The Effectiveness of the Dispute Settlement Body of the World Trade Organization: An Analysis of its First Twelve Years of Existence and Proposals for its Improvement

Abstract

Purpose – The purpose of this paper is to analyse the performance of the Dispute Settlement Body (DSB) of World Trade Organization (WTO) performance, between 1995 and 2007, as well as to discuss the main proposals for its improvement.

Design/methodology/approach – First, the paper presents the legal predictability of the system; compliance with its procedural stipulations in regard to its proposed timeframes; and the participation of different groups of States within this system. The timeframes are compared with those that really happened. Thus, there is an analysis of the effectiveness of its decisions and the necessity to induce compliance and retaliation. Finally, the main proposals to change the system are discussed.

Findings – It is concluded that most of legal procedures are accomplished as previewed by DSB, but the system itself is highly dependent of the action of States, who need time to negotiate. It is also possible to conclude that there is a high level of effectiveness and States prefer to respect the decisions of DSB and maintain the legitimacy of the system as a whole than keep advantages in specific matters.

Originality/value – When the WTO was founded, there was an effort to generate a system guided by legal rules. The DSB has made efforts to maintain a high level of legal preciosity. However, it is clear that this system is still very limited by the traditional method of negotiation among States. The implementation of a rule-oriented system contributes to greater democratization of access to justice and, of course, in a limited way, the principle of sovereign equality of States. Finally, the majority of proposed changes attempt to apply the logic of domestic courts to an international body, assuming a level of organization of the international community as a whole that still does not exist. Others proposals suggest increasing the politicization of the system, which is also not appropriate.

Keywords: WTO, effectiveness, DSB/DSU, reform

JEL Classification: K33