The World Trade Organization has positioned itself as a key player in resolving international disputes between nations. Geneva, Switzerland serves as the organization's home. It was founded in 1995. The group had 164 nations as members as of July 2016. Roberto Azevedo, the Director-General, is in charge of it. The need to address crucial elements with regard to the aspect of international law relating to commerce served as the inspiration for the creation. International trade talks and relations are governed by the WTO. In particular, it administers the legal framework on trade agreements between member countries. Furthermore, implementation of the regulations is the mandate of the WTO. In essence, it works on settling of trade disputes that arise between members, through their dispute settlement framework. Also, the WTO plays a critical role in reviewing national trade policies and practices that exist among different countries. The ability of WTO to realize its mandate is dependent on its cooperation with other international bodies. Thus, the organization works in close collaboration with international organizations including the International Monetary Fund and the World Bank. The partnership is critical in helping the organization achieve the goals for which it was established. The WTO has a structure that guides in the way its mandate is to be executed. The organization has a ministerial conference, general council, dispute settlement body, trade policy review body, specialized councils, committees, and secretariat (Hoekman 2002, p. 45). The focus of the discussion is on the role of the dispute settlement body in addressing the concerns of countries at the international level.
Structure of the Dispute Settlement Board
The Dispute Settlement System is structured to allow representation of all member states which have ambassadors. The system determines the outcome of trade disputes upon the recommendation of the Dispute Panel, following a report provided by the Appellate Body of the World Trade Organization. Despite the fact that the Appellate Body and the established Panels can make decisions, their role in making recommendations to the Dispute settlement body is limited (Reich, 2017). The DSS has the overall authority to make decisions and recommendations on issues which arise. Nevertheless, the guidelines provided by the Panel, in collaboration with the Appellate Body are accepted except the situations where members reach consensus which refutes such an adoption. Consequently, it is likely that the recommendations provided by the Panel will be approved and adopted by the DSS in dealing with the disputes which are recorded.
The DSS decides on cases and provides recommendations to individual members to take action against decisions which have been made. A country which has lost in a case can bring its laws and ensure that it conforms to that provided by the World Trade Organization Agreements. The DSS ensures that the losing party in a filed dispute is given adequate time to restore its laws, failure to which authorization can be given to the complainant to take a retaliatory measure against the loser (Jackson, Hudec, and Davis 2000, p. 190). However, such cases are rarely reported since both sides end up implementing the decision made in time. Consequently, decisions are made almost voluntarily by the individual country. The success of the DSS in dealing with disputes between countries can be attributed to the flexibility it provides to ensure the achievement of sound resolutions.
The Dispute settlement system has come a long way in dealing with issues that arise among different countries. The system, which came into force in the year 1995 has made significant strides in resolving issues between member states. According to Brown and Mavroidis (2017), the DSS has reported a decline in the number of disputes over the past years. Nevertheless, there is no sign of the weakening of the organization’s ability to deal with the conflicts between nations. The ability of the DSS to address the issues that arise can mainly be attributed to the fact that it has established adjudicating bodies which play fundamental roles in ensuring timely resolution of disputes which arise. Brown and Mavroidis (2017) examined a total of 16 reports which have shown the vital role played by the DSS in dealing with the arising issues. The focus of the researchers was based on examination of Appellate Body reports which evaluate some of the fundamental duties which have been done by the DSS. In the study, it was evident that a range of Agreements had been reached upon with regard to trade goods. The DSS has been critical in ensuring that disputes which arise between the member states are addressed. Indeed, consistency has equally been shown by the body in arbitrating against arising concerns between different countries on the international level. Thus, it is a confirmation that the DSS has attained success, on the basis of the mandate for which it was created.
The dispute settlement board has established itself as an essential body, following the vital function it plays in the trade system. According to Davey (2014, p. 680), the DSS are imperative to the extent that the developed laws can be implemented and enforced when the need arises. The researcher evaluates the role of the DSS focusing on its effectiveness in resolving disputes which occur between the major trading powers. The success of the DSS can be measured by how successfully it settles the conflicts between countries including United States of America, China and the European Union (Zhang, X. and Li 2014, p. 155). In general, the DSS can enjoy positive reputation to the extent that it can adequately address international disputes. Davey (2014, p. 682) notes that an organization which is rules-based but cannot efficiently negotiate rules and enforces them can as well be considered as not functional, terming its raison d’etre called to question. The future of such an institution would not be stable since it would attract resistance from the individual member states. Despite high standards which have been established for the DSS, various situations indicate that indeed, it is performing as is expected. Different factors suggest that the World Trade Organization’s dispute settlement system is doing well, in consideration to its mandate. The legal frameworks which have been created by the WTO have been critical in ensuring that disputes are resolved amicably, and individual parties can observe the laws that have been designed. The subsequent sections will identify the successes of the dispute settlement system in the aspect of addressing issues arising between the member states.
Success of Dispute Settlement System
Members of the World Trade Organization had maximized the use of the dispute settlement system from the time when it was introduced. Davey (2014, p.683) identifies that initially, the predominant users of the dispute settlement system were the United States of America and the European Union. However, over time, more member states have come to embrace the organization and utilize it in dealing with the disputes which arise. For example, in the past five years, the usage of the system among the WTO member states was minimal. However, over time, change has been witnessed as many countries are resorting to the organization. Despite the fact that the two members, the USA and the EU continue to use the dispute settlement system, their dominance has declined over the years. Developing countries have equally resorted to the use of DSS in dealing with the issues which they encounter related to trade. In general, developing countries have continued to use the dispute settlement system. Indeed, the change in member usage is a reflection of the success of the DSS in dealing with the issues which they encounter. It is a confirmation of the fact that the WTO member states are gaining confidence in the system with a focus on their ability to amicably resolve issues which arise. In particular, the choice of developing countries to actively take part in the system confirms growth. Thus, it could be perceived as a measure of success for the dispute settlement system. China, an upcoming economic power, has joined both the United States and the European Union in using the dispute settlement system (Baldwin 2016, p. 101). The country is a frequent user of the system and can be attributed to the extensive use by the United States and the European Union. In general, China’s decision to join other countries in utilizing the settlement system further reaffirms its effectiveness. In addition, America depicts one of the WTO member states which has challenged the dispute settlement by a greater percentage (Von Lewinski 2016, p.603). The Appellate Body reports issued indicates that 47% of respondents was from the USA by the year 2000 (Leitner and Lester, 2017 p182). However, at the time of launch of the program in the year 1995, the country was a respondent on 21% of the reports which were issued. The growth in the percentage is a confirmation of the success so far attained by the dispute settlement system. The choice to continue membership and become actively engaged in activities of the organization is guided on how well it is able to resolve the issues affecting individual states. The increase in percentage from 21% to 47% confirms the success of the organization. The DSS is equally supported by the entry of countries such as China and the European Union which has consistently maintained its presence and active participation in the dispute settlement system.
Activities of the DSS have increased over the years with a focus on dispute settlement. Initially, cases of request for consultation were majorly reported in the year 1997 reaching a peak of 50 (Jackson, and Charnovitz, 2016 p387). However, in 2009 through to 2011, about 13 requests have been reported. The shift can mainly be attributed to the fact that the DSS is shifting its focus to dispute settlement cases, selecting issues only of fundamental significance. However, one can argue that the decline could be due to the fact that there is dissatisfaction with the way in which the organization is executing its activities (Bown, and Reynolds, 2017 p. 90). Indeed, the comprehension of the system would mean that the countries do not lodge in consultation requests. Further, it is a reaffirmation of the fact that the DSS has made significant efforts in educating the WTO nations regarding their mandate and the functions for which it was formed. Consequently, it would be possible for them to determine which cases are legible for presentation to the settlement system. They have gained a better understanding of the operations meaning that they can determine when it is useful to initiate a case. The dispute settlement system has been active in ensuring individual States gain awareness regarding the overall operations of the organization and how it can help them in addressing the issues which they have to face (Elsig, Hoekman, and Pauwelyn, 2016). There is a reduction in a number of consultation requests and an increase in DSS activities focusing on resolution of challenges which are witnessed by the individual member states. The dispute settlement system has been vital in handling cases affecting the WTO member states and establish cohesion.
The success of the DSS can equally be measured by the efforts it is taking to reach out to countries that are less privileged and could be disadvantaged. In particular, following the agreements which were adopted at the Uruguay Round, the dispute settlement system has established provisions which are directed to nations that are developing (Michalopoulos 2017 p. 130). The dispute settlement system acknowledges the need to pay “special attention” to issues which are affecting the third-world countries. The initiative to confront the interest of least developed states is essential since it indicates the commitment of the DSS in ensuring the achievement of the mandate for which it is created. The DSS has the duty to engage with all member states in a fair manner. In essence, countries which are likely to be disadvantaged should not be discriminated. Fortunately, the DSS has created a channel that ensures that member countries which raise concerns get the necessary support in the course of dispute resolution (Sacerdoti, 2016). For example, in the event that a dispute is brought to the DSS by a developing country, measures have been enacted to ensure that there is fair treatment at all stages of arbitration. For instance, the developing country has an extended time to consult before the convening of a panel. Furthermore, the deadline for disputes presented by the developing country is subdued for submission purposes. Indeed, the identified factors are an indication of the attempts which have been taken by the dispute settlement systems to ensure that the concern of nations is addressed. In addition, if a developing country requires a legal expert, the Director-General working in collaboration with the Chairman of the Dispute Settlement Board can organize for them.
The achievement of the dispute settlement system is dependent on the benchmark established for application in dealing with cases. The comparison of the current system with the GATT of 1947 is essential since it will form the basis of determining whether it has been instrumental in addressing cases encountered by member states. Nevertheless, the comparison of the WTO’s dispute settlement system with GATT indicates that the latter has been efficient (Agnew, 2015). The system is structured to handle many and more complex cases. Further, with the changing dynamics in the international arena, it is evident that the DSS has been vital. In particular, the DSS is defined by a quasi-judicial and quasi-automatic character enabling it to handle difficult cases. The feature is a reflection of the fact that it is more equipped to meet the needs of members about the aspect of the trade. Individual countries which seek to file a dispute are well-placed to do so, because of the efficient structures which have been enacted by the DSS. Thus, it is possible for the nations to defend their rights at the international arena. All in all, in comparing the DSS with other systems which have been developed in international law to resolve disputes, the DSS stands out for being able to execute their mandate. Further, the mechanisms which are in place are critical in enabling the firm to attain its mandate which is delivery of a reliable resolution mechanism for cases which are brought forth. The success can mainly be attributed to the identified factors, which form part of the dispute settlement system of the World Trade Organization.
The effectiveness of the dispute settlement system is dependent on their ability to meet the objectives for which it was established. McRae (2008, p.1) proposes that the effectiveness of the DSS should be measured in line with the goals for which the WTO dispute settlement system was formed. According to the researcher, the WTO provides punishment but equally creates an environment where parties are obliged to conform to the laws which have been created. Indeed, an organization which is capable of delivering results should be able to meet its objectives. In taking into consideration that the organization is working with members of the international community requires that it is powerful enough to subject members to comply with the guidelines or decisions which have been decided. The recommendations which are made should be adopted by member states without coercion. However, in a scenario where the member states fail to comply, the international body should have in place a framework to force the members to observe the rules. The dispute settlement is designed to sanction countries which do not adhere to the recommendations which are reached upon. Indeed, considering that the WTO dispute settlement fits within the confines of a remedy model, the sanctions would be vital if individual countries fail to uphold with the decisions made. The outcome would be the developing ones will have a voice, if the key players disregard the guidelines which have been established. However, it is critical to acknowledge that compensation is meant to provide incentives for members to remove measures which could be offending.
The WTO dispute settlement system has ensured that the legal framework is efficient to address the concerns of the members. Davis (2015) notes that the judicial economy is adopted. For example, panelists decide against ruling in part of the complaint. However, consideration is made to the fact that cases which involve the United States and the EU are deliberated upon in a way which will avoid the possibility of development of a controversial legal point. Judges are expected to exercise discretion. Indeed, the approach is of fundamental significance since it ensures that the decisions which are made will be accepted by the parties which are involved. The WTO has provided that fairness is exercised in dealing with the cases which arise.
Johnson (2015, p. 217) notes that despite the challenges which are encountered in the course of handling the cases filed, measures are taken to ensure fairness. In particular, the panel judges take caution to respect the rules which allow for the restriction of the trade when it is necessary for handling trade disputes which are presented. The approach adopted by the researchers ensures that governments do not get away with issues such as protectionism. Authoritative decisions made are adhered to by members.
Failure of the Dispute Settlement System
Studies have primarily focused on the successes of the WTO’s dispute settlement system over the past decade. However, it is critical to evaluate the failures of the system regarding the concept of resolution of conflicts. According to Reynold’s (2007), the the successes of the DSS could have been miscalculated. According to the researcher, approximately 33% of disputes which have been presented to the WTO dispute settlement system have been determined as being either active or pending following resolution. Consequently, the researcher indicates that some of them are not included in studies which have primarily acknowledged the success of the WTO dispute settlement system. In addition, some of the identified cases have actually been resolved by countries on an individual basis, without incorporating the service of the WTO. The inability of the WTO to adequately settle all the cases which are presented to them is a reflection of failure on their part. In particular, it could be an indication that either the organization is overwhelmed, or lacks the adequate legal structures which are needed to deal with the cases which are presented before them. Furthermore, the decision by individual countries to resolve their cases could mean a lack of confidence in the systems which have been enacted by the WTO to deal with the challenges presented. However, it is critical for the WTO to institute measures that would be instrumental in addressing the problems which they are facing as a way of ensuring that the cases which are presented are adequately dealt with within the timelines that have been provided. The outcome would be an increase in the level of confidence in the organization’s ability to resolve disputes.
The WTO has been shown to abandon a number of cases which are presented. The abandoned cases is an indication of failure on the part of the WTO dispute settlement system. Brown and Reynold (2007, p175) report that out of the 324 cases which have been presented to the WTO from the year 1995 to 2004, 33% are pending with no resolutions in sight. The figures could be an indication that the WTO dispute resolution could be lacking the capacity to deal with the cases brought upon them. However, there are other cases which could be attributed to the failure of the dispute settlement system to deal with the conflicts presented. First, it could be that the countries which lodge complaints could have realized that the cases which they presented to the WTO failed to attain the merit and hence no need to proceed. The member states may as well be lacking the financial resources to proceed further with the case. Thus, the WTO should ensure that it addresses such components so that justice is served for all the individual parties presenting their concerns. However, despite the reasons which have been provided, it is vital for the organization to adopt sound measures which would guarantee that all the filed disputes which are presented are decided. The reasoning is based on the rationale that if cases which have been resolved are addressed by individual member states, then it could be that the organization is well suited in handling issues such as peaceful determination.
The Dispute Settlement System and Developing Countries
The developing countries have widely been perceived as being underprivileged because of the lack of resources to agitate for issues which they face. The dispute settlement system has been instrumental in ensuring that they develop a framework which would be essential in ensuring that the developing countries have access to fair treatment. The DSS has established an Advisory Center on the World Trade Organization (ACWL) which seeks to support the developing countries focusing on the aspect of dispute settlement. According to Hassan and Ibrahim (2016, p118), the establishment of the ACWL was aimed at ensuring that there is a balance between the member states. The body has been instrumental in providing a range of services to developing countries in a bid to ensure that it attains the maximum benefit out of the WTO’s DSS system. In particular, it has been engaging with the developing countries in different sectors including the provision of legal advice, training, and support considering the aspect of the dispute settlement activities. The ability of the WTO to create a body within its systems is essential since it would ensure that the concerns of the emerging nations are addressed. The developing states are affected by various factors. Consequently, they may not be able to solve the problems they have. Schunken (2008, p. 67) reports that such states are faced by two primary challenges including lack of legal skills and inability to obtain knowledge for engagement with the dispute settlement making it difficult for the domestic firms in the countries to realize breach of the obligation they have for the WTO. Eventually, with the lack of knowledge and information regarding the operations of the WTO, the developing countries’ capacity to utilize the system is adversely affected.
The ACWL has been actively engaged in addressing the plight of the developing countries. The most significant achievement of the body can be attributed to the adoption of article 27.2, leading to the creation of an independent body of the WTO with five consultants. In particular, it would comprise developing countries and all other members of the WTO. The goal of the body would be to assist and help participants without any form of interference from the WTO Secretariat. Consequently, the ACWL was created, to operate as an independent body within the WTO in the year 2011 (Van der Borght 1999, p. 723). Thus, the developing countries have access to help which they need at any given stage of the WTO process.
While the WTO’s DSS has taken measures to ensure the concerns of developing nations are addressed, much needs to be done to promote equity. For example, the legal services which are provided by the ACWL are not free (Hasan and Ibrahim 2016, p. 118). The developing states have to pay for such legal aid since they are charged at the center. Even though they have a discount, it could be expensive for some of the developing countries. For instance, the least developing countries are given a 43% discount when they request for legal support (Meagher, 2015). The WTO should work on emerging a mechanism where the percentage can be reduced or an exception provided for the same.
The least developed countries have been participating in the dispute settlement system in important measures. The choice to engage with the body is a confirmation of the fact that there is a level of confidence that the countries have on the WTO dispute settlement system. However, the states have limited experience regarding to the process which is involved in handling the cases which are presented to the DSS. The effect is the minimal utilization of the organization and the duties which it is mandated to execute. According to Beyerlin, Stoll, and Wolfrum, (2006), the developing and least developed countries do not have enough experience on the mechanism of the WTO’s DSS. The difference can primarily be seen in a country like the United States and the European Union which are active participants. The two member states have both the resources and legal expertise to maximize the usage of the dispute settlement system. However, in assisting the developing countries, it should be possible for them to present their cases and have them resolved by the DSS. Nevertheless, the ACWL has ensured that there is staff who is qualified to help the developing countries present their cases. The DSS promotes equality and that any country which requests for legal advice can be granted without a conflict of interest arising.
All in all, the WTO has been significant in promoting trade on an international level. The creation of the DSS has been critical in resolving disagreements which arise between the member states. Overall, improvements should be adopted to ensure the effectiveness of the organization in settling differences. The organization should engage in a series of international forums which are aimed at ensuring that awareness is created regarding the mandate of the WTO’s DSS. The developing countries should be critical stakeholders in such meetings since it would be vital in promoting their involvement in the mandate of the organization. The WTO should work in collaboration with all the member states to ensure that trade disputes are addressed within the confines of the established legal framework. The dispute settlement system is mandated to resolve trade disputes which arise between the member states. The nature of the duties expected of the body establishes the need to have a strong foundational basis. The effect would be an authoritative approach in addressing the issues that arise between the member states. For example, with the United States and the European Union being the key players, it is vital to ensure that there is minimal interference from the two member states. The decisions made should be impartial and not perceived to be favouring one party. The dispute settlement system should aim at establishing a framework that would guarantee equity in dealing with the cases filed. There are instances where cases have been reported abandoned or unresolved. The organization needs to identify such cases and come up with measures through which they can resolve. Alternatively, it could be imperative to evaluate why they cannot be resolved. The outcome would be a resolution of a significant percentage of the pending cases.
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