WTO's Dispute Settlement Mechanism and Developing Countries

WTO's Dispute Settlement Mechanism and Developing Countries

Literature Review

Dispute Settlement was a highly controversial issue under the General Agreement on Tariffs and Trade (GATT) regime and caused a great deal of complaint, especially among developing countries. According to Asif (2003), this dispute settlement system was, allegedly, power-based, thus preventing developing countries from successfully defending their interests within the GATT Forum. Among the most important sources of criticism was the lack of deadlines for the consultation process, the need for consensus for the approval of the panels' decisions and the different procedural and substantive regimes provided by the GATT and Tokyo negotiation rounds, leading to extended “norm and forum shopping”. On the other hand Claude (2001) argues that the signing of the Final Act, establishing World Trade Organization (WTO), and the annexed thereto Dispute Settlement Understanding (DSU) modified the dispute settlement system, as it incorporated a more “rule-oriented” approach. On the one side, the DSU confirmed some of the GATT procedures (Thomas, 2006). On the other side, the DSU included some innovations, the most important of which were the introduction of tight time-limits for consultation and the creation of a single, unified regime of dispute settlement, concerning the whole GATT/WTO system and the quasi-automatic acceptance of the panels' decisions by the newly founded Dispute Settlement Body (unless consensus for the opposite is reached by the parties). According to Davey (2005), these innovations were aimed at addressing the above indicated deficiencies and enhancing developing countries' position in WTO Dispute Settlement System.

The DSU and its more legalistic approach towards Dispute Settlement were expected, by most countries taking part in the Uruguay negotiations round, to be beneficial for developing countries and to motivate them to participate in the WTO legal procedures. In order to assess its success, we have to focus on some specific aspects of the DSU. First of all, we have to look at the Appellate Body (AB), which was an institution established during the Uruguay rounds, in order to deal with the appeals of states against the panel reports. David (2004) has mentioned in his research that the quasi-automatic adoption of its reports (which is implemented with regard to panel reports as well) is the most important feature of this organ. Its explicit (art 17.9) authorization to enact its own procedural rules and its obligation to express its opinion on any legal question brought before it by the parties, render it a powerful institution, as it issues in most cases the last decision on legal matters within the DSU. Secondly, we have to consider the level of participation of the states as third parties in bilateral disputes, as stated in the DSU. States are allowed to take part in the proceedings under the general condition of having a “substantial trade interest” (Srinivasan, 2007). Donald (2008) claims that this right is much more limited in the proceedings before the panels (participation is possible only in certain stages of the process), compared to the proceedings before the ...