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An overview of the WTO Dispute Settlement Process

The Dispute Settlement Mechanism

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Introduction

y The DSB is, in effect, a session of the General Council of the

WTO: that is, all of the representatives of the WTO member

governments, usually at ambassadorial level, meeting together.

y It decides the outcome of a trade dispute on the recommendation

of a Dispute Panel and (possibly) on a report from the Appellate

Body of WTO, which may have amended the Panel

recommendation if a party chose to appeal.

y Only the DSB can make these decisions: Panels and the Appellate

Body are limited to making recommendations.y Reverse Consensus :

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Contributions

y Dispute settlement is the central pillar of the multilateral

trading system, and the WTOs unique contribution to the

stability of the global economy.

y

The system is based on clearly-defined rules, with timetablesfor completing a case. 339 cases settled as on 2007

y First rulings are made by a panel and endorsed (or rejected)

by the WTOs full membership.

yAppeals based on points of law are possible.

y The priority is to settle disputes, through consultations if

possible.

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Principlesy Proper balance between rights and obligations of members,

Article 3.3 Annex 2

y Security and predictability to multilateral trading system,

US Section 301 Trade Act, clarify existing provisions of WTO

covered agreements according to customary rules ofinterpretation of public international law,Article 3.2 of DSU

y Settlement of disputes through multilateral procedures, and notthrough unilateral actions, Article 23.1 of DSU, US-certain EC

products

y Members should not unilaterally determine the violation of WTOlaw and should not take unilateral retaliation

y Settlement of disputes through consultations, Article 3.7 positivesolution which is mutually acceptable.

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Principles continued..y Article 19.2 of the DSU , the Appellate Body cannot add to or

diminish the rights and obligations provided in the coveredagreements.

y This flows from Article IX: 2 of the WTO Agreement, TheMinisterial Conference and the General Council shall have theexclusive authority to adopt interpretations of this Agreement andof theMultilateralTrade Agreements

This principle was clearly laid out in US- Certain EC Products

y DSU cannot take the role of a legislator or judicial activism

y Article 3.10 ,Settlement of Disputes in Good Faith,

US Offset Act (Byrd Amendment) , two conditions,

(a) Member failed to act in good faith

(b) there should be something more than mere violation.

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