Academic journal article University of New Brunswick Law Journal

The World Trade Organization and Dispute Settlement: Too Much for Litigation

Academic journal article University of New Brunswick Law Journal

The World Trade Organization and Dispute Settlement: Too Much for Litigation

Article excerpt

INTRODUCTION

The World Trade Organization (WTO) was established in 1995 as a result of the Uruguay Round of multilateral trade negotiations that lasted from 1986 to 1994. It superseded the General Agreement on Tariffs and Trade (GATT), effective since 1948, which, despite its informal origins, had gradually evolved into an international organization in all but name. (1) Yet, the incremental development of the GATT led to a cluster of agreements, some with differing purposes, memberships, and dispute settlement arrangements. In this regard, if successive GATT negotiations had significantly expanded the scope of international trade provisions, the Uruguay Round formally transformed the GATT into a permanent institution, the WTO, in charge of overseeing trade relations among its members. The text of the WTO Agreement establishes a legal framework which ties together the various trade pacts negotiated under the GATT and includes institutional and procedural rules governing the activities of the organization. (2) The GATT/WTO has been the main international institution established to promote order and cooperation in world trade relations. It is the only organization which provides a worldwide set of rules--of rights and obligations voluntarily accepted by its states parties--governing international trade. More than 95 per cent of world trade today takes place within the GATT/WTO regime.

In the course of the Uruguay Round, states agreed on strengthened mechanisms and, in particular, on a new Dispute Settlement Understanding (DSU), (3) to help ensure overall compliance with international trade provisions. The agreements on the WTO and the DSU were negotiated in tandem, as dispute settlement is a critical function in the application of rules. The idea of the WTO was all about organizational structure and dispute settlement. The WTO and the DSU were both necessary to preserve and enhance the integrity of the world trading regime that had been built incrementally from the 1940s to the 1990s. (4)

Yet, there is an imbalance between the strong, legalistic, binding DSU, on the one hand, and the comparatively weak, cumbersome, political rule-making and negotiating machinery, on the other. (5) Despite specific provisions for certain decisions to be taken either by simple, two-thirds or three-fourths majority, under the formula of one-state-one-vote, the WTO, like the GATT before it, has shied away from formal voting. Decisions are usually made by consensus, i.e., when no member present at a meeting formally objects to a proposed decision, as stipulated in Article IX of the WTO Agreement. Nevertheless, WTO members have been able to adopt some key decisions by consensus. (6) Even though the WTO Agreement contemplated that new provisions, amendments, and even new agreements could be negotiated at any time, members have also continued the GATT practice of negotiating new rules in the framework of broad, multilateral trade rounds, so that only one amendment has been negotiated and adopted since 1995. (7)

As a result, WTO members might have come to think that progress can be made through enforcement and that litigation is a faster, more convenient way to resolve difficult issues. This stands in contrast with the WTO as a forum for genuine international trade cooperation and rule-making and prevents a more broad-based participation of all stakeholders in the formulation of international trade rules. (8) But, more importantly, all of the WTO's three main functions--multilateral negotiations and rule-making; monitoring and surveillance of the implementation of its rules; and dispute settlement--are now in a state of decline, albeit at differing speeds and to varying degrees. As the Doha negotiations unfolded, there would have been a serious underestimation of the importance of the monitoring, surveillance and implementation functions, while dispute settlement is at risk of seeing its standing eroded. (9)

With regard to dispute settlement, three main problems stand out. …

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