Dispute Settlement Mechanism—Analysis And Problems

Abstract

When the World Trade Organization (WTO) came into being in 1995, its dispute settlement mechanism (DSM) was widely heralded as the ‘jewel in the crown’. Sixteen years later, the DSM has moved further towards centre stage. Public attention has increasingly turned to the ways in which the WTO has dealt with trade disputes. Similarly, the academic study of the litigation mechanisms of the WTO has grown substantially. This article describes how the DSM works, notes the key differences from the older General Agreement on Tariffs and Trade dispute mechanism, and discusses some trends in WTO dispute settlement. After a brief overview of the workings of the DSM, it addresses major conceptual and theoretical issues associated with the DSM, including the fundamental question of why international trade agreements need dispute settlement provisions, and what shape might they take. The article also provides an overview of scholarship on major questions on the WTO's DSM, such as legalization, dispute initiation, and third party litigation.