Comment on the collapse of the World Trade Organization’s dispute settlement mechanism and how it affects the countries.

The WTO’s dispute settlement mechanism requires at least three members to function and of the three members currently on the seven-member body, the terms of two members has come to an end.  WTO’s dispute settling mechanism has been its most important function. With the system facing problems there will be no official resolution for many international disputes. 

The problem faced by the WTO appellate body – 

The membership has been reduced to three instead of seven, with the United States blocking appointments of new members, and reappointments of members who have completed their four-year tenures. The US has blamed the WTO for being unfair and has taken the decision to disregard its authority. It believes the WTO has encouraged China to strengthen its economy at the cost of other nations including the US and has done nothing about its unfair trade practices.

Effect on working – 

With the body being understaffed, the backlog of cases has prevented it from initiating proceedings in appeals that have been previously filed in the last year. India has been impacted as a result of this. 

An appeal in a dispute between India-Japan over certain safeguard measures which India imposed on imports of iron and steel products was unable to be taken up. 

Around 20 developing countries have met in India to discuss ways to prevent the WTO’s dispute resolution system from collapsing, but their efforts have not produced the desired results.

Working of the Appellate Body – 

It was setup in 1995 to preside over appeals against judgments passed in trade-related disputes brought by WTO members. It’s dispute settlement procedure is seen crucial to ensure smooth functioning of international trade flows.

Topics: GS-III: Economic Growth Development