World Trade Organization and Dispute Settlement

The World Trade Organization or for short, the WTO started in January 1^st 1995 in Geneva, Switzerland as a successor to the late General Agreement on Trades and Tariffs (GATT). WTO is the only international organization presently created and fully functional to address the issues and dealing with the global rules of trade between nations. It has a function to ensure that trade flows between nations as predictably, smoothly and freely as possible.  The WTO regulates the trade of goods (tangible manufactured goods), services (professions, banks, insurances, IT sector) and intellectual property rights (copyrights, trademarks, trade dress, patents). The main difference between GATT and WTO is that intellectual property rights is more of an issue in a more globalized world than the world of 1947 (the year GATT was created) thus the reason why WTO now addresses that area of International Law.

How Does it Regulate Trade?

The World Trade Organization administrates trade agreements between nations and acts as a forum for trade negotiations. It also specializes in settling trade disputes, reviews national trade policies that may effect international trade, assists developing nations in trade policy issues and cooperates with other international organizations to have more diplomatic and political power and legitimacy.

Dispute Settlement Process

The most significant power of the WTO is the power over dispute settlement. This process makes the WTO the strongest international monitoring agency in history, even more powerful than the previous GATT agreement. The primary purpose of the WTO is not to pass judgments or get involved in international policies but to settle disputes between nations. So a dispute usually arises when one country trades or takes action that a fellow WTO member considers to be violating WTO rules or some previous bilateral agreements. If a crisis cannot be solved bilaterally, then the nations can bring the problem before the dispute settlement body of the WTO.

Stages of Dispute Settlement

Stage One of the process is called “Consultation.” Before taking any further action, the two countries involved in the conflict must take to each other to settle differences. If no results yield, then they can call on WTO and director general to mediate the talks. If it is still not settled, then either party can request a panel to hear the case. Each panel is made of neutral economic experts most respected in their field and least involved with the conflict. A panel has six months to complete its report on the crisis. The Panel does the following:

1. Each side involved in the problem presents their case to the panel and the dispute they are having in writing.
2. The panel will then hold a hearing for each side to present their case.
3. Then a second hearing is held for both sides to present a oral and a written rebuttal to their opponent’s claims and case.
4. The panel submits its first draft of the decision to each side involved in the conflict and allows them to comment on the draft. The draft does not include any findings or conclusions.
5. After review of the draft, an interim report is submitted to both parties involved in the conflict for review. This report includes findings and conclusions. The parties then have a maximum for three weeks to review the report and after the review, the final reports is issues to both sides of the conflict and is circulated to all members of the WTO.

The final report becomes the dispute settlement body’s ruling on the issue in 60 days unless a majority of the WTO members reject the report for whatever reasons. Currently, there are 153 members within the World Trade Organization, the real power of the WTO is that once a decision is made, it is binding to ALL 153 members and it is automatically the final decision in a matter unless a majority or over 80 countries object to the decision.