Restoring the World Trade Organization’s crown jewel

Source: The post is based on the article “Restoring the World Trade Organization’s crown jewel” published in The Hindu on 10^th July 2023.

Syllabus: GS 2 – Important International Institutions

Relevance: concerns associated with WTO’s dispute settlement system (DSS)

News: In June 2022, at the Geneva ministerial conference, the member-countries of the World Trade Organization (WTO) reached a crucial agreement.

Recently, an agreement was reached for revival of the WTO’s dispute settlement system (DSS) by 2024, also known as the “crown jewel” of the organization. DSS has been paralyzed due to the non-functioning of its appellate body since 2019.

What is the Dispute Settlement System of the WTO?

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What are the reasons behind the non-functioning of the appellate body of the DSS?

The United States has blocked the appointment of appellate body members, making it inactive. It has criticized the appellate body of the WTO for exceeding its institutional mandate and engaging in judicial overreach.

One of the main concerns raised by the U.S. is that the appellate body has been creating binding precedents through its decisions, which goes against the WTO’s dispute settlement understanding (DSU).

It is well-established that there is no rule of stare decisis, i.e., no rule of precedent in international law. It is system followed by Courts under which Courts refer to the previous, similar legal issues to guide their decisions.

Further, the WTO’s DSU also makes this clear in Article 3.2 by stating that the appellate body rulings can neither add nor diminish the rights and obligations of WTO member-countries.

Therefore, the appellate body needs to ensure consistency in the interpretation and application of WTO agreements without establishing binding precedents.

However, the appellate body has encouraged WTO panels to consider previous interpretations, only in similar cases, while it has also departed from previous rulings which have cogent reasons.

Moreover, other appellate bodies, such as the International Court of Justice and the International Tribunal for the Law of the Sea also follow past decisions.

Why are other strategic reasons behind the United States blocking the appointment of DSS’s appellate body members?

The United States appears to have a larger strategy of de-judicializing trade multilateralism.

With the creation of the WTO, governments around the world accepted certain norms of international law to evaluate their actions and gave this authority to international courts, which resulted in the legalization of international relations.

It also led to judicialization of international relations, with the expansion of international courts and tribunals that dominated national decision-making.

This judicialization has raised concerns about the erosion of national sovereignty as countries delegate critical decision-making powers to international courts.

Therefore, the United States, facing the economic challenges posed by China, aims to regain full control over its trade policies by doing away with the judicial review of the WTO appellate body.

Note: According to Daniel Abebe and Tom Ginsburg, De-judicialization is the reverse phenomenon where countries weaken international courts to take back decision-making power.

Must Read: Dispute Settlement System of the WTO: Challenges and Solutions – Explained

What can be the way ahead?

It seems useless to try to restore the WTO’s appellate body through negotiations with the United States. Instead, other countries should try to elect the appellate body members by resorting to voting at the WTO’s General Council meeting.