How Dispute Settlement is made under WTO?

Ever since its establishment in 1995, the WTO is doing a commendable work is settling trade disputes among the member countries. There is no favour for big or developed countries, no favour for political super weights etc. under WTO. The institution is most respected for its dispute settlement mechanism. 

For the discharge of dispute settlement responsibilities, the General Council of the WTO has rules and procedures which are contained in the Dispute Settlement Understandings (DSU).  Based on the DSU legal framework, the responsibility of dispute settlement is done by the Dispute Settlement Body (DSB).

Dispute Settlement Body (DSB)

As mentioned, the Dispute Settlement Body is responsible for dealing with dispute among the member countries. For that, the DSB is administering the DSU, i.e. for overseeing the entire dispute settlement process.

Constitution of the DSB 

The DSB has a broad structure as it is made up of representatives from all member governments. The members from different countries are usually represented by ambassadors or people with equivalent position.

The DSB performs a number of activities related to dispute settlement.  This is because dispute settlement is a process often involving many stages. There are other bodies within the DSB like dispute settlement panel and appellate body that look after the various dispute settlement procedures. The main authorities and responsibilities of the DSB are:

  • To establish dispute settlement panels,
  • To adopt panel and Appellate Body reports,
  • To maintain surveillance of implementation of rulings and recommendations and
  • To authorize the suspension of obligations under the covered agreements of the DSU

The DSB has one regular monthly meeting. But it meets whenever it is necessary to carry out the dispute settlement functions. When a Member requests, the Director-General convenes additional special meetings.

Stages of dispute settlement

A dispute arises when a member government believes another member government is violating an agreement or a commitment that it has made in the WTO. The dispute settlement mechanism is based on certain principles- that the process should be equitable, fast, effective, and mutually acceptable.

Main thrust of the dispute settlement mechanism is that the dispute should be solved through consensus as far as possible. For this the procedure for dispute settlement is made very flexible under the DSB. Parties can settle the issue at any stage through discussions.

The dispute settlement process is made through many stages as we mentioned. There is approximate time period for each stage of a dispute settlement procedure.

Following table gives the time frame for dispute settlement procedure:

Time period

Procedure

60 days

Consultations, mediation, etc

45 days

Panel set up and appointment of the panelists

6 months

DSB adopts the report (if no appeal)

3 weeks

Final Panel report to WTO members

60 days

DSB adopts the report

Total  1 year

Without appeal

60 – 90 days

Appeals report (when appeal is filed)

30 days

DSB adopts appeals report

Total I Y and 3 M

(With appeal)

A member can file compliant and WTO gives 60 days for consultation and discussion by the parties before going to further steps. If the compliant insists to go with the complaint, the DSB should appoint a panel to make enquiry into the matter and should submit its findings in six months.

Dispute Settlement Panel

The DSB Panel makes enquiry into the matter and submits report within the time frame. The Panel members are selected by the DSB. The Dispute Settlement Body has the sole authority to establish “panels” of experts to consider the case, and to accept or reject the panels’ findings or the results of an appeal.

When the Panel has made the report, appeal can be filed to the DSB. The stand of the DSB will be final.

It monitors the implementation of the rulings and recommendations, and has the power to authorize ‘retaliation’ when a country does not comply with a ruling.

A major feature of the dispute settlement process is that most of the disputes are settled with discussions and consensus by the parties.

A recent instance of dispute settlement involving India is the US complaint against India on Solar energy case. The complaint is related to the local content requirement instructed by India for the sourcing of solar energy project equipments for the National Solar Mission.

The Panel has submitted the report by validating the US complaint. India has decided to go for appeal. 

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