Opaque WTO dispute talks a concern for India, South Africa, and Egypt

The two tier dispute settlement system of WTO involving consultation and adjudication remains non-functional since December 2019

India, South Africa, and Egypt have expressed concern about the nature of discussions regarding reforms in the dispute settlement system at the World Trade Organization (WTO) ahead of the 13th ministerial conference (MC13) scheduled for February next year.

WTO members have engaged in informal delegate-level discussions since April 2022, initiated by the US, which is seeking consensus in the upcoming MC13 in Abu Dhabi for reforms in the dispute settlement system.

The two-tier dispute settlement system of the WTO, involving consultation and adjudication, has remained non-functional since December 2019 as the US refused to agree to the appointment of fresh members to the seven-member appellate body, the highest adjudicating authority.

The US claims that the present system has often overreached its mandate and has hinted at its preference for a single-tier system and more scope for bilaterally resolving disputes.

MC12 had mandated member countries to “conduct discussions with the view to having a fully and well-functioning dispute settlement system accessible to all members by 2024”.

The three members, including India, said that these ‘informal discussions’ were meant to contribute to multilateral talks on dispute settlement reforms as mandated by the MC12 Ministerial Declaration, rather than to substitute for such discussions.

“The format and pace of the discussions have made it challenging for most developing countries, including least developed countries (LDCs), to effectively participate, consult with capitals to thoroughly prepare and present their views and suggestions, submit comprehensive proposals, and review progress. The informal and fragmented nature of the process, with its multiple meetings and lack of record-keeping, creates information asymmetry, particularly for capacity-constrained delegations,” they said.

The three members claimed that the current discussion and drafting processes favour the participation of resource-rich delegations and deviate substantially from accepted WTO practices.

They pointed out that members cannot submit their own textual submissions on any aspect that is important to them. The input received by the drafting groups from commentators and peer reviewers was initially not shared with all delegates, resulting in differential access for delegations to the evolving text and discussions.

The members demanded full, effective, and equal participation in the WTO membership through an inclusive, equitable, and transparent process, preferably under the guidance of the Chair of the dispute settlement body.

They stressed the importance of remaining rooted in consensus-based decision-making and being facilitated by multilaterally mandated Chairs or co-Chairs, as is the current practice in the WTO. The methods of work should facilitate the participation of developing countries, including LDCs, and delegations with limited resources.

The members highlighted that meaningfully addressing issues concerning the accessibility of developing countries and LDCs, including issues pertaining to third-party rights, compliance, retaliation, technical and financial assistance, litigation costs, and capacity building, are indispensable to the outcome of any reform of the dispute settlement system. They also underscored the need to ensure special and differential treatment, which is currently missing in the discussions.

While maintaining that developing countries have long-standing interests in reforming the dispute settlement system, they insisted on maintaining a fully and well-functioning two-tier dispute settlement system accessible to all members, with the appellate body at its core.

“A reformed dispute settlement system should recognise that developing countries, including LDCs, face challenges such as capacity constraints, resource limitations, and limited access to legal expertise. The reform process and the changes it brings about should not make the dispute settlement system more onerous, in practice, for developing countries, including LDCs,” they added.