World Trade Organization and its Dispute Settlement Mechanism

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World Trade Organization is an International organization which was established to supervise and liberalize the world trade. This organization is commonly known as the successor to the general agreement on tariffs and trade which was established in the year of 1947. GATT was expected that it would be replaced by a specialized agency of the United Nation and will be known as the International Trade Organisation . However the ITO was never came into force as the GATT was successful at that time . By the late 1980’s there was a requirement for  stronger multilateral organisation to monitor trade and resolve trade disputes . After that the completion of the Uruguay Round of multilateral trade negotiations the WTO has started to operate in the year of 1995 .


The main objectives of WTO are

  1. To set and enforce rules for international trade,
  2. It provides a forum for the negotiation and it also monitors the trade liberalization.
  3. WTO resolves the trade related disputes through its efficient dispute settlement mechanism.
  4. WTO helps to increase the transparency of decision making processes.
  5. It cooperates with other major international economic institutions which are involves in global economic management.
  6. WTO also helps to provide benefits to all developing countries from the global trading system.

State Parties involved in WTO

In the year of 2013 the Lao People’s  Democratic Republic and Tajikistan formally joined the organization  leads to 159 member states at this moment . After that WTO brings the ninth ministerial conference which approved the accession package of Yemen . Formal membership is now subject to the ratification of Yemen’s accession protocol by the Yemeni parliament and the subsequent notification and deposit of the instrument of acceptance of the protocol with the director general of the WTO .

Resolution of Trade Disputes

Previously GATT was provided an forum to resolve the trade disputes , a role that was strengthened substantially under the WTO. All members of this organization have been committed that they will not take any unilateral action against other members but they are expected to seek recourse through the WTO’s dispute settlement mechanism . Members needs to follow the rules and findings of the organization . the procedure for the dispute settlement mechanism mentioned under the GATT is automated and greatly streamlined . There has been a tight  schedule for all the disputes followed by the dispute settlement mechanism and for this reason it is to be considered as the most successful dispute settlement body.

Dispute Settlement Mechanism under WTO

The dispute settlement system of world trade organization follows the specific and detailed timetable for completing the examination of a case . The examination of a case started with a group of three panelist who are selected for the case . After that their findings are published in a form of report that may be appealed by the members concerned . WTO’s appellate body considers the appeal which consist of seven members who has been elected for the term of four years . Dispute settlement understanding set out the WTO’s dispute settlement system and it is administered by the dispute settlement body which is consisting of representatives of all WTO members . When any member  of WTO wants to lodge the complaint , they required to specify that which agreement of the world trade organization are violated . Only members of the organization can directly participate in the dispute settlement as parties to the case or as a third party . In the longest running dispute in this organization the EC Bananas case US filed an allegation against the European Union that EU gave banana producers from African, Caribbean and Pacific countries preferential access to European market which violates the WTO’s non discrimination rules even though the US was not itself exporting bananas to the EU .

When any member made a formal complaint that automatically begins the dispute settlement process . Request for consultation is known as the first stage of this procedure where concerned members will  initially try to resolve the dispute by consulting with one another . If it not works then a dispute panel will be establish to examine the case .

Only developed countries are not allowed for the dispute settlement system of the organization but the developing countries also can access the system . The main aim of the dispute settlement understanding is to help the developing member states to participate in the dispute settlement . Till date more than half of the complaints are being initiated by the developing countries only .

DSU also allows to establish a single panel where more than one WTO member has complained about the same issues which allows to settle the disputes more quickly .

WTO members have agreed to bring their disputes to the WTO rather than take action unilaterally in cases where they believe that another member violates the rules which have been mentioned under the rules of the dispute settlement system .

Panels shall be automatically established by the dispute settlement bodies to examine the complaints and adopt the findings of the panels .

This organization believes in amicable dispute settlement mechanism rather than the winning of cases . Most of the cases have been settled amicably without the need for a dispute panel . According to the DSU the director general is allowed to assist members to settle their disputes in settling their disputes by using the mode of good offices , mediation and conciliation .

The members of the WTO are always  ready to comply with all the rulings of the dispute settlement system in about 90 percent of cases . It may take time but if the parliament of the member’s or congress wants to change or abolish the measure in question to bring it into conformity with the relevant WTO agreement .


Now over the years WTO has grown up , it deals with loads of cases with an increasing volume of complex technical evidence . This organization has been recruited more than 20 dispute settlement lawyers over the past few years to assist the dispute panels and the appellate body . The increased number of cases initiated by the developed and developing countries shows that this organization is able to create their trust by continuously resolve all the disputes quickly and efficiently . Over the past 20 years almost 500 disputes have been brought to them and half of those disputes were resolved during bilateral discussion and rest of the disputes proceeded to a panel discussion . Now it takes only 14 months to resolve any dispute so it is considered to be the most effective and successful dispute settlement body in the world .


Written By

Saptaparni Raha

Adamas university

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