World Trade Organization Dispute Settlement System Research Articles

Maximizing Trade Benefits Through Strategic WTO Dispute Filings: A Quantitative Analysis of Optimal Initiation

The study investigates the asymmetrical distribution of bilateral dispute initiations at the World Trade Organization Dispute Settlement System (WTO-DSS) between specific country pairs. The study introduces a novel concept of dispute depth to examine how the asymmetrical bilateral dispute initiation affects bilateral trade among disputing dyads and to optimize the number of disputes that a country should file to maximize its trade benefit. By using the augmented Structural Gravity Model of trade and the PPMLHDFE estimator with extensive trade data for the years 1995–2022, across selected WTO member countries, the article demonstrates that an increase in the dispute depth decreases the bilateral trade between disputing dyads. Further, the study finds that the WTO member countries should strategically file no more than three disputes per year to maximize their trade gains. The study has important ramifications in the ambiguous world of WTO-DSS and paves the way for implementing the optimal number of disputes into trade dispute strategy, policy-making decisions and business environment of the constantly evolving international trade landscape.

Challenges Faced by Vietnam and Other Developing Countries in Participating in the WTO Dispute Settlement System (DSS)

The World Trade Organization (WTO) is currently experiencing a crisis in its dispute system, driven by an increasing number of disputes, escalating complexity of case law, and the ongoing blockade by the United States of Appellate Body appointments since 2016. This blockade has resulted in significant delays in the WTO’s litigation process, disproportionately affecting developing countries - majority members of the WTO - due to the substantial financial costs associated with pursuing litigation. This study aims to analyze the challenges faced by Vietnam and other developing nations in navigating the WTO dispute system. Employing a qualitative methodology, this research will draw on primary sources including legal documents, official WTO reports, and governmental statements. The findings are expected to highlight the limitations of current WTO regulations, the inadequate support from the Advisory Centre on WTO Law (ACWL), and the financial obstacles that deter developing countries from participating actively in the Dispute Settlement System.

From Confrontation To Coexistence: An Appeal Opt-Out Arrangement As An Inclusive Approach To Revive The WTO Dispute Settlement System?

Resolving the crisis in the dispute settlement system is a priority issue for the reform of the World Trade Organization (WTO), and Members have made sustained efforts in this regard. Since the Twelfth Ministerial Conference (MC12), discussions on the dispute settlement system have entered a new phase, focusing on facilitator-organized meetings and proposals from Members. The reform negotiations have made some progress, but still face a number of significant challenges, in particular with regard to the appellate procedures. It is highly uncertain whether a comprehensive solution can be reached by 2024 as mandated by the MC12. Taking into account the different positions of Members and the imminent approach of the Thirteenth Ministerial Conference (MC13), this paper recommends that Members show more pragmatism and flexibility, puts forward a compromise proposal to establish a multilateral arrangement that would allow Members to opt out of the appellate review process under the Understanding on Rules and Procedures Governing the Settlement of Disputes ( DSU), and argues that this could be conducive to restoring a fully and well-functioning dispute settlement system. WTO, Appellate Body Crisis, Dispute Settlement Reform, Opt-out Arrangement

WTO International Trade Dispute Settlement System and Benefits for Indonesia

International trade is one of the essential pillars of the global economy. International trade can improve people's welfare through increased productivity, diversified production, and lower prices of goods and services. In international trade, it is not uncommon for disputes to occur between business actors from different countries. This study examines the international trade dispute settlement system in the World Trade Organization (WTO) and its benefits for Indonesia. This research uses normative legal research methods. The data collection technique used in this research is a literature study. The data analysis technique used in this research is qualitative analysis. The results show that the dispute settlement mechanism through the WTO is part of the WTO adjudication function as a world trade organization. The stages of dispute settlement involve consultations, panel formation, panel procedures, and ratification of panel reports, judicial review, and implementation. For Indonesia, participation in the WTO dispute settlement system brings several benefits, such as increasing legal certainty in international trade, protecting Indonesia's trade interests, and increasing the competitiveness of Indonesian products in the international market.

The WTO and Using Digital Economy Technologies: Surviving the Race With Preferential Trade Agreements

This article examines the potential of Artificial Intelligence (AI) and blockchain technologies to help resolve trade disputes, facilitate multilateral trade and increase efficiency within the World Trade Organization (WTO). It looks at how AI and blockchain can be used to automate more complex trade processes, such as anti-dumping measures. The article also outlines the challenges associated with implementing such technologies, such as the need for developing countries to invest in infrastructure, the need to ensure correct data is available, and the potential for future regulatory challenges. Finally, it identifies the key measures that must be taken before AI and blockchain can become part of the WTO dispute settlement and trade facilitation system. WTO, Digital Economy, Artificial Intelligence, Trade Facilitation, Dumping, Dispute Settlement

MULTIPARTY INTERIM APPEAL ARBITRATION (MPIA) AND ITS IMPORTANCE FOR THE REFORM OF THE WORLD TRADE ORGANIZATION

Since 2016, the World Trade Organization (WTO) has 164 members representing over 98% of world trade. One of the main achievements of the WTO is considered to be the strengthening of the dispute settlement system, which has effectively countered the intensification of protectionist tendencies in the global economy. However, the paralysis of the Appellate Body has deprived the world trading system of an enforceable dispute settlement mechanism. To address this difficult situation, an alternative mechanism, called the Multi-Party Interim Appeal Arbitration Arrangement (MPIA), has been set up at the initiative of the EU, which, in the face of the paralysis of the central appeals body, provides a binding, two-stage and independent adjudication process. From the analysis carried out in the study, it can be concluded that the MPIA is an important tool for stabilizing the WTO dispute settlement system, and due to its potential to bring about changes in this system, the MPIA can serve as an initiator of reforms in one of the key areas of the organization’s operations. To achieve the objectives of the study, the analytical and descriptive method, as well as the case study method, were mainly used. The considerations were based primarily on source materials and scientific studies, as well as data from WTO resources.

The WTO dispute settlement system as a forum for climate litigation?

AbstractThis article examines whether and to what extent the dispute settlement system (DSS) of the World Trade Organization (WTO) could and should serve as a venue for international climate litigation. The article tackles these questions in three parts. First, it maps the nature and features of a trade‐related climate litigation. Second, it considers the prospect of such litigation under existing substantive and procedural rules of the WTO. Third, it investigates whether the WTO DSS should serve as a venue for climate litigation. The article finds that while the prospect of pro‐climate litigation remains limited, anti‐climate litigation is likely to increase, and that the DSS is an appropriate venue for adjudicating such disputes.

WTO Dispute Settlement: Crown Jewel or Costume Jewelry?

AbstractThe dispute settlement system of the World Trade Organization (WTO) knew considerable success in its early years, being described as the WTO's crown jewel. In recent years, the jewel has become tarnished. Its principal actor – the Appellate Body – is no longer functioning, and the practice of the membership has been to appeal almost all new panel reports, thereby consigning them to a legal limbo from which they seem unlikely to ever emerge. This paper briefly reviews the record of the WTO dispute settlement system, considers the problems that led to its current state and evaluates various proposals that have been made to reinvigorate the system.

Preventing the Bad from Getting Worse: The End of the World (Trade Organization) As We Know It?

Abstract Recent survey evidence illustrates that many World Trade Organization (WTO) members and trade practitioners believe that the WTO dispute settlement system needs improvement. We make several proposals to improve the operation of WTO conflict resolution, drawing on proposals made by WTO members in the long-running negotiations to improve WTO dispute settlement procedures. We argue that a focus on technical dimensions of dispute settlement is insufficient to prevent a steady decline in the salience of the organization. Revitalizing the WTO as a forum for rule-making is needed both to address the cross-border policy spillovers driving trade conflicts between the major trading powers and to improve WTO conflict resolution. Principals – WTO members – should accept that negotiations to clarify and extend existing rules must be an element of a robust system of dispute settlement and that bolstering WTO dispute settlement is a necessary condition for nascent efforts at plurilateral rule-making to be successful.

Restrictions on Trade in Telecommunications: WTO’s Cybersecurity Conundrum

This article examines the role of the World Trade Organization (WTO) in balancing the nexus among a rule-based multilateral trade system, national security, and cybersecurity. It presents a historical account of restrictions placed on the telecommunications trade over national security concerns and focuses on the significant political risks thereof for the WTO if these restrictions are challenged at its dispute settlement system. An analysis based on the WTO Panel rulings in ‘Russia – Traffic in Transit’ and ‘Saudi Arabia – Protection of IPRs’ is revealing in this context. It shows that, despite the obvious cybersecurity concerns, the invocation of the national security exception is not straightforward. The turn to power politics and regionalism highlights the significance of multilateral organizations that provide a more inclusive structure to reflect and protect the interests of all their members, not just those that hold positions of power and control. As long as the stalemate at organizations such as the United Nations (UN) and the International Telecommunication Union (ITU) continues, despite the need for a more legitimate, inclusive multilateral framework, the expectation of a ruling on trade-related aspects of cybersecurity will place an unnecessary burden on the WTO dispute settlement system. Cybersecurity, World Trade Organization, National Security Exception, Telecommunications, Multilateralism, Regionalism, Geopolitics

Reflections on Developing Countries’ Initiation of Disputes in the WTO Dispute Settlement System

The establishment of the World Trade Organization (WTO) has presented a major improvement in international trade liberalization to the benefit, as claimed, of all its members. Such improvement is reflected in the comprehensive legal framework of the WTO trading system, which is based on detailed rules regulating various aspects of international trade, and a dispute settlement system ensuring the implementation of such rules and safeguarding rights and interests associated with the system’s membership. Each of these two elements complements the other. The dispute settlement system needs to be based on comprehensive rules that provide a clear detail on members’ rights and obligations, and such rules are useless in the absence of an effective dispute settlement process that guarantees the protection of members’ rights and the enforcement of their obligations. The efficiency of the WTO dispute settlement system is not only measured by its mechanism’s detail and strictness, but also by its accessibility and ability to accommodate the different positions of all WTO members in a way that ensures an optimal utilization of the system. Developing countries are still struggling in accessing the WTO dispute settlement system and reinstating their violated WTO-protected rights and interests, which undermines not only the integrity of the dispute settlement system, but also the whole organization. This study focuses on the participation of developing countries in the WTO dispute settlement process, outlining the main issues that affect such participation. In doing so, the initiation stage, where countries make the decision to participate or not, is going to be the focus, as it provides a clear indication on the general position of developing countries in the process of dispute settlement in general. WTO, Dispute Settlement, Developing Countries, Developed Countries, Initiation Stage

Remarks by Cherise Valles

The dispute settlement system of the World Trade Organization (WTO) had long been viewed as the “crown jewel” of the multilateral trading system. In just over twenty-five years, in various proceedings under the dispute settlement understanding (DSU), the WTO dispute settlement system was prolific and thorough. There have been nearly four hundred adopted panel and Appellate Body reports (including compliance panel proceeding under DSU Article 21.5), twenty-five decisions notified under arbitrations on determining the amount of retaliation under DSU Article 22.6, thirty-eight awards to determine the implementation period under DSU Article 21.3(c), and one stand-alone arbitral award under DSU Article 25. This output has attracted attention in other international tribunals, notably the International Court of Justice (ICJ). In the 2007 Pulp Mills case before the ICJ, the WTO was commended as having contributed the most to the development of “best practices” in the evaluation of evidence submitted during the course of dispute settlement proceedings.

U.S.-China Trade Relations in the Biden Era: Trade War, Industrial Policy, and Rule-Based International Order

Presidential candidate Joe Biden's team declared President Trump's trade war with China a failure when Democratic nominee Senator Kamala Harris told Vice President Mike Pence at the U.S. vice presidential debate that “You lost that trade war.” Half a year has passed since Biden took over the White House, the U.S.-China trade war is still going on, though in a much less pompous manner than what President Donald Trump once liked it to be. President Biden refused to make significant change to Trump's tough stance on U.S.-China trade relations on the ground of the accusations of China's “stealing” intellectual property (IP), state subsidies to enterprises, forced technology transfer from foreign companies, among others. On the other hand, China has not backed off from the trade war, though it arguably made many concessions in the so-called “Phase 1 trade deal” signed by the United States and China on January 15, 2020, in which China pledged to buy US$ 200 billion more of American goods and services in 2020 and 2021, in addition to the commitments to strengthen protection and remove forced technology transfer. Evidence suggested that China was still far behind prorated targets of a full year when Biden assumed presidency in January 2021. More significantly, Chinese President Xi Jinping has been taking the opportunities offered by the trade war to remake the Chinese economy toward state capitalism. Additionally, as the trade war was happening, the Trump administration intensified its assault on the multilateral trading system under the World Trade Organization (WTO) and effectively paralyzed the Appellate Body, a crucial part of the WTO's Dispute Settlement System.

Judicial Conflicts between Panels and the Appellate Body in the WTO Safeguard Jurisprudence

Interestingly, there occur huge discrepancies in understanding and interpretation of the safeguard system between the World Trade Organization (WTO) panels and the Appellate Body (AB), even in its core concepts ranging from pre-conditions such as unforeseen developments to import increases, causation, types of injury, and permissible extent of the measure. These phenomena, which originate from the different approaches – contextual or literal – have contributed to the current debacles in the WTO dispute settlement system as well as egregious misuse of safeguard measures by WTO members. Future endeavours to reform the WTO system should therefore pay more attention to the safeguard system, especially where it causes unsettling jurisprudence.

Neo-Liberal, State-Capitalist and Ordo-Liberal Conceptions of World Trade: The Rise and Fall of the WTO Dispute Settlement System

This contribution begins with an overview of the historical evolution of international trade leading to, today, five competing conceptions of international economic regulation (section I). The more some areas of trade regulation (like trade remedies, subsidies, internet services, intellectual property rights, appellate review) became dominated by business-driven, neo-liberal interest-group politics (section II), or are circumvented by non-transparent practices of state-capitalism and state-owned enterprises (section III), the less successful have the ‘regulatory functions’ of the World Trade Organization (WTO) become. From the entry into force of the WTO Agreement in 1995 up to 2020, the more than 420 WTO panel, appellate and arbitration findings – similar to the, by now, more than 1,020 publicly known investor-state arbitration (ISA) cases and related national court decisions (e.g. enforcing ISA awards) – protected higher degrees of transnational rule-of-law in worldwide trade and investment relations than in any previous period (section IV). Compared with rule-of-law among the 30 member states of the European Economic Area, however, ordo-liberal European economic constitutionalism has limited market failures, governance failures and rule-of-law deficits through more comprehensive judicial remedies and ‘constitutional methods’ than in neo-liberal and state-capitalist economies (section V). Since 2017, the hegemonic US assault on the WTO legal and dispute settlement system has disrupted WTO appellate review by re-introducing power politics (section VI). Similar to the criticism of neoliberal ‘investor biases’ in commercial ISA, some WTO Appellate Body judges from the USA revealed political biases in support of neo-liberal, US trade policies (section VII). Justice, democratic constitutionalism and rule-of-law require protecting impartial WTO third-party adjudication as a precondition for rules-based, multilevel governance protecting global public goods like ‘sustainable development’, climate change mitigation, poverty reduction and public health for the benefit of citizens and their human rights, yet with due respect for legitimately diverse ‘constitutional pluralism’ (section VIII).

United States—Anti-dumping Measures Applying Differential Pricing Methodology to Softwood Lumber from Canada

This dispute, brought by Canada against the United States, constitutes another chapter in three separate sagas: the enduring softwood lumber dispute between the two North American nations; the debate over the acceptability of the practice of “zeroing”; and the fight over the value and role of World Trade Organization (WTO) Appellate Body precedent. Notably, the panel departed from established Appellate Body decisions finding, inter alia, that zeroing was permissible under a weighted average-to-transaction (W-T) methodology. This departure is remarkable, not just because it runs counter to prior jurisprudence, but also for the reasoning supporting it and the circumstances in which it occurred. Indeed, the Panel Report was issued in the midst of a crisis of the WTO dispute settlement system arising from the United States’ decision to block the reappointment of Appellate Body members. The United States justified this action, which eventually resulted in the Appellate Body losing its quorum to hear new appeals on December 10, 2019, on the basis of complaints, among others, that the Appellate Body had championed an approach to precedent that the United States found incompatible with the intended role of dispute settlement within the WTO. While members worked feverishly to formulate a compromise that might respond to the United States’ criticisms and soften the effect of the Appellate Body's approach, the Panel suggested its own. Thus, it found room to depart from prior precedent (which the United States argued had been wrongly decided) while paying lip service to the Appellate Body.

Rule-of-Law in International Trade and Investments? Between Multilevel Arbitration, Adjudication and ‘Judicial Overreach’

Arbitration and adjudication aim at protecting rule-of-law, which was a life-long concern for Prof. Giorgio Bernini. The United Nations (UN) have defined ‘rule of law at national and international levels’ as ‘a principle of governance in which all persons, institutions and entities, including the State itself, are accountable to laws that are publicly promulgated, equally enforced and independently adjudicated, and which are consistent with internationally recognized human rights’. Such ‘rule of law’ has emerged in worldwide trade and investment law only since the 1990s with the ‘judicialization’ of GATT/WTO law and investor-state arbitration (ISA). Both the World Trade Organization (WTO) adjudication and ISA are today challenged: The power-oriented blockage of Appellate Body (AB) nominations by the USA has rendered the WTO AB dysfunctional; it re-introduced power-politics into the WTO dispute settlement system, limited by voluntary ‘interim appellate arbitration’. ISA is rejected by some developing countries and inside the European Union as a threat to democratic constitutionalism. This contribution discusses these dialectic developments, i.e. ISA reforms aimed at strengthening ‘public law adjudication’ inside and beyond the European Union; the WTO appellate court system being transformed into voluntary arbitration in response to alleged ‘judicial overreach’; and multilevel judicial cooperation inside the EU, where the German Constitutional Court has - for the first time since the beginning of European economic integration in the 1950s - refused complying with a judgment of the European Court of Justice (CJEU) on the ground that the CJEU and the European Central Bank exceeded their limited powers ‘arbitrarily’ due to their insufficient ‘proportionality justification’ of encroachment on national economic and fiscal policy powers. How can rule-of-law, constitutional and ‘deliberative democracy’ and judicial comity be protected in multilevel, judicial cooperation among national and international courts?

The WTO Legal and Dispute Settlement Systems in Times of Global Governance Crises

This contribution begins with an overview of current global governance crises (I). Due to the ‘perspectivism’, ‘bounded rationality’ and ‘conflicting instrumentalization’ of law by politicians, the social, economic and political disagreements inside and among states often prevent reasonable crises responses, as illustrated by the increasing conflicts between neo-liberal, state-capitalist and European ordo-liberal conceptions of international economic regulation (II). The hegemonic nationalism driving President Trump’s ‘trade wars’, his assault on the World Trade Organization (WTO) and the US destruction of the WTO Appellate Body reflect what Nobel Prize laureate A.Einstein called the ‘madness’ of using obviously wrong methods for resolving problems; without protecting the WTO legal and dispute settlement system against money-driven, nationalist power politics (III) and maintaining the independence and impartiality of the Appellate Body (IV), the needed WTO reforms, mitigation of climate change, and coherent responses to global health and environmental emergencies appear impossible (V). The failures of ‘member-driven WTO negotiations’ suggest that adjusting the world trading system to the global governance crises may require pluri-lateral and regional reforms before the needed WTO adjustments may be possible (VI).

Panel: Dispute Settlement System of the World Trade Organization (WTO)

This entry in the Max Planck Encyclopedia of International Procedural Law, titled Panel: Dispute Settlement System of the World Trade Organization (WTO), comprehensively covers all aspects of dispute settlement before WTO panels, as well as panel proceedings within the overall WTO dispute settlement system. This includes informal and formal consultations; the establishment and composition of panels; the sequence of proceedings; access for non-disputing parties; and the role of of the WTO Secretariat. The article also covers various elements of the panel process, including terms of reference, the standard of review, the applicable rules of interpretation, questions of evidence, the use of experts, the confidentiality of panel proceedings, panel expenses, and impartiality. It finally touches on how developing countries participate in the panel process and what the consequences are of the WTO's Appellate Body suspension.

The European Union Faces the Crisis of the WTO Dispute Settlement System: Tensions between Multilateralism and Unilateralism in International Trade Law

The paper explores the reaction that the European Union has put in place in order to face the crisis of the Appellate Body, one of the pillars of the complex mechanism that governs the settlement of international trade disputes in the framework of the World Trade Organization (WTO). Objective of the Union’s action is to preserve as much as possible the rule-based character of the system in a very difficult situation where multilateral trade relations based on shared and mutually accepted rules appear in jeopardy for the blockage of the appointment of AB members due to the U.S. government’s veto. The European Union’s initiative that led to the adoption of a Multi-Party Interim Appeal Arbitration Arrangement on March 27, 2020 was instrumental in preserving to the greatest extent possible the rule of law principles, especially the binding character of the dispute settlement system, the availability of two levels of adjudication, the independence and impartiality of the appellate review. The paper also considers the unilateral action of the Union, aimed at protecting the interests of European economic operators faced with a lack of certainty in the adjudication of international trade disputes. The paper argues that the WTO crisis is just a symptom of a much more diffuse disease of the international, multilateral and institutionalized legal system. In this difficult context the EU needs to be ambitious. It’s appropriate and understandable that it enhances its unilateral firepower, but at the same time it must exercise at the maximum level the influence it derives from its unique experience as a legal system based on an integrated and multilevel approach to policy making and human rights protection.