Arbitrating International Trade Disputes: What Does the Future Hold?

Abstract

The establishment of the World Trade Organisation in 1995 saw the creation of a system of binding arbitration for trade disputes between WTO Members. The WTO dispute settlement system has been called “the jewel in the crown” of the WTO. It provides a process for a panel of arbitrators to hear a trade dispute brought before it, and a mechanism for appeal to a standing Appellate Body. Members must comply with rulings of the Appellate Body or face the possibility of retaliatory action. In the last few years there have been trenchant criticisms of the system, in particular of the Appellate Body, by the United States. Appointments to the Appellate Body have been blocked so that it now numbers only three members. By the end of the year it will number only one, which will severely hamper the effective operation of the Appellate Body. This presentation explores the current functioning of the Appellate Body and the circumstances which have led to the impasse. It identifies the gains and deficiencies of the WTO dispute settlement system from a New Zealand perspective and suggests potential pathways to resolving the current issues. In doing so the presentation seeks to bring greater awareness of the significance of an effectively functioning system for resolving international trade disputes. It concludes by offering some reflections on what the future of international trade dispute resolution may hold for New Zealand.