Critically evaluate the role of the United States of America in the World Trade Organization (WTO) dispute settlement mechanism and its implications for the future of the WTO. (UPSC CSE Mains 2020 - Political Science and International Relations, Paper 2
Dispute Settlement System under WTO
- The Dispute Settlement System (DSS) is often referred to as the ‘crown jewel’ of the World Trade Organization (WTO).
- It was established in 1994 as a result of 8-year long Uruguay Round negotiations (1986-1994) and serves as a mechanism for resolving trade disputes among WTO member states.
- Objectives: The main objective of the Dispute Settlement System is to bring stability and predictability to the global trading system by providing a fast, efficient, reliable, and rule-based framework for settling disputes.
- It offers a platform for a complaining country to safeguard its rights and allows the accused country to defend itself against allegations.
- The DSS facilitates the interpretation, clarification, and proper application of the rights and obligations outlined in the WTO agreements.
Concerns raised by U.S
- The United States criticizes the appellate body of the World Trade Organization (WTO) for overstepping its authority and creating binding precedents, which goes against the WTO''s dispute settlement understanding (DSU).
- International law does not have a rule of precedent, and Article 3.2 of the DSU explicitly states that appellate body rulings cannot add or diminish the rights and obligations of WTO member countries.
- The US considers that the Appellate Body has created precedents in its reports, which is problematic because it is the WTO Members who determine the rules.
- The US has also pointed out that the Appellate Body has not always adhered to the deadlines that apply.
Larger game plan of the U.S. - De-judicialization of trade multilateralism
- De-judicialisation is the reverse phenomenon where countries weaken international courts to take back decision-making power.
- The U.S. appears to be pursuing a strategy to reshape trade multilateralism by reducing its reliance on judicial mechanisms.
- The establishment of the World Trade Organization (WTO) occurred during a time when the prevailing ideology was neoliberalism, which emphasized the importance of market competition complemented by legal regulations.
- The WTO served as the "visible hand" of the law in global trade governance. This era witnessed the legalization of international relations, with states accepting specific legal standards and delegating judicial authority to international courts.
- However, this trend towards judicialization has raised concerns about the erosion of national sovereignty, as decision-making power shifts away from individual nations.
Motive behind US’s plan
- In response to the growing economic influence of China, the United States aims to assert greater control over its trade policies by reducing the influence of the appellate body''s judicial review.
- Although the US has identified several issues with the current dispute settlement system, it has rarely presented meaningful recommendations to address these concerns.
Road ahead
- In addition to more directions in proceedings, an annual dialogue between the WTO Members and the Appellate Body members could deepen the understanding between them.
- Various types of clarifications and amendments, could also clarify the purpose of the dispute settlement system and the roles and obligations of the members of the Appellate Body. This could create a better common understanding of what it is intended to achieve.
- The other countries can opt for electing the appellate body members by resorting to voting at the WTO’s General Council meeting.
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