Dispute Settlement Mechanism of WTO: Challenges and Solutions

Abstract

The Dispute Settlement Mechanism (DSM) of the World Trade Organisation (WTO) has been recognised as a fundamental element of the multilateral trading system, promoting the enforcement of trade regulations and enhancing predictability in international trade. Nevertheless, the mechanism has faced several structural and political obstacles in the last ten years that jeopardise its effectiveness and credibility. This paper provides a critical analysis of the development, operation, and current crisis of the WTO’s DSM, placing particular emphasis on the standstill in the Appellate Body since 2019, which results from the United States’ ongoing obstruction of judicial appointments. The paralysis at the appellate level has weakened the dispute resolution process and raised concerns about the rule-based framework governing international trade. The study investigates the inherent limitations of the DSM, including delays in adjudication, challenges with compliance, and power imbalances between developed and developing nations. It underscores how these challenges impede fair access to justice for smaller economies and impact the overall trustworthiness of the WTO. It engages with academic discussions and member-state proposals for reform, such as interim arrangements like the Multi-Party Interim Appeal Arbitration Arrangement (MPIA), procedural innovations, and broader institutional changes.  While the WTO’s Dispute Settlement Mechanism is still crucial for sustaining the global trade order, its present obstacles call for immediate reform. Without comprehensive and collaborative initiatives to restore and modernise the system, the future of multilateral trade governance may trend towards fragmentation and unilateralism, jeopardising years of progress in international economic law. This study contributes to the ongoing conversation by suggesting balanced and implementable reforms designed to safeguard the integrity and functionality of the DSM amidst a swiftly changing geopolitical landscape.