The WTO and Rules-Based Dispute Settlement: Historical Evolution, Operational Success, and Future Challenges

Abstract

The World Trade Organization (WTO) has three main functions—first, negotiations on trade matters; second, oversight of existing WTO agreements; and third, dispute settlement. The WTO's negotiation function has broken down and its oversight function, while useful and valuable, is the least visible and least significant of the three functions. Thus, the credibility of the WTO as a functioning international organization essentially depends on ensuring the effectiveness of its dispute settlement function. This paper briefly traces the historical evolution of the dispute settlement system under the General Agreement on Tariffs and Trade (GATT) and then considers the current state of the WTO dispute settlement system—how effectively has it operated to date and what operational and procedural problems have arisen? It concludes by examining the challenges the WTO dispute settlement system will face in the coming years, considering, in particular, whether the system will be able to resolve effectively disputes between the major WTO powers—the United States, the European Union and China.