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Well-functioning Multilateral Trading System Is An Effective Dispute Resolution Mechanism

At the core of a well-functioning multilateral trading system is an effective dispute resolution mechanism.[1]

This statement was given by Peter Van den Bossche, who was the departing Appellate Body member of World Trade Origination. He delivered this statement in his farewell speech to the World Trade Origination Dispute Settlement Body on 28th May 2019.

After analyzing the context in which the above statement has been given some questions arise in my mind, likely:

• What do you understand with the multilateral trading system?

• What do you know by effective dispute resolution mechanism?

• How is a well-functioning multilateral trading system an effective dispute resolution mechanism?

So, I have put my understanding under these three heads. Firstly, the trading system and multilateral trading system; secondly, dispute resolution mechanism; and lastly, relation between the multilateral trading system and dispute resolution mechanism.

I. Trading System And Multilateral Trading System

In common language trading meanings buying and selling of goods and services between parties. As we all know, today's world is more globalized and liberalized so that any county can make a trade with any other country without any restrictions. The transferring of goods and services between two or more countries is known as international trade. When one country transfers the products and services to another country that termed as export. In general term, we can say that we are carrying across goods and services to another country. Moreover, when we bought products and services from another country in our country that is known as an import. In general term, we can say that when we purchased goods from external sources or another jurisdiction.

Trading globally allows consumers and countries to be visible to new markets and products. We can find almost every product in the international market, such as food, clothes, spare parts, oil, jewellery, wine, stocks, and water. Services, including tourism, banking, consulting, and transportation.

Increasing international trade is vital for the continuance of globalization. Otherwise, nations would be limited to the goods and services produced within their borders without international trade. However, dealing with the problems aroused due to international trade is not so easy. So, we need an effecting system for trading. A trading system is a set of rules that formulate buy and sell signals without any ambiguity or any subjective elements. These signals generated by technical indicators or combinations of technical indicators. The primary aim of a trading system is to manage risk and to increase profitability in any market environment. Optimal levels of risk and reward are accomplished by modifying the different parameters within each rule of the system.[2]

From the initial days of the Silk Road to the formation of the General Agreement on Tariffs and Trade (GATT) and the birth of the World Trade Origination, trade has played a vital role in promoting peaceful relations among the nation and economic development.

The multilateral trading system, formerly known as the General Agreement on Tariffs and Trade GATT. On 1st January 1948, it came into force. It is a legal agreement between different countries, whose primary motive was to support international trade by reducing or removing trade barriers such as tariffs or taxes. According to its preamble, the following are its primary purpose:

• Substantial reduction of tariffs and other trade barriers and;

• the elimination of preferences, on a reciprocal and mutually advantageous basis.

It continued in effect until the signature by 123 nations in Marrakesh on 14th April 1994, of the Uruguay Round Agreements, which established the World Trade Organization (WTO) on 1st January 1995. The World Trade Origination is an heir to GATT, and the original GATT text is still in effect under the World Trade Origination context, subject to the modifications of GATT 1994.[3]

GATT and its replacement World Trade Origination have successfully reduced tariffs. World Trade Origination is the only global international organization dealing with the rules of trade between nations. It aims to help producers of goods and services, exporters, and importers conduct their business. It is an origination which helps to sort out the problems related to trade between different countries. This international organization open trade for the benefit of all.

II. Dispute Resolution Mechanism

Dispute resolution is another primary function of the multilateral trading system, or we can say World Trade Origination's other primary function is dispute settlement. Countries fetch disputes to the World Trade Origination when they think their rights under the agreements are being infringed. The World Trade Origination is considered as one of the most active international dispute settlement mechanisms in the world. Over 500 disputes have been bought till now.

Disputes are settled by the Dispute Settlement Body, which involves of all World Trade Origination members. Though much of the procedure is similar to a court or tribunal, therefore the favored resolution is for the countries involved in disputes have to discuss their problems and settle the dispute by themselves. The first stage is consultations between the governments involved, and when the case has progressed to other stages, still consultation and mediation are possible.

So, this dispute settlement process starts with conciliation and mediation. Before going for further action, parties have to talk to each other to see if they can solve the problems themselves. If they are not able to solve, then they can ask the help of World Trade Origination for dispute settlement.

If your problem is not solved in the first one, then you can move to the second stage, where a penal is setup who try to resolve the disputes. Later on, the panel's final report should be given to the parties to the conflict within six months.

Then a final report is submitted to both the parties and also be circulated to World Trade Origination, three weeks later. If the panel agrees that there was an infringement of World Trade Origination agreement, it recommends that the measure be made to follow with World Trade Origination rules.

At last, the report becomes a ruling or judgment. However, later, within 60 days, any sides can appeal the report.

However, the Dispute Settlement Body has to reply within 30 days whether they are going to accept or reject the appeals.

Also, when it was found out that this particular country had broken the rules and laws of World Trade Origination agreement, then the country has to pay compensation to another county whose rights were infringed under World Trade Origination agreement as a remedy.

However, World Trade Origination needs this arrangement even more right now. Without the Dispute Settlement Understanding's rules and procedures, the tit-for-tat boom of taxes on goods become the trade war between the US and China. However, the World Trade Origination's dispute settlement mechanism is in crisis as the Appellate body must involve seven members. Three Members are required to hear an appeal and make a final ruling. In the start of 2017, the WTO has a composition of seven Appellate Body Members. At the end of December 2017, they left with only four. On 1 October 2018, the number was down to only three, the bare minimum required for each appeal. If the appellate body impasses continue, there would be only one Appellate Body member left in the office by 10 December this year. The result would render the Appellate Body unachievable due to insufficient number to discharge the functions at the appeal stage.

The present administration of the US further claims that the remedies under World Trade Origination law do not go far enough. They do not protect intellectual property rights and technological innovation adequately. World Trade Origination agreements forbid, as a general principle, unfair trade practices. China and Chinese firms are accused of plundering foreigners' inventions and discoveries.

III Relation Between The Multilateral Trading System And Dispute Resolution Mechanism

We cannot deny the success achieved by World Trade Origination since inception, but we cannot also deny that currently, the World Trade Origination is facing several serious problems. It was said by Peter Van den Bossche in his farewell speech, "Despite these successes, the system currently faces its most serious challenge since its inception. while it is a system that needs much improvement to be fair to all, as well as adapted to 21st-century realities, the rules-based multilateral trading system, as it progressively developed since the late 1940s, has served us well."[4]

Thus, they decided to provide security to the multilateral trading system and to support that system from prohibiting to decide individually regarding the violation of its rules by any World Trade Origination member.

As Peter Van den Bossche said in his farewell speech that well-functioning of the multilateral trading system is an effective dispute settlement method. We can analyses that if the World Trade Origination performs its functions well then, they can be the finest origination for the settlement of disputes related to trade at international level. However, for achieving this, they have to resolve their problems first.

The major criticism faced by World Trade Origination is that its operation has an orderly toward rich countries and multinational corporations and this operation are harming smaller countries which have less negotiation power. Initially, World Trade Origination put the needs of the developing country at the centre of the international trade negotiation agenda was proposed. However, the membership of World Trade Origination has failed to deliver the promised pro-development changes. They completely sideline the developing counties because of economic and political interest of global powers. The developing countries did not get benefit from the World Trade Origination Agreements and, therefore, the credibility of the World Trade Origination trade system could be battered.

Another criticism has considered the green room/inner room discussions in the World Trade Origination as unrepresentative and non-inclusive it involves more active participants as they represent more diverse interests and objectives and have complex World Trade Origination decision-making, and the process of consensus-building has smashed down. Results from the inner room are presented to the World Trade Origination then the members vote on the result. They have formed a small, informal committee that can delegate the responsibility for developing a consensus on trade issues among the member countries. In the international standards-setting world, the consensus is first and foremost a decision-making method "that involves looking to take into account the views of all parties concerned and to resolve any conflicting arguments.

Another problem is that As I mentioned able also If the appellate body impasses continue, there would be only one Appellate Body member left in the office by 10 December this year. The result would render the Appellate Body unachievable due to insufficient number to discharge the functions at the appeal stage.

Thus, we can analyze that multilateral trading system id facing the problems. So mostly in dispute settlement mechanism. So, they have to work on themselves first then only they have been able to solve the disputes of others at the international level.

Conclusion And Suggestions
The world is more globalized and liberalized in the current scenario. Also, for maintaining this global era, it is vital that all counties trade peacefully without any threat and barriers. And the World Trade Organization is the only origination that can maintain this situation at international level. Because it all started through the multilateral trading system only, and this is only which can manage the trading system effectively. However, as we all know the multilateral trading system facing so many problems at a single time, so they are not able to perform their function adequately, such as dispute settlement.
• They have to solve their problems;
• they have a monitor that no member of the World Trade Organization is breaking the rules and obligation of the World Trade Organization;
• they have to check that functioning is going properly within the originations;
• they have a look if they require changes in their current laws and rules and systems; or
• they are in need to make new rules for better performance of their functions.

The above mentioned are only a few of the points, but they have to look deeper then only they will able to find out the solution for their problems. Also, once they came out of their crises, then they can able to achieve their objectives and aims and also be able to perform those function for which it was established. So, as said by Peter Van den Bossche that multilateral trading system will become effective dispute settlement method at the international level.

[1] Farewell speech of Appellate Body member Peter Van den Bossche accessed on 13th July 2019
[2] Definition of trading system accessed on 14th July 2019
[3] WTO legal text < > accessed on 14th July 2019
[4] Farewell speech of Appellate Body member Peter Van den Bossche accessed on 13th July 2019

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