Dispute settlement in the World Trade Organization

Dispute settlement or dispute settlement system (DSS) is regarded by the World Trade Organization (WTO) as the central pillar of the multilateral trading system, and as the organization's "unique contribution to the stability of the global economy".^[1] A dispute arises when one member country adopts a trade policy measure or takes some action that one or more fellow members consider to be a breach of WTO agreements or to be a failure to live up to obligations. By joining the WTO, member countries have agreed that if they believe fellow members are in violation of trade rules, they will use the multilateral system of settling disputes instead of taking action unilaterally — this entails abiding by agreed procedures—Dispute Settlement Understanding—and respecting judgments, primarily of the Dispute Settlement Board (DSB), the WTO organ responsible for adjudication of disputes.^[2]

A former WTO Director-General characterized the WTO dispute settlement system as "the most active international adjudicative mechanism in the world today."^[3] Chad P. Bown of the Peterson Institute for International Economics and Petros Mavroidis of Columbia Law School remarked on the 20th anniversary of the dispute settlement system that the system is "going strong" and that "there is no sign of weakening".^[4] The dispute settlement mechanism in the WTO is one way in which trade is increased.^[5][6][7][8]

Since 2019, the WTO's dispute settlement mechanism has been de facto paralysed due to the United States vetoing the appointment of judges to the WTO's Supreme Appellate Body, and without a functioning Appellate Body, no final rulings can be made. This has since severely impacted the effectiveness of the WTO.^[9][10][11] This action has been criticised by many countries, including China, Australia and Mexico, who in 2022 pushed for a proposal to restart the appointment of judges, which was once again blocked by the United States.^[12]