The World Trade Organization

Introduction

The World Trade Organisation regards dispute settlement as the multilateral trading systems central pillar and as the unique contribution of the organization to the global economy`s stability. Disputes come into being whenever a member country takes some actions like adopting a trade policy measures considered by other member states to be a failure to live to obligations or a breach of WTO agreements. Through joining the WTO, member countries usually are in agreement that in the event their fellow members violated any of the trade rules, instead of taking unilateral action, they would use the multilateral system for settlement of disputes. That would entail abiding by the procedures agreed on, understanding the process of settling disputes and respecting the Dispute Settlement Board`s (DSB) judges. The DSB is an organ of the WTO whose responsibility is to adjudicate on disputes.

Increased economic certainty was witnessed at the WTO in the years 2008 and 2009. The WTO handles disputes arising from trade, administers agreements and monitors country-specific trade policies while at the same time cooperating and training with nations that are still developing and other global organizations.

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In addition to enhancing the quantity and value of commerce, the WTO has also facilitated the eradication of trade and non-trade barriers. The organization further broadened the scope of governance of trade to trade in intellectual property, services and investment.

The organization has over time emerged as a greater institution when compared to GATT and expanded its agenda`s through inclusion of policies for development by introducing the Trade Policy Review which improved monitoring and helped in

settlement of disputes and the World Trade report in addition to increased transparency through doing away with green room negotiations. WTO has also been encouraging trade developments that are sustainable. With the expansion of the volume of trade, number of traded goods, companies and countries trading, there are a lot of chances that conflict would arise. The platform of the WTO assist in resolving these conflicts constructively and peacefully which goes a long way in reducing tension in international trade because countries are always at will to turn to the WTO to help them solve their disputes. WTO has a single set of rules applicable to all its member states which in a big way simplifies the regime of trade. While the WTO cannot possibly claim to have made all countries equal, most of the inequalities are reduced through the process and more voice ends up being awarded to the smaller countries while also freeing the bigger countries from the complexities of having to negotiate agreements of trade with each of their many fellows in trade. Member states of the WTO have been observed to reduce the trade barriers and subsidies which

that is broader to choose from. Across the world today, the WTO is the single most effective agency. Governments representing up to 90% of the populations of the world have decided to bind themselves to the rules and procedures for settling disputes of the WTO. The organization also happens to supervise close to 95% of the entire globe`s trading activities. Within the WTO agreements, numerous provisions provide both the developing and underdeveloped countries with extra leniency and special rights.

These include provisions which require already developed members to treat them more favorably as they would treat other developed members. The WTO accords more attention to those countries that are not as developed. For example. Better-off members are required to see that they lower import barriers on the countries considered to be less developed. The WTO, in 2002, adopted a work programme for the countries that were not as developed. Some of the elements contained in the programme included more technical assistance, improved access to markets, support for agencies that worked on the diversification of the economies of the least developed countries and more rapid membership processes for least-developed states that intended to be part of the WTO.

Failures of the WTO

The inability of the WTO to uphold democratic principles is its foremost failure. To a great extent, the organization is fundamentally undemocratic. While its policies have an impact on numerous aspects of the world, the organization lacks transparency and democracy. Some countries are able to push for certain regulatory standards within international bodies through policy laundering and go ahead and transfer those regulations home under the guise of multilateralism and the requirement for harmonization. There is a lot of bias towards the rich and developed nations at the WTO, for example;

The increments in non-tariff barriers like anti-dumping measures that are allowed against countries that are developed. Pressing of developing countries to open their markets while agriculture in developed countries is highly protected. Most of the countries that are still developing lack the requisite capacity to follow the negotiations and actively participate.

WTO has been seeking to privatize public services which are essential like water, energy, health care, and education. Privatization would imply the sale of public assets, for example, schools and radio airwaves to private corporations which are mostly foreign. These corporations would run these services for profit and not for the public good.

To a great extent, the WTO has also been heavily contributing towards environmental degradation. Corporations have been using the organizations to dismantle environmental protection laws in different countries, which they normally attack as trade barriers. A ruling by the first panel of the WTO held that a provision of the US Clean Air Act was not legal. The provision needed both domestic and foreign producers to come up with gasoline that was clean. WTO has also been seen to make attempts to deregulate industries like water utilities, fishing, and distribution of energy and logging which would eventually see increased exploitation of these natural resources.

Dispute Settlement System of the WTO

Back in 1994, members of the WTO agreed on the Dispute Settlement Understanding. In line with the DSU`s rules, for purposes of resolving trade disputes related to covered agreements, member states can engage in consultations, and if the consultations fail to succeed, a panel of the WTO will listen to the case. It is worth noting that settlement of disputes is always the priority, and that should always be consultations whenever possible. By January 2008, of the nearly 369 cases to have been presented to the WTO, only about 136 reached the full pane process.

WTO disputed the process of settlement which involves third parties as well as parties involved in a case and sometimes involves the WTO Secretariat, the DSB board, independent experts, arbitrators, the Appellate Body, and various specialized institutions. The General Council uses the Dispute Settlement Body to discharge its duties within the DSU. And just like the General Council, the DSB consists of members drawn from all WTO member states. The DSB usually is responsible for the administration of the DSU, which involves their overseeing of the entire process for settling disputes. Additionally, it`s within its authority to publish panels, adopt Appellate Body and panel reports, authorize suspension of obligations under the agreements that are covered and sticks to surveillance of implementation of judgement as well as their recommendations. The DSB is required to meet often to adhere to the DSU`s timeframes.

Consultations may be called for whenever a member state considers another member state to have adopted a measure that deprived it of advantages accruing to it based on either of the covered deals. If within 60 days, the consultations are not able to resolve the dispute following the receipt of a consultation request, the creation of a panel may be demanded by states that launched the complaint, the responding state can in no way possible prevent or delay the establishment of a panel. That can only happen if the DSB agrees otherwise by consensus. The panel that is normally made up of three members appointed ad hoc ad hoc by the secretariat is normally tasked with making findings and presenting conclusions to the DSB8. The panel's proceedings are normally kept confidential and at instances when involved states are concerned directly, they are never allowed to be present or make submissions that are outside the state in question. Crisis can possibly come up from benefit claims’ Non-violation nullification.

The panel`s report last version, is first distributed to the involved individuals to the case and then after week two, it is given to all other WTO member states. It is required that the report has to be adopted at a conference of the DSB in sixty days after it has been circulated, unless, by consensus, the DSB decides not to adopt the results or one of the involved parties to the dispute gives notice that it intends on making an appeal. Parties are always at will to appeal the panel reports to the standing Appellate Body, but that should only be on issues of legal interpretation that the panel develops.

Crisis at the Appellate Body of WTO

The WTO has an Appellate Body of judges established in 1995. This body can hear an appeal with a minimum of three judges even though the full complement is made up of seven judges. By July 2018, the Appellate Body had only three members left because the others had completed their respective four year terms and later in 2018, another judge’s term ended. An article by the Centre for International Governance Innovation, a Waterloo, Ontario-based independent think tank, the Office of the US Trade Representative which has been seeking reforms of the WTO has blocked any possible reappointments.

In refusing to support the process of selection of new judges, the US stipulates that there should be an obligation upon appellate members to stop their activities once their mandates have expired. This requirement would see the DSB gain huge prerogative as well as control on the issue. While the seven judges to the Appellate Body`s bench are nominated by the DSB, it is the responsibility of the Appellate Body itself to extend their mandates even though it has to notify the DSB of such extensions. The US additionally takes issue with the Appellate body`s judicial activism which leads to the creation of fresh obligations. The US feels that the legitimacy of the Appellate Body is put into question by these concerns.

The EU also came up with its proposals to deal with the impasse. Their proposal contained constructive, ideas for improvement of the procedures for conducting appellate reviews of dispute panel findings that were albeit flawed. Their proposals, however, did not offer solutions to the concerns raised by the US. In a proposal submitted together with India, China, Norway, New Zealand, Canada, Switzerland, Korea, Australia, Singapore, Mexico, and Iceland contained five elements in it. It first suggested a transitional rule for the members of the Appellate board who were outgoing which would allow them to complete the disposition of pending appeals in which hearings had already taken place during the term of that member. Additionally, the proposal envisaged that any extensions of the 90-day timeframe allocated for appeals would only be possible once the parties to the dispute approved it. The proposal would also limit the interpretation of the appellate body of the meanings attached to contested national laws. The Appellate Body would also only address issues on appeal to the necessary extent for the dispute`s resolution. Finally, an annual meeting was proposed between the Appellate Body and WTO member states to facilitate regular communication on issues of jurisprudence and systemic issues. These proposals failed to address the concerns of the US fully. For example, the third and fourth elements would not prevent overreaching interpretations, especially in constructive ambiguity cases. These are cases where members of the WTO would deliberately agree on rules that were ambiguous. Additionally, the proposed meetings could not probably spur negotiations that would resolve uncertainties as they only offered soft alternatives to legal remand for cases where constructive ambiguity was involved. This first proposal, however, offers some really good starting point for constructive dialogue because it would be very naïve to demand that all systemic issues are resolved at once.

The EU proposed a second proposal together with India and China whose scope was narrower and did not address most of the issues the US had raised. On the positive side, however, it proposed an increment of the members of the Appellate Body to nine: to better provide Appellate Board members geographical balance and considering the overload of cases, which made a lot of sense. The two other suggestions in the proposal were a bit problematic. One sought to replace the renewable four-year term of a member of the Appellate board with six and eight years terms that were not renewable. The proposal also contained a suggestion to continue serving up to two years even after their terms had expired if replacements had not been found. The proposal also sought to increase the remuneration of the judges while also prohibiting them from engaging in any other occupations whose nature was professional.
Lengthening the terms for the Board members would bring about more issues with the US. In its objection of longer terms, the US could argue that less frequent reviews of the Appellate Body would come about as a result of longer terms, which would go a long way in diluting the Appellate Body`s abilities to discharge members who were objectionable. There are however possible solutions that have been advanced to this stalemate that would augur well with the demands of the US. These solutions are summarised into two types with one requiring the extensive political support from the member states of the WTO because it involves carrying out a majority vote. The category entails in it the proposal to recreate the system of appeal through a separate treaty outside from the WTO. Somewhat softer measures are contained in the second category, which requires modification of the procedural

rules of the Appellate Body, or employment of the appeal arbitration option that is normally available under Article 25 of the Dispute Settlement Understanding. The option of voting would involve a one-off emergency vote in the DSB that is observed to take conclusions by consensus. A final judgement can only be reached when there is no member making a formal objection to the decision proposed. Some obstacles may be faced in this because there is some form of uncertainty on whether DSB support the idea to vote on the matter within the rules of the WTO. The advantages of this approach are that a solution may be presented by the mere possibility of bringing up the option to vote. In environments that are based on consensus, the members of the WTO may never want to be left out or singled out of votes being done to make decisions. There exists a preeminent risk here, that, this can invite starker authority clashes with the United states, which would definitely block the WTO`s progress.

In the event the voting option received opposition from the majority member states, another option would be to look for solutions from outside the WTO through the creation of negotiating groups among coalitions of willing states. In addition to the long time frames and extensive support required to agree on new pacts, that the disputes of the WTO would have to leave the WTO turf is another drawback. Knowing multilateral agreements, considerable amounts of time would be required to agree on this and further implement. Suggestions have also been made that the appellate body makes amends to its procedures for working to prevent any fresh appealing when there is an expiry of the terms of three or even more parties of the Body. That would facilitate the consideration of the decisions of the panel as final and their subsequent adoption by the DSB. What is good about this option is

Suggestions have also been made that the appellate body makes amends to its procedures for working to prevent any fresh appealing when there is an expiry of the terms of three or even more parties of the Body. That would facilitate the consideration of the decisions of the panel as final and their subsequent adoption by the DSB. What is good about this option is that it would give the system an opportunity for moving on, even though at the cost that members of the WTO will be required to to temporarily forego the appeal rights. The downside of such an option is that such a weighty matter legal basis at the least dubious. Alternatively, an idea by the Appellate Body barring its members from attending on new panels ahead of the expiration of their appointments could overcome the need for an extension of the mandate. However, that is not ideal largely because the Appellate Body`s problems and the further need for extensions of mandates are linked to its high workload.

An option that is with no doubt softer than the voting option is the idea of appeal arbitration is also present. The basis of the idea is founded in Article 25 of the DSU, which upon the parties’ mutual agreement sets out alternative dispute resolution means. Under this provision, arbitration can be used for purposes of replicating the current WTO appellate review process` essential feature. Under such circumstances, it would be up to the parties to decide on their proceedings, culminating in an arbitration award to be notified to the DSB, the council of the WTO and other relevant committees. Enforcing of decisions would be in the same way as if they were adopted through Appellate Body Reports. Article 25 if the DSU stipulates that in no way is arbitration dependent on any of the DSB`s actions which allow members of the WTO to temporarily exercise their rights to appeal.

There are nuances that however need to be considered. For this to work. It would be requisite for the parties to agree on appeal arbitration before the panel issues its interim report. That would go a long way in eliminating the risk of obstruction of appeal by the party which in the panel phase won the case19. Even though the upsides are slim, the right of appeal is with no doubt preserved by this option; even though not in its original form. The option further, avoids overloading of the Appellate Body, allows the Appellate Body Secretariat to service the proceedings and most importantly, buys more time for members of the WTO to come up with solutions that would be more solid for the system.

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Conclusion

Turning a blind eye to the domestic political context in which the WTO is tested by the US is difficult. The Appellate Body is normally designated with some level of authority related to procedural issues. A lot of criticism has been wielded towards the Appellate Body as it is said to have the potential of exacerbating and balancing inequalities already in existence. It is worth noting that there are quite some significant reforms that have been accomplished by the Appellate Body including opening doors for amicus curiae submissions by private individuals, broadening third party access in appellate proceedings and endorsing that governments can be represented by private counsels.

The WTO Dispute Settlement System will amount to very little if it’s not possible to enforce its obligations whenever any of its signatories failed to comply with any such obligations. Moreover, effective ways for settlement of crisis increase the practical commitment value undertaken by the leaders in international agreements. One thing that shows the importance which the WTO members attach to compliance is the fact that the current system for settling disputes was established during the Uruguay Round of Multilateral Trade Negotiations.

Disputes settlement in a manner that is both structured and timely is quite crucial as it assist in curtailing the detrimental impact that would come about as a result of international trade conflicts that would be left unresolved as well as to further solve the imbalances that exist between weaker and stronger parties by ensuring that their crisis are solved on the basis of laws and not possession of powers to determine the outcomes. The WTO crisis settlement platform is considered to be one of the main outcomes of the Uruguay Round. Beyond the system for settling disputes was integrated into the WTO agreement in 1995, it gained practical importance as it was frequently used by members to settle disputes.

The future of international trade rests on the future of the resolution of trade disputes. Without the Appellate body of the WTO, any international disputes in trade would return to the pre-1995 General Agreement on Tariffs and Trade (GATT) status quo. In the past, states would have different interpretations of international trade laws and as such reaching a common agreement was always hard. Uncertainty for businesses trying to navigate international landscapes would be brought about by a dysfunctional WTO.

Works Cited

  • Beshlar M, 'Trade Skirmishes Safeguards: A Theory of the WTO Dispute Settlement Process' (2019) 82 Journal of International Economics accessed 6 March 2019 pp.35-48
  • Brewer, Thomas L., and Stephen Young. "Globalisation or De-Globalisation: What Role for the World Trade Organisation?" In Globalisation and Korean Foreign Investment, pp. 134-152. Routledge, 2017.pp. 135-142
  • Carley MP Spapens, Sharing the World: Sustainable Living and Global Equity in the 21St Century (Routledge 2017)
  • 'Crisis at the WTO and the Future of Trade Dispute Resolution' (Duke University - Government Relations, 2019)
  • accessed 6 March 2019 Foltea M, 'Options for Breaking the WTO Appellate Body Deadlock' (International Center for Trade and Sustainable Development, 2018)
  • accessed 6 March 2019 Gantz, David A. "An Existential Threat to WTO Dispute Settlement: Blocking Appointment of Appellate Body Members by the United States." (2018). Jackson J, 'Dispute Settlement and the WTO' (2019) 1 Journal of International Economic Law pp. 329-351 Koul A, Guide To The WTO And GATT: Economics, Law And Politics (Springer 2018) pp. 1-19 Kuijper P,
  • Lester, Simon, Bryan Mercurio, and Arwel Davies. World trade law: text, materials and commentary. Bloomsbury Publishing, 2018. Lester S, 'Petersmann on "How Should WTO Members Respond to the WTO Appellate Body Crisis?"'
  • accessed 6 March 2019 McDougall R, 'Crisis in the WTO: Restoring the Dispute Settlement Function' (Center for International Governance Innovation, 2018)
  • Orbie, Jan. "The European Union’s role in world trade: harnessing globalisation?" In Europe's Global Role, pp. 51-82. Routledge, 2016.pp.51-82 Payosova T, G HufbauerJ Schott, 'EU Proposals to Resolve the WTO Appellate Body Crisis Represent Partial Progress' (PETERSON INSTITUTE FOR INTERNATIONAL ECONOMICS, 2018)
  • Sen, Agneshwar. "An evaluation of the dispute settlement mechanism (DSM) of the World Trade Organisation (WTO)." PhD diss., IIPA, 2017. Winham, Gilbert R. "The World Trade Organisation: institution-building in the multilateral trade system." In Global Trade, pp. 393-412. Routledge, 2017.pp.393-412 Woolcock, Stephen. "The EU should defend the World Trade Organisation." LSE Business Review (2018).

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