumption that a measure may be applied only prospectively, and thus may not
be backdated so as to apply as of the date of publication of the importing
Member's request for consultation.
US - Zeroing (Korea)Main Dispute
Because the United States, the respondent, completely implemented the DSB's
recommendations and decisions within the reasonable time frame agreed upon by
the parties on December 19, 2011, this is another case that went well for South
Korea. Korea defeated the United States in this issue after adhering to all
stages of the dispute resolution procedure, which began with consultation on 24
November 2009 and panel formation on 18 May 2010. Korea requested consultations
with the United States regarding their use of zeroing in three antidumping cases
involving certain products from Korea, namely, stainless steel plate in coils,
stainless steel sheet and strip in coils, and diamond sawblades and parts
Finally, the Panel concluded that the United States violated the first clause of
Article 2.4.2 by applying the zeroing methodology to the three original
investigations at issue in order to determine some dumping margins..
Cases where wto dispute mechanisms failed to resolve disputes.
- EC and Certain Member States -Large Civil Aircraft Case
It is acknowledged that this case has significant stakes, significant issues,
and that it has been prolonged and appears to have failed in the WTO dispute
settlement process. The United States (the complainant) has been in contact with
the governments of Germany, France, the United Kingdom, and Spain (the "member
states") since October 6, 2004, when the case known as European Communities -
Measures Affecting Trade in Large Civil Aircraft (Dispute DS316) was first
initiated.in regards to policies influencing the trade in large civil aircraft,
particularly with the European Communities ("EC") (respondent). Measures by the
EC and the member States give subsidies that are in conflict with their
responsibilities under GATT 1994, according to the United States' request for
consultations: Subsidies and Countervailing Measures: Art. 1, 2, 3.1, 3.2, 5,
6.3, 6.4. Art. III:4, XVI:1, XXIII:1.
The Panel constituted
Because there was a different panel constituted on June 13, 2005, the panel for
this case was established on July 20, 2005, more than two months after the
United States requested the creation of a panel. The third-party rights of
Australia, Brazil, Canada, China, Japan, and Korea are reserved. The DSB then
began the processes outlined in Annex V of the SCM Agreement at a meeting on
September 23, 2005. One of the United States' demands is that the panel be put
up by the Director-General on October 7, 2005. But on October 17, 2005, the
Director-General disqualified himself in this regard, and the Deputy Director
took his position to assemble the panel.At this point, it appears that the
complexity of the issues has influenced the delay in forming the panel.
Due to the substantive and procedural complexities involved in this dispute, the
panel would be unable to complete its work within six months of 13 April 2006.
The panel, however, completed its work by the end of April 2010. In this regard,
the WTO dispute settlement appears to be prolonging.
This is the case. Furthermore, the outcome of this case was still on the status
of ongoing compliance proceedings, indicating that the case has not yet been
resolved. It is clear from the implementation stage that the United States
claimed that the European Union and certain member states had failed to comply
with the DSB's recommendations and rulings, so they requested DSB approval to
take countermeasures under Article 22 of the DSU and Article 7.9 of the SCM
Agreement on December 9, 2011.
US - Shrimp and Sawblades Case
This case which was known as United States - Anti-Dumping Measures on Shrimp and
Diamond Sawblades from China(Dispute DS422) seems to be unsuccessful case.
"Although the current status released by WTO as implementation notified by
respondent which was United States, China as complainant did not share the
United States' view, thereby, China pressed the United States to respect its
obligation. This case began with China requested consultations On 28 February
2011 with the United States regarding the latter's anti- dumping measures on
certain frozen warm water shrimp from China.
China alleged that the US Department of Commerce's ("USDOC") use of zeroing
in the original investigation and several administrative reviews to calculate
dumping margins for the subject imports is inconsistent with the United States'
obligations under Article VI:1 and VI:2 of the GATT 1994 and Articles 1, 2.1,
2.4, 2.4.2, 5.8, 9.2, 9.3, and 9.4 of the Anti-Dumping Agreement
At its meeting on 25 October 2011, the DSB established a panel. The European
Union, Honduras, Japan, Korea, Thailand and Vietnam reserved their third party
rights. Following the agreement of the parties, the panel was composed on 21
December 2011. On 8 June 2012, the panel report was circulated to Members with
some summary key findings as follows:
Therefore the Panel concluded that the United States had acted inconsis- tently
with its obligations under this provision.
The Panel rejected China's claim concerning the separate rate, but noted that
the calculation of the separate rate on the basis of individual margins
calculated with zeroing necessarily incorporated the WTO-inconsistent zeroing
"At its meeting on 23 July 2012, the DSB adopted the panel report. Then, on 27
July 2012, both parties had agreed that the reasonable period of time for the
United States to implement the DSB recommendations and rulings shall be 8
months. Accordingly, the reasonable period of time expired on 23 March 2013.
Finally, in terms of implementation of adopted reports the United States
informed the DSB that it had implemented the DSB recommendations and rulings
within a reasonable period of time at the DSB meeting on 26 March 2013. However,
China did not agree with the United States' view that it had fully implemented
the DSB recommendations. Furthermore, China advocated the United States to honor
In summary, it has been demonstrated that WTO dispute settlement is an effective
tool for resolving disputes between WTO member countries. The system operates in
a proper and orderly manner in terms of timeframe. The increased participation,
particularly from developing countries, and the outstanding success in resolving
disputes enabled this system to effectively achieve its main goal, namely, to
settle disputes between member states in order to provide security and
predictability to the multilateral trading system.