WTO: DSU Reform Chair Releases Preliminary Text

The individual overseeing the informal talks about reforming the World Trade Organization’s (WTO) dispute resolution system has shared a confidential preliminary draft. This draft appears to significantly weaken the enforcement capacity of the WTO, seemingly in alignment with the preferences of the United States, according to those privy to the document.

The initial draft, as viewed by our correspondent, includes a footnote suggesting that the document may eventually take the form of a “Ministerial Decision.” Yet, the final format will be determined by the plenary based on the document's substantive content.

This preliminary draft seems poised to override the existing dispute resolution understanding, potentially rendering the enforcement process less effective. This shift might favor major industrialized nations, according to an anonymous trade official.

The draft proposes strict rules which could limit the functionality of the panel/appellate body. For instance, paragraph 34 states that a Party cannot rely on or introduce evidence from other dispute proceedings under the DSU or any other agreements. Additionally, any information shared during Article 5 procedures, including advice from mediators, cannot be considered in decisions.

The draft details 20 key areas where "factual or statistical information is required", covering topics from Alternative Dispute Resolution (ADR) under WTO, establishment of panels, page limits for submissions, to referrals of interpretations in adopted reports.

These proposed elements could hinder the panel and adjudicators from acting as independent, impartial judges. It also seems to diminish the authority of the two-tier dispute settlement system, remarked an anonymous former trade envoy.

The 31-page confidential draft, introduced by facilitator Marco Molina of Guatemala, was the product of numerous meetings and comprehensive drafting. The footnotes explain the intention behind the draft, stating it serves as a foundation for further text-based discussions. 52 delegates contributed to its creation, while all WTO members were invited to partake in the collective drafting process.

A significant portion of the draft seems to echo the suggestions made by the U.S., which some believe is trying to dilute the decision-making power of the WTO's panels and appellate body.

The draft also discusses the importance of alternative dispute resolution methods. Yet, there's concern that such methods might provide avenues for dominant nations to exert undue influence on weaker members, reminiscent of practices seen under the General Agreement on Tariffs and Trade before WTO's inception in 1995.

There's ambiguity in the draft about who categorizes disputes as standard, complex, or exceptionally complex, leaving some to wonder if this falls to the involved parties or the WTO Secretariat.

The draft delves into the "alternative dispute resolution proceedings and arbitration" in its first chapter, detailing definitions, general principles, and procedures. While the initial chapter is focused on alternative dispute resolution, subsequent chapters are yet to be completed and touch on topics like arbitration, appeals, compliance, and more.

Finally, the chapters also provide guidelines for adjudicators, discussions on treaty interpretations, support from the Secretariat, and emphasize transparency, accessibility, and accountability.