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The Crisis of WTO Dispute Resolution System

Abstract

The existence of a mechanism for resolving international trade disputes (IFAs) within the framework of the World Trade Organization (WTO) is one of the most significant advantages of this organization and is important not only from an economic, but also from a political point of view. Over the 25 years of the existence of the WTO and, accordingly, of the universal dispute resolution mechanism (IFA), it has been possible to achieve greater transparency in the application of the rules, create a precedent base and enable countries to defend their positions on the application of trade policy measures based on a universally recognized mechanism. Proponents of the functioning of this mechanism argue that it helped prevent trade wars while protecting the rights of smaller states in the WTO. In turn, the critical arguments are that only the most powerful states capable of effectively defending their arguments can really take advantage of this mechanism. The allegations of critics have been confirmed recently when D. Trump’s policy of “restoring” American greatness and domination (Make America Great Again) turned this “working” tool into a political tool, which drove the system into a deep crisis and, moreover, questioned the effectiveness of the WTO at large. In the process of forming the WTO, IFAs and representatives of its member countries strove to maximize the transparency, fairness and independence of decisions based solely on the agreed upon principles and procedures. At the same time, in 2019, the DSM was in a crisis situation due to a violation of the procedural principles by some of its participants, due to which, in particular, the work of one of the most important elements, the Appeals Body, was practically paralyzed. The purpose of this article is to identify the main causes of the current crisis of the IFA and to substantiate the need for its reform within the framework of the WTO reform, taking into account the positions of individual members of the Organization. After analyzing the main causes of the crisis, as well as the proposals of individual researchers and the arguments of countries, the authors draw conclusions about possible solutions to the problems that have arisen, reflecting on the political nature of the problem and the need to maintain this mechanism as one of the foundations of the modern multilateral trading system.

Keywords:

WTO Dispute settlement mechanism; multilateral trading system; political influence; WTO reform.

 


Authors: Tatiana Isachenko, Oleg Savelyev

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