Making a Rules-Based Trading Regime Work: Globalization and the WTO Dispute Settlement Mechanism

Abstract

We discuss the role of the dispute settlement mechanism (DSM) of the World Trade Organization (WTO) in the context of a complex characterization of globalization. The dispute settlement mechanism (DSM) of the World Trade Organization (WTO) is at present a controversial exercise at the international level. Reasonable people disagree as to whether it has enhanced and maintained equality between developing and developed countries. Through examining its concrete provisions, procedures and several important factors such as resource availability and political influence outside the WTO, it can be concluded that there are conditions under which the new rule-based DSM can indeed contribute to promoting developing countries' status in the system. Consequently, the rule-based DSM can provide them with more power to defend their own interests. However, the DSM still does not eliminate the power-based relationships between countries. Developing countries are still affected by biases, which stem from several sources such as high financial and legal resource costs, political pressure generated outside the WTO, declarative WTO legal provisions, etc... A reformed WTO with less asymmetry of power will result in a higher level of global social welfare.