India on Wednesday made a strong pitch for immediate restoration of the appellate body of the World Trade Organisation (WTO)’s dispute settlement system pending the outcome of the discussions on reform in the area.
During the working session on Dispute Settlement Reform India and some other WTO members singled out the US for its role in making the appellate arm of dispute settlement system non-functional since 2019, by blocking the appointment of its members
“This has called into question the WTO’s overall credibility and the rules-based trade-order it upholds,” India in its intervention said.
The US, whose actions led to the whole dispute settlement system becoming non-functional, has now started engaging on the issue of Dispute Settlement Body’s reforms in an informal setting. It wants an entirely new system that some officials say relies more on negotiation and does not have an appellate body as the litigation in the legacy system is costly and time consuming.
The European Union has also talked of dispute settlement reform and backed the US’ approach.
India said informal organisation of the reform discussions made it extremely difficult for developing countries to participate effectively, particularly the least-developed countries (LDCs).
The chair of the DSB should be guiding the dispute settlement reform, Indian officials stated the transition to formal setting should not just be a mere formality but results in an effective multilateralization of the process.
Members should be provided an opportunity to bring in new proposals at any stage, and the resulting text should be fully representative of the views in the room and be consensus-based, with hybrid participation being permitted.
There are two main ways to settle a dispute once a complaint has been filed in the WTO. Either the parties involved settle it among themselves or they may move for adjudication. The ruling of the dispute settlement body can also be challenged at the appellate body. The US had derailed the dispute settlement system after it lost many disputes at the WTO
The dispute settlement system at the WTO has been in limbo since the US in 2017 started blocking appointments to the appellate body of the dispute settlement system as the judges there retired. By 2019 the system became non-functional. Since 2020 all seven seats of the appellate body have been vacant.
This has resulted in a situation where rulings by the dispute settlement body of the WTO cannot be implemented as the system of appeal is not available. Normally more than 70% of the rulings by dispute settlement panels end up in appeal. Since December 2019, over 20 appeals have been filed for appeal and are in limbo.
At various occasions, major trading countries have committed to get the dispute settlement system functional by 2024. The US is also not gone back on that deadline but now it has talking of achieving it by year end.