Restoring the World Trade Organization’s crown jewel

Context:

• In June 2022, at the Geneva ministerial conference, the member­ countries of the World Trade Organization (WTO) agreed to resurrect the WTO’s dispute settlement system (DSS), also called WTO’s ‘crown jewel’, by 2024.

WTO’s dispute settlement system (DSS):

• Security and Predictability- The dispute settlement system of the WTO is a central element in providing security and predictability to the multilateral trading system.
• Consistency in interpretation- It is incumbent on the appellate body to ensure that there is consistency in the interpretation and application of the WTO agreements without creating a binding precedent.
• Rely on previous interpretations- It has encouraged the WTO panels to rely on previous interpretations especially where the issues are the same (departure can be made if credible reasons are found)

Issues with DSS:

• Blocked the appointment- WTO’s DSS that hears appeals from WTO panels, is non-functional because the United States, single­-handedly, has blocked the appointment of its members.
• Judicial overreach- The U.S. reproaches the appellate body for judicial overreach and exceeding its assigned institutional mandate
• Creating binding precedents- One major problem that the U.S. identi?es is that the appellate body, contrary to the text of the WTO’s dispute settlement understanding (DSU), has been creating binding precedents through its decisions.

Impact of weaken DSS:

• De-judicialization -The larger game plan of the U.S. seems to be the de­judicialization of trade multilateralism by making the working of DSS impossible.
• Visible hand- The WTO became this ‘visible hand’ of the law to regulate global trade which arguably, erodes the sovereignty of nations as they lose control over critical decision­ making.
• Take full control of trade policies- Given the emerging geo-economic challenges posed by a rising China, the U.S. wants to exercise full power over its trade policies, throwing o? the shackles of the appellate body’s judicial review.