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Dispute settlement under the wto

Individual Assignment Question: What is the role and function of dispute settlement under the WTO? By reference to its institutions, procedures and jurisprudence, comment on the effectiveness of WTO dispute settlement in achieving its intended objectives.

World Trade Organization


World Trade Organization (WTO) is the only international body that governs trade between countries. WTO is a multilateral trading system governed by an agreement which contains the basic rules of international trade as a result of negotiations that have been signed by the state member countries. The agreement is a contract between the state-members that bind the government to comply in the implementation of trade policy. Although signed by the government, its main purpose is to help producers of goods and services, exporters and importers in trade activities.

Origin of WTO

World Trade Organization was created on 1 January 1995 to replace the General Agreement on Tariffs and Trade (GATT – General Agreement on Tariffs and Trade) which included a series of commercial treaties concluded at the end of World War II, in order to facilitate free trade. GATT principles and agreements were adopted by the WTO which was charged with administering and extending them. Unlike GATT, the WTO has a substantial institutional structure.

Effectively, the WTO is long overdue successor to the International Trade Organization which was originally planned to be successor of GATT. International Charter of the International Trade Organization was established in the United Nations conference on trade and occupation, held in Havana in March 1948 but was blocked by the U.S. Senate. Some historians have assumed that the failure may have resulted from fears coming from within the American business community, those that the World Trade Organization (WTO) could be used to regulate rather than to liberalize big business.

History of establishment

The WTO was officially established on January 1, 1995 but the trading system itself has been there half a century ago. Since 1948, the General Agreement on Tariffs and Trade (GATT) – the General Agreement on Tariffs and Trade has made the rules for this system. Since the year 1948-1994 the GATT system includes regulations concerning world trade and generates the highest growth in international trade.

At first the GATT aimed to establish the International Trade Organization (ITO), a UN specialized agency which is part of the system of Breton Woods (IMF and World Bank). Although the ITO Charter was finally approved in the UN Conference on Trade and Development in Havana in March 1948, the process of ratification by the legislative institutions of the state does not run smoothly. The most serious challenge came from the United States Congress, that although as a trigger, the U.S. did not ratify. Havana ITO Charter that cannot be implemented effectively. Nevertheless, the GATT remains a multilateral instrument governing international trade.

Nearly half a century of GATT legal text remained the same as in 1948 with several additions including consent forms (agreed upon by some countries only) and tariff reduction efforts. Trade problems resolved through a series of multilateral negotiations known as the “Round of Trade” (trade round), in an effort to encourage the liberalization of international trade.

Procedure for Dispute Resolution

In disputes between two States, the complaining party may request to enter into consultations with the other party in order to find a settlement to the conflict. This application must be notified to the DSB (Dispute Settlement Body). The other Member States, which show a substantial trade interest to follow these consultations may obtain permission to participate as a third party (nearly a quarter of the conflicts are settled through the mechanism of consultations).

In the absence of settlement, the complaining party may request the DSB to establish a “panel” (panel). The panel generally consists of three persons proposed by the WTO secretariat. Its mission is to examine, in light of the relevant provisions of WTO agreements, the matter referred to the DSB and to make findings as will assist the DSB in making recommendations. The other Member States that demonstrate the existence of a substantial trade interest may be third party and written submissions to the panel. The panel establishes itself of its work schedule and chooses whether to make use of experts. It must make, in principle, its report within six months from the date of formation of the panel. This period may be extended but must not exceed nine months. An amicable settlement is still possible for the panel’s work.

The DSB can meet to adopt the panel report earlier than twenty days not later than sixty days after its distribution to Member States in all three official WTO languages (English, French and Spanish), unless that a Member State, part of the dispute notifies the DSB of its intention to appeal or the DSB decides by consensus not to adopt the report (decision to “negative consensus”).

The Appellate Body has to decide on the panel report within sixty days of notification of the decision to appeal, and no later than ninety days from that date in case of difficulties. The appeal is limited to questions of law and legal interpretations developed by the panel’s report.

The DSB must adopt the report of the Appellate Body within thirty days of its distribution to Member States. It supervises the implementation of decisions and recommendations it has made in light of two reports mentioned above. The party must, in principle, immediately comply with these decisions and recommendations. It may nevertheless have a reasonable time fixed by mutual agreement between the parties or by arbitration. In the latter case, this period should not normally exceed fifteen months from the date of adoption of the panel or the Appellate Body.

In case of disagreement between the parties on the question of whether the party has complied with many recommendations of the DSB, the matter may be brought before a panel that then has 90 days to settle this dispute. The parties may mutually agree to establish a voluntary compensation which aims to “redeem” the lengthening of time in which the defaulting party should in principle remove the illegal measure.

Moreover, within twenty days after the expiry of the reasonable period referred to above, the complainant’s view that compliance measures implemented by the other party are inconsistent with the recommendations of the DSB may apply the DSB to suspend concessions and other rights enjoyed by the other party under the WTO agreements. If the Member State concerned objects to the level of suspension of concessions authorized by DSB, it may request arbitration to verify the adequacy of the level of suspension of concessions to the level of nullification or impairment of benefits.

WTO Decision-Making Methods

WTO, GATT uses the traditional method of making decisions in the voting, but consensus (consensus) method. The members of this procedure, sometimes for the benefit of the multilateral trading system of consensus, the self-interest, provide a good opportunity to be considered. WTO consensus cannot be provided, using the method of voting. In such cases, using each country, one vote, and decisions are taken by majority vote. There are four different method of voting adopted the WTO Agreement.

First, three-fourths vote of the members of the WTO multilateral trade agreement any of the creation of many acceptable.

Second, a quarter of the Conference of Ministers of the three mostly the responsibility of an international agreement can be removed by any member of a loaded.

Thirdly, the provisions of international agreements, but all the members decided to cancel two-thirds majority, depending on the nature of the adoption or decision can be taken. However, this cancellation decisions, may enter into force only after being accepted by WTO members.

Finally, the Ministerial Conference, but two-thirds majority to be a new member after accepting occur.

Dispute Solving

Dispute resolution system, the WTO and the international trading system is an element that provides security and predictability of WTO members through this system, in case of violation of international trade rules against them they do not have the initiative, but would like to try to resolve this situation the multilateral dispute settlement system. In principle, concessions, subject to the punishment should be given to the industry sector that is the same. If this is not applicable or not enabled, the sector may be assigned to a different area of concessions in the agreement. In any case, WTO Dispute Resolution Body (DSB) adopted the recommendations and to monitor the implementation of the rules and any dispute over the status issue, the agenda continues to completely eliminate. Developing Countries and Transition Economies Help 1994 128 GATT member countries at the end of the year by 97 developing countries and countries in transition to market economy is still increasing number of WTO members, further increasing weight of the organization. As a result, the needs and problems of the countries mentioned are of great importance.

As an example, the WTO Secretariat organizes seminars on its own or in cooperation with other international organizations or multilateral trade negotiations and WTO commitments, in practice the effective joining the governments of relevant countries or their experts, provides technical co-operation opportunities. Some of the activities of the WTO as a trade policy and related issues, including conflict resolution, special courses are given. Furthermore, developing countries and least developed countries among them, especially in relation to their exports, trade and tariff information is about and helps these countries to join the WTO.

Trade and the Environment

WTO, trade and environmental issues are connecting to each other. In this respect 1995 was established a committee to deal with in the following topics: multilateral environmental agreements, sustainable growth, environment and trade, market access, especially in the development of exports to developing countries, trade in domestic trading of banned goods, packaging, labels and other recycled materials, trade-related legislations provided at being compatible with each other. Launched in 2001, within the framework of the Doha Development round, the Trade and Environment Committee and the committee was established, environmental products, market access, multilateral environmental agreements – the relationship between the WTO and the development of environmentally sensitive issues such as trade practices linked to the appointment decision.

Organization and Functions of WTO

WTO, 1 January 1995 ‘has been established in. Uruguay Round’ a-party countries on December 15 1993 in Morocco, has completed negotiations in Marrakech in April 1994 in the “Final Decision” was signed by ministers. 15 April 1994 in Marrakech Declaration was declared, and ratified the Uruguay negotiations Roundup Tariffs and the General Agreement on Trade ( GATT ) carried out under the seven-meeting “to strengthen the world economy and more trade, investment, provide employment and income growth” of declared. WTO, not only in terms of membership (in 1994 at the end of 128 members) GATT not much, at the same time, applied in terms of commercial activities and trade policies cover a wider area. GATT, the GATT, trade in goods comprises not only the WTO of goods, services and intellectual property rights, also known as “trade in ideas” at all included.

WTO’s main functions; total as the multilateral trade negotiations by WTO to manage and implement, to serve as a forum for multilateral trade negotiations, trade disputes to seek solutions to control national trade policies and global economic policy-making purposes, cooperation with international organizations in charge to go. WTO agreement, agriculture, textiles and garments, services, intellectual property rights to the rules, separate from the text consists of 29 different areas. In addition to these additional responsibilities and commitments by WTO members, an additional 25 declaration, decisions and agreements are also available. WTO rules are accepted as the traditional agricultural goods, trade in sensitive sectors as textiles and apparel products, and includes. Agriculture adopted rules in terms of market access, rules of domestic production support, export promotion and food safety practices, includes plant and animal health rules. Textile and apparel at the new rules, agreement after the 10-year transition period will be included with the WTO rules.

The first agreement on trade in services, the scope of members of national practices and market access issues and mentions obligations regarding the liberalization of trade in services further underscore a general framework. Market access commitments in financial services negotiations already in progress, the basic communication sectors, maritime transport and migration of people across the border is about the limit. During the talks with other trade-related intellectual property rights in a first aspect (TRIPS), this agreement is only protected by copyright, patent rights, such as bringing a new Gold supports the language of intellectual property rights, as well as geographical indications, industrial designs, trademarks and trade secrets and know-how (process information) is protected by the rights. WTO rules of trade in goods, the anti- dumping practices, subsidies and counter-practices, customs, practices and issues of import license covers. The rules will be applied if the rules in these applications, such as when he describes the agenda.

An agreement referred to above, together with several simple and basic principles always creates a new multilateral trade system. The main rules of GATT, to discriminate between domestic production and imports between the members and prohibits. For example, Article I “Most favoured the country” (MFN) clause applies to any country; a country cannot be less than the stated privilege to other countries. Another distinction of doing the “national treatment” is a goods and domestically produced goods in the market until at least when stated.

Role of WTO

WTO plays a crucial role in regulating the global trade in goods, services, intellectual property, as well as in shaping trade policies of member countries and in resolving trade disputes between them. To understand the significance of this organization, its role in the regulation of international trade, should be considered in more detail the structure, function key agreements and principles which form the legal basis, as well as the benefits of the WTO trading system.

“The main objectives of the WTO – liberalization of international trade and ensure its fairness and predictability, promoting economic growth and economic welfare. There were 151, solve these problems by monitoring the implementation of multilateral agreements, trade negotiations, resolve trade in accordance with the mechanism of the WTO, as well as assist developing countries and review of national economic policies ”

Effectiveness of WTO

Among other issues that merit discussion in the WTO, we can note the corruption in international trade-related, inter alia, government procurement, regionalism, that is, the spread of preferential trade agreements among groups of countries and the impact of world commodity prices on trading profits. In the near future the WTO to solve four major problems:

Necessary to ensure understanding by governments of different countries, what free trade is regulated by multilateral rules – the key to the economic development of both individual countries and the world economy as a whole.

The process of liberalization of markets should equally affect both developed and developing countries, and including should be granted free access to foreign markets for goods and services from the least developed countries (duty-free treatment, the removal of existing quotas) should be improved regimes for investments in these countries, be promote regional cooperation and the gradual equalization of levels of development and competition regulation.

Should solve the problem of universality of the WTO as an international organization: to Russia and other countries, while remaining in her overboard, get rid polarity in the approaches of different groups of countries to regulate international trade relations.

Should be provided a policy of “open regionalism” and the gradual convergence of regionalism and multilateralism in the regulation of world trade.

Summarizing the above analysis, we note that there are two approaches to the problem of the effectiveness of the WTO. Proponents of one approach consider the WTO an instrument by which developed countries in general and U.S. in particular; impose the interests of their business elites to the rest of the world. Proponents see it as another approach, a neutral entity that provides for collective rules and norms that benefit all countries involved in trade. These terms seem contradictory, but actually are not.

All participating countries are interested in trading in the existence of a specific set of common rules, which are considered by their trading partners as legitimate. In this respect, the WTO operates on the common good. Any set of rules includes only some of the theoretically possible set of norms and the selection process favours some countries to a greater extent than others. Since the economic might of the U.S. and other major developed countries is reflected in the process of harmonizing regulations in the elaborated set of such rules is manifested differentiated interests of these countries. With this premise in agreement that the first stages of development of WTO rule-making priorities were primarily associated with intellectual property rights and trade in services, that is, issues that are of greatest interest primarily for the U.S. and other advanced economies.

Recognition of the fact that the rules of international trade cannot help but reflect particular interests, gives rise to two interrelated questions. The first – is worse or less developed countries with an institutional form of regulation of the global economy, as the WTO, than without it.

According to P. Evans WTO regime (i.e. the trade regime, produced by and used under the organizational auspices of the WTO) must be compared not with some idealized global economic democracy, and its most likely alternative, when the processes of intensification of international trade and cross-border movement of factors of production in the course of economic globalization are regulated primarily at the bilateral level, the efforts of the United States and other developed countries.

In such a comparison is quite reasonable to claim that the regulation of world trade through organizations like the WTO gives the developing countries more opportunities to continue to pursue an independent economic policy. Even more reason to assert that the use of body type the WTO as a kind of filter allows you to expand the institutional capacity of developing countries to protect themselves from the wayward actions which combines ideas of “free trade” with the vested interests of U.S. firms and other states with advanced economies at the expense of poorer countries. From the viewpoint of the “third world” institutionalization, implementation by the WTO almost certainly preferable to a regime controlled countries economic leaders on the basis of real politics.

The second question – whether weaker subjects of international relations through the institutionalization of new opportunities to change the rules to better reflect their interests. That is, can the WTO be the forum in which developing countries could implement rules to more effectively address the problem of overcoming the gap in socio-economic development between developed and developing countries.

Obviously, if a large group of developing countries would be trying to make statement on the vote of any question with reference to the failure to reach consensus, the United States and other developed countries would find themselves in a politically difficult position. Is there a chance that developing countries will reach a compromise on any significant issue (e.g., reduction of agricultural subsidies, the EU)? Hardly, but the obstacles to success, coupled with the WTO is less than the related problems of a general nature that prevent developing countries to take concerted political action. Any move to challenge the proposals of stronger economically and politically partners would have been inevitably linked with the complexity of collective action due to a variety of specific interests of States, united under a common name in developing countries.

It is important to emphasize that the main obstacles to effective political action by developing countries would exist, and regardless of whether the WTO. The influence of the WTO as an institution may well be positive. Moreover, the formally democratic structure of the WTO should serve as an incentive for developing countries to identify common interests and to overcome many obstacles to collective action. The more frequently in practice, countries will be in the settlement of trade disputes, to rely on the WTO and the more thorough and comprehensive to be conducted its institutionalization, the greater the incentive to use it as a mechanism for collective action to rectify the situation.

It would be a mistake to assume that the relationship between national institutions and global governance of international economic relations leads to a fruitless struggle in an attempt to divide a given amount of monitoring powers. Reason, in our view, is to look at the aspect of the complementarily of these institutions. Without creating (or maintaining) a workable institutional framework at national levels the international trade regime that is created now, it may be unviable. This means that the effective functioning of the WTO depends on stimulating the growth of institutional capacity at national level and gain. Otherwise, the global markets will lack the stem-element of local regulatory capacity, which forms an important first line of defence against unwanted instability. Institutions of global governance will undermine even its own institutional structure, unless they work to strengthen institutions at the national level.

Thus, this article has disclosed the institutional nature of the World Trade Organization as a social institution designed to regulate international trade relations. It was also shown the need to analyze the functioning of the Institute of World Economy and proposed framework for the assessment of such performance, including using the principle of alternative (i.e., comparing the current situation with an alternative to institutional matrix of international economic relations, in which there would be no WTO as a multilateral institution regulation of world trade). The author believes that there are a lot of reserves for increasing the effectiveness of the WTO, while preserving the national interests of member countries of the World Trade Organization.

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