WTO's step towards dispute settlement process reform

Towards the end of lastmonth, Usha Dwarka-Canabady, the representative of Mauritiusto the World Trade Organization (WTO) was appointed as ‘facilitator’ for negotiations on reform of the WTO’s dispute settlement process. The deliberations would now build upon the consolidated text which emerged from the earlier informal process and take place on a formal basis, with a work plan, timetable and periodic reports to the WTO members. It is a step towards the goal of securing a fully functioning trade disputes settlement system by 2024, a mandate set by the WTO members at its 12th Ministerial Conference (MC12).

The WTO dispute settlement process includes consultations following a complaint by a member about breach of any obligations by another member, ruling after due hearing by a panel of experts and appeal by any member dissatisfied with the panel

ruling. Since the establishment of the WTO in 1995, 621 trade disputes have been brought to the WTO and over 350 rulings have been issued. The United States (US), however, was unhappy about the way WTO rules were interpreted in some cases and alleged that the appellate body is acting beyond its mandate and jurisdiction.

In 2019, the US retaliated by blocking the appointment of enough members to hear the appeals, and since then the appeal process has become dysfunctional. The panel rulings cannot be enforced when one of the parties in dispute goes on appeal. So, many panel rulings remain unenforced and consequently, the disputes remain unresolved.
 

Given the impasse, many WTO members have opted to include a mechanism for resolving trade disputes in their bilateral or regional free trade agreements. Many others have also resorted to Article 25 of the WTO agreement on disputesettlement that allows an alternate means of dispute settlement through expeditious arbitration, where the parties to the dispute agree. This mechanism, known as the Multi-Party Interim Appeal (MPIA) arrangement, has emerged as a stop-gap solution since July 2020.

However, it has gained limited acceptance as only the European Union and 22 other countries have accepted this mechanism. At MC12, the WTO trade ministers recognised the importance of carrying forward negotiations with the aim of having a fully and well-functioning dispute settlement system accessible to all members by 2024. After the MC12, informal conversations among delegates on dispute settlement reform at the technical level started in April 2022, led by the US. In February 2023, Marco Molina, Guatemala’s Deputy Permanent Representative to the WTO, began an informal negotiating process with themembers and reported back to the WTO members on a regular basis regarding the progress, from time to time. More than 70 proposals from members were received and the Molina report presented on February 16, 2024, discussed all these proposals and several options and their merits. However, a consensus on how to reform the dispute settlement process has eluded the WTO members.
 

Now, the dispute settlement reform process has been forma lised and so, the rules of procedure for meetings of WTO bodies will apply to this process, including interpretation and virtual participation, which will also be available forofficials based in the capitals of various member countries. The discussions under the new process should lead to greater transparency and inclusi -

veness and hopefully, lead to a consensus on how to reform the WTO dispute resolution process.

Email:tncrajagopalan@gmail.com