Quick Win No. 6
Reform the WTO dispute settlement mechanism to support a rules-based multilateral trading system
The WTO dispute settlement system is vital for enforcing WTO rules and providing security and predictability to the multilateral trading system. While the system has been by and large effective over the past 30 years, its practical application over time has made clear that some aspects need improvement or clarification. Accumulated dissatisfaction of some WTO members over certain features of the system, especially related to appellate review, led to a deadlock in the appointment of Appellate Body members to replace those whose terms of office had expired. This situation came to a head in December 2019, when the Appellate Body became non-functional due to a lack of quorum.
As a result, the right to obtain appellate review of legal findings by WTO panels and the automatic adoption of dispute settlement reports—two essential characteristics of the current WTO dispute settlement system—have effectively been lost. Because the right to appeal exists in the WTO rulebook but cannot be operationalized, final resolution of a dispute cannot be achieved if a party seeks an appeal. Currently, in the 31 disputes pending before the dysfunctional Appellate Body, WTO members are unable to obtain a final determination on the WTO-consistency of challenged measures, undermining a central feature of the current WTO legal architecture.
Against this background, dispute settlement reform is a priority for WTO members. In June 2022 at their 12th Ministerial Conference (MC12), WTO Ministers agreed “to conduct discussions with the view to having a fully and well-functioning dispute settlement system accessible to all members by 2024.” Informal interest-based technical discussions convened in February 2023 resulted in a consolidated text on dispute settlement reform, which contains suggestions for improving the system but does not address the issue of appeal/review. Several WTO members have critiqued this text in their own papers. At the 13th Ministerial Conference (MC13), Ministers acknowledged progress and directed officials to accelerate discussions to achieve the MC12 target by the end of 2024.
Since MC13, WTO members have taken significant steps toward the goals set at MC12 and reaffirmed at MC13. Key developments include formalizing the dispute settlement reform process and appointing a facilitator, steps which have set members on the right path to meet the 2024 deadline. The facilitator is working with a group of six co-convenors, nominated by WTO members at the expert level, to address outstanding issues, including on the topics of appeal/review and accessibility.
The collective efforts of WTO members, as demonstrated in recent Ministerial Conferences and ongoing discussions, reflect a strong commitment to reforming the dispute settlement system. The strong political signal sent by Ministers at MC13 indicates that members are expected to finalize the reform discussions by the end of the year. Given the foundational role played by dispute settlement in the WTO, achieving such reform would be a significant win for the international trading system.
