Settling Disputes

Effective and efficient dispute settlement (DS) is fundamental to the international trading system. While trade negotiators may seek to achieve clear and fair rules with a broad degree of consensus and commitment, a DS system is needed to ensure that commitments are honored. In the early days of the General Agreement on Tariffs and Trade (GATT), differences were addressed through bilateral consultations. However, this approach proved inadequate over the years, and in the 1970s and 1980s an increasing number of cases were brought before GATT panels. But many countries did not even bother to contest cases given the delays, different procedures for different issues, and particularly the ability of the defending country to block panel findings. The new rules needed to be more clearly enforceable so that the time invested in developing new rules in the Uruguay Round (UR) would not be wasted by a weak DS system. Most observers hailed the World Trade Organization’s (WTO) new DS rules as a major achievement of the UR. For smaller economies, which had made little use of the GATT DS system, the changes seemed particularly significant. One question to be addressed in this chapter is to what extent the new WTO DS system has lived up to such expectations, and especially in the eyes of the Amerièas. Parallel to the multilateral process, several regional trading arrangements have been signed since the late 1980s, each with its own system for dealing with disputes. With the proliferation of regional mechanisms, the other question for this chapter is what are their relative strengths and weaknesses and what does experience with their use imply. If there is to be free trade within the hemisphere, what would be the most appropriate approach to DS?