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17 July 2019

WTO Dispute Settlement: Know the Ropes and Act

Source: ULF


In the light of current political discourse, one could well believe that the golden age of globalization is over. Instead, a new era of sluggishness called “slowbalisation” has appeared on the horizon. This is true to a certain extent. Business now faces an unprecedented and turbulent trade environment around the globe, as more and more governments are introducing various protectionist measures to close their internal markets and decrease import flows. This makes the business landscape very unpredictable. Whereas previously business could forgive a restrictive measure, now it is vital to fight against any such measure. The reason is that while some export markets are closing rapidly, unprotected markets are being flooded with imports even faster. In this article, our aim is to shed light on the most effective instrument to open restricted export markets — WTO dispute settlement.

Look At The Data

In the 24 years since it was established, more than 570 disputes have been brought to the WTO. According to official WTO statistics, more than 65% of WTO Members have engaged in dispute settlement as a complainant, respondent, or third party. Among the most active participants are the US, the EU, Canada, China, and Japan.

Efficient or Not!

The primary objective of the system is to settle disputes, not to pass judgements. Therefore, for the sake of prompt and effective dispute settlement, the procedure starts with consultations allowing the parties to reach a mutually agreed solution. This mechanism works — around 20% of all disputes reached settlement during consultations. If a mutually agreed solution cannot be worked out, the dispute is settled through adjudication, involving examination of the case by panels and, if applicable, by the Appellate Body.

The compliance rate for WTO dispute settlement rulings is remarkably high (around 80-90%). At any case, if the “lo- sing” party fails to implement the ruling, it usually faces countermeasures (trade sanctions) and not only in the same sector where the violation was found. For example, a WTO-inconsistent measure relating to agricultural products can be retaliated with an increase of import tariffs on metallurgy or chemical industry products. This makes the system more efficient.

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