Developing countries: Protect WTO dispute settlement

The World Trade Organization’s dispute settlement mechanism has, for decades, provided stability and predictability to the resolution of disputes between member countries. As escalating global crises increasingly affect world trade, however, the WTO needs to reform or risk becoming irrelevant.

Many are questioning whether the 2024 Ministerial Conference – the WTO’s highest decision making body – is the last chance to save the WTO. At the top of the agenda of the conference being held in Abu Dhabi is the blocking by the US of new Appellate Body member appointments. The Appellate Body of seven persons deals with appeals against panel findings in disputes brought by WTO members.

The WTO’s dispute settlement system isn’t perfect. It is overly technocratic and expensive; and the Appellate Body was often accused of overreaching its authority.

The dispute settlement mechanism was designed to provide a safeguard against unfair trade practices by treating all countries equally and regardless of their economic power. Once seen as the “jewel in the crown” of the WTO, the two-tier dispute settlement system has not been fully functional since December 2019.

The Appellate Body collapsed when the terms of two of its three remaining members expired. Due to the requirement for three members to hear an appeal, there was no longer a standing body that could decide on appealed panel findings. This put cases on hold, threatening to undermine the WTO’s legitimacy.

In the hope of solving the current crisis, WTO members have put forward alternative models for resolving disputes. One is a multi-party interim arrangement. It provides a temporary alternative for appealing trade disputes. Originally set up by 16 WTO members, the arrangement quickly