Sunday, January 8, 2012

Will the Dispute Settlement Mechanism salvage the WTO?

A brilliant blog piece on the Dispute Settlement Mechanism is found in the tradeandenvironmentnexus blog. It states,

"Generally, the sentiment seems to be that even a failed Doha Round would not in a direct or immediate manner lessen the credibility or the functioning of the DSM. Both the stability of the body of case law as well as WTO Members recognition of its utility seem rather strongly indicative of no such negative effects ensuing, at least not in any immediate fashion. However, the effect on the DSM from a failed Doha Round is not something so simple as to be a non-issue. The important point, which may sound like heresy to the purist lawyer, is that the DSM should not be considered as functioning in a vacuum, complete unto itself. Though it seems evident that few Members have serious quarrels with the mechanism as such, this would only be reassuring it from potential political fallout if the mechanism could be considered as being isolated from the political part of the WTO"

Referring to the reality that the DSM does not function in a political vacuum, the piece states,

"Here we enter the realm of power and politics but, again, if one accepts that ultimately the DSM does not function in a vacuum, such a discussion is unavoidable. There may be an element of power shifting between WTO members that has evolved over time, influencing the actions of the Appellate Body. Most seem to agree that there indeed seems to be a greater degree of activism by the Appellate Body in recent times as compared to its earliest decisions. The reason for this is subject to debate, but it is perhaps not implausible that the power dynamic of the WTO was heavily skewed toward a few major players during the early years, as opposed to the more dispersed power landscape we see today. A more activist approach taken in recent times may thus not be the manifestation of increased confidence or security in the body of legal decisions, but rather (or also) be simply a reflection that whatever the Appellate Body decides in recent times will lead to one of many major players being upset. Faced with such a modern bind, it may actually afford the Appellate Body more freedom to focus on reaching the right decision than what they might have dared during the early days. The flipside is that focusing on the ‘right’ decision also often is one and the same with increasing the degree of activism when the dispersed power landscape effectively blocks political progression."

The “legal” nature of the DSM is highlighted as against the “political economy” of the multilateral trade negotiations. While one would like to believe that a strengthened DSM is a positive for a “rule-based” multilateral trading system with “legality” overpowering “political might”, one needs to be cautious about ignoring the political economy of trade as manifested in trade negotiations. The DSM has been recognised as one of the halmarks of the WTO and as an independent arbiter of rights and obligations of WTO members irrespective of political power or trading might. How effective it will remain in the context of failed political negotiations would be an interesting study in times to come.

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