At the heart of the multilateral trading system created in the 1990s is the World Trade Organisations's and its dispute settlement procedures. It is through these procedures that the many kinks of the international trade flow are worked over. In a world of intense global competition member states of the WTO are attempting to pave the way towards a more just and organised trading system by affecting positive change and finding just ends to economic conflicts through dispute resolutions…
Most importantly, and despite the organisation and efficiency of the WTO in producing resolutions, there is the question of whether or not member states will follow through with panel mandates, most specifically those states with the greatest economic power. Experience so far tells us that state cooperation on panel findings may not be the norm and that attempts at retaliation by complaining states could cause a bitter tit for tat situation in which no one wins.
By the 1990s the predecessor to the World Trade Organisation, the GATT (The General Agreement on Tariffs and Trade), was of limited use in a world of ever increasing economic interdependence. Member states who came to negotiate at the Uruguay Rounds clearly saw the need to move beyond discussions pertaining purely to trade in goods and into to the areas of services and intellectual property. The trading system that was to come out of these negotiations would become the basis of the new multilateral trading system established on January 1, 1995.
The mandate of the newly created WTO was composed of sixteen articles and four annexes which covered the newly adopted issues as multilateral services and intell...
In order for the new system to work there was no doubt amongst the members that it must have a stronger institutional structure.1 Article 3.2 of the WTO Agreement states, "'The dispute settlement system of the WTO is a central element in providing security and predictability to the multilateral trading system.'"2
In order to fully appreciate the importance of the changes made to the process of dispute settlements it is helpful to discuss the nature of dispute settlement under the GATT. Before 1995 complaints of unfair trade practices were heard under the GATT by a panel of independent experts on legal matters. The panel would listen to both arguments and then it would issue a ruling which would in turn have to be accepted by members of the GATT in order for it to take affect. Most often than not the offending nation would vote against the ruling and political and economic pressure would be the only recourse left to make it comply.3 In addition, while these types of pressure may have worked on smaller countries, bigger members of GATT could not easily be swayed by such measures. In this sense the GATT system was completely lacking in adjudication because it did not have "the means to enforce compliance or conduct surveillance of adherence to panel decisions."4 One of the most important advances made during the creation of the WTO charter was the requirement that for panel findings to be reversed the majority of the nations must reject the decision of the panel. This change formally ended with the veto problem by the offending country.
The Uruguay Round also introduced greater discipline for the time limits within which a dispute should be settled. Prompt settlement of an issue was seen as essential if the WTO was to function ...
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