New Process for WTO Dispute Reform

With the enforcement function of the World Trade Organization having been broken amidst escalating trade tensions, the new facilitator for overseeing the reform of the fractured dispute settlement system has her task cut out, particularly in restoring a binding Appeal/Review mechanism that provides legal certainty in resolving global trade disputes, said people familiar with the development.

At a meeting of the Heads of Delegations, the new facilitator, Ambassador Usha Dwarka-Canabay of Mauritius informed members that she will convene a HoD meeting to discuss the Appeal/Review mechanism, said people familiar with the development.

She informed members that regular technical meetings at the level of experts from member countries will be conducted as well a monthly Heads of Delegations meeting starting with the most sensitive issue of Appeal/Review mechanism, said people familiar with the developments.

“I must say that across the consultations, a common element was a sense of urgency to complete work by 2024 and earlier if possible,” Ambassador Dwarka-Canabady said, according to a statement.

“It is our common responsibility to take care of the system, and I know I can count on your constructive approach,” she added.

In her comments at the meeting, WTO Director-General Ngozi Okonjo-Iweala said: “Let's get it done so that it will be something treasured by each and every member, which means we have to listen to each other and think of the greater good. I'm very optimistic.”

At the recently concluded 13th ministerial conference, trade ministers agreed on the following decision:

“Recalling our commitment made at our Twelfth Session to conduct discussions with the view to having a fully and well-functioning dispute settlement system accessible to all Members by 2024, we take note of the works done thus far.

"We recognize the progress made through this work as a valuable contribution to fulfilling our commitment. We welcome all submissions from Members that help advance our work.

"We instruct officials to accelerate discussions in an inclusive and transparent manner, build on the progress already made, and work on unresolved issues, including issues regarding appeal/review and accessibility to achieve the objective by 2024 as we set forth at MC12.”

Uncertainties

However, it is moot whether the elephant in the room, i.e., the United States, will agree to the
restoration of a robust Appeal/Review mechanism with binding powers, said a trade envoy who asked not to be quoted.
With this being a presidential election year in the United States, there is little or no chance of committing on a strong Appeal/Review mechanism, the trade envoy suggested.

It is, therefore, not clear whether the Appeal/Review mechanism would replace the binding Appellate Body, the highest arm for resolving global trade disputes, or a truncated version of the AB without binding powers will be put , said a legal expert who asked not to be quoted.

Without a binding Appeal/Review mechanism, the WTO’s enforcement function will serve little purpose in providing legal certainty and equity, said people familiar with the developments.

Also, it is not clear how the members intend to proceed with huge volume of work done by the previous informal facilitator, Marco Molina of Guatemala, who was abruptly removed days before MC13.

Apparently, Mr Molina’s removal was due to opposition from one powerful member who seemingly disapproved rapid issuance of drafts on various aspects of the DSS reform, said a trade envoy who asked not to be identified.

While several developing countries use dispute settlement more frequently for safeguarding their rights, many other members of the Global South are not known to have used the DSS that often, said people familiar with the discussions.

In contrast to the continued US opposition to restoring the Appellate Body by filling up the vacancies that Washington had blocked since December 2019, a large majority of developing countries and several industrialized countries want the AB to become functional expeditiously, said people involved in the discussions.