The interim dysfunctional way of settling disputes and the reform proposals

The current dysfunctional process of settling disputes in the WTO stops at the phase of Panel Reports because it cannot go to the phase of Appellate Body for appeals since there are no sitting judges at the Appellate Body. This has been wreaking havoc in the WTO secretariat and membership as the DSM pillar is supposed to be the assurance of trade rules being guaranteed to flow smoothly and predictably. It was reported that one of the main frustrations of former WTO Director General Azevedo had been the adamant refusal of the Trump USTR to even discuss a compromise in order to save the Appellate Body.

There is a growing list of disputes that cannot be resolved at the panel stage and are waiting for the Appellate Body to be re-established. This indicates that the stop gap measure of having the DSB attempt to settle all disputes at the panel stage and avoid the need for an Appellate Body is simply not enough.

The EU and a number of other countries have presented an interim solution to the Appellate Body crisis. It is the multiparty interim appeal arbitration arrangement (MPIA). It is open to all WTO Members and can be used as the alternative venue for Parties to present disputes and come to a resolution through arbitration. The proponents have pointed out that this proposal is not at all antagonistic to the WTO, citing that the DSU text itself allows for such arbitration. In Article 25 of the DSU: “1) Expeditious arbitration within the WTO as an alternative means of dispute settlement can facilitate the solution of certain disputes that concern issues that are clearly defined by both parties” [10] It continues to three more points that all indicate that arbitration amongst Parties can indeed move forward for so long as it is agreed on by all participating Parties. This seems like a viable solution except that this MPIA will not have the authority to enforce rulings. The arbitration may solve disputes but if the dispute is not one that can be solved and needs a ruling to implement compensation or retaliation to the offending Party, the MPIA does not have the legal mandate like the DSM does.

[10] Article 25 of the Understanding on Rules and Procedures governing the settlement of disputes The Results of the Uruguay Round of Multilateral Trade Negotiations: The Legal Texts