World Trade Organization: U.S. Experience in Dispute Settlement System: The First Five Years

The World Trade Organization provides the institutional framework for the multilateral trading system. Established in January 1995 as a result of the Uruguay Round of international trade negotiations, the WTO administers rules for international trade and provides a forum for conducting trade negotiations. For the first time, the 1994 Uruguay Round agreements brought agriculture, services, intellectual property rights, textiles and apparel, and trade-related investment measures under the discipline of multilateral trade rules. In addition, the Uruguay Round agreements established a new dispute settlement system, replacing that under the General Agreement on Tariffs and Trade, the predecessor to the WTO. The WTO dispute settlement system provides a multilateral forum for resolving trade disputes among WTO members in four major phases consultation, panel review, appellate body review when parties appeal the panel ruling, and implementation of the ruling. The new system has several important features. It discourages stalemate by not allowing losing parties to block decisions sets firm timetables for completing litigation of cases and establishes a standing appellate body, which helps make the dispute settlement process more stable and predictable. Finally, it allows losing parties to accept retaliation or provide compensation as alternatives to complying with WTO rulings. While the new dispute settlement system facilitates the resolution of specific trade disputes, it also serves as a vehicle for upholding trade rules, preserving the rights and obligations of members under the WTO agreements. Finally, the system clarifies the provisions of specific WTO agreements and provides a climate of greater legal certainty in which trade can occur.