To AB or Not to AB? Dispute Settlement in WTO Reform

Abstract

Recent debates on the operation of the World Trade Organization’s dispute resolution mechanism have focused primarily on the appellate body. We argue that this neglects the first-order issue confronting the rules-based trading system: sustaining the principle of depoliticized conflict resolution that is reflected in the negative consensus rule for the adoption of dispute settlement findings. Improving the quality of the work of panels by appointing a roster of full-time professional adjudicators, complemented by reforms to World Trade Organization working practices that reduce incentives to resort to formal dispute settlement, can resolve the main issues that led to the appellate body crisis. Effective, coherent, and consistent World Trade Organization dispute resolution need not include an appellate body. An appropriately redesigned single-stage process can serve just as well, if not better.

WTO Reform: Back to the Past to Build for the Future

“…A central dimension of the 'value proposition' offered by the WTO is independent, third-party adjudication of trade disputes reflected in the principle of de-politicized conflict resolution (Hoekman and Mavroidis, 2020). An effective dispute settlement mechanism is critical for existing WTO agreements to remain meaningful, and for the negotiation of new agreements.…”

“…Both the multi-year review of the DSU and extensive legal scholarship makes clear that there is significant scope to improve the quality of the work of panels and to reduce the recourse to appeals (Hoekman and Mavroidis, 2020). This suggests reform efforts should include a focus on the first stage panel process and the role of the WTO bodies and the Secretariat in helping to defuse and resolve disputes.…”

“…The key goal here should be to maintain the de-politicized nature of WTO dispute adjudication. This need not require an appeals board if WTO members were willing to improve the first stage panel process (Hoekman and Mavroidis, 2020). Most WTO members have made clear, however, that they prefer to maintain the two-stage process.…”

“…The need to consider the panel process as well as the role of the AB reflects the fact that many appeals address matters that are not strictly legal but center on factual matters that the AB does not have a mandate to consider and the heterogeneity in professional background and expertise of panelists resulting from the ad hoc nature of panel appointments. Moving to a standing body of professional panelists would improve the quality of panel findings and reduce the need for appeal (Hoekman and Mavroidis, 2020). 14.…”

WTO Reform Priorities Post-Covid-19

“…A final critical area for reform concerns a central dimension of the 'value proposition' offered by the WTO: independent, third-party adjudication of trade disputes reflected in the principle of de-politicized conflict resolution embodied in the negative consensus rule for adoption of dispute settlement findings (Hoekman and Mavroidis, 2020). An effective conflict resolution mechanism is critical for existing WTO agreements to be meaningful, and for the negotiation of new (plurilateral) agreements with binding policy commitments.…”