Negotiating the review of the WTO dispute settlement understanding

On 1 January 1995, the Understanding on Rules and Procedures Governing the Settlement of Disputes that governs the settlement of disputes between WTO members entered into force. Since 1998, negotiations to review and reform the DSU have taken place without any results. This study presents the negotiations and the individual reform proposals in their broader context. Policy recommendations on how to advance the DSU review proposed by the author include:

• trimmed ambitions and a focus on technical improvements
• improved integration of developing countries into dispute settlement practice. This is important both as a matter of fairness, and as an instrument to secure their support for and sense of ownership in the system
• inclusion of transition periods
• abandoning the idea of an early conclusion of the negotiations
• rebalancing adjudication and political decision-making

Factors to take into considerations when rebalancing adjudication and political decision-making include:

• imbalance between adjudication and political decision-making as a problem
• weakening the adjustment system
• strengthening political decision-making at the WTO
• taking globalisation into account when using economic perspectives
• correcting the imbalance through an incremental strategy

The authors conclude that the ideal setting for a conclusion of the DSU review negotiations increasingly appears to be the conclusion of the Doha Round. The conclusion of such a round could also include a political settlement of controversial trade disputes between major trade powers, in particular the many trade disputes between United States and the European Commission (EC). A further advantage of concluding the DSU review negotiations in the context of a larger trade deal is that a considerable portion of the uncertainty which is inherent to the context of the DSU review negotiations would be removed.