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Dispute Settlement Body Explained

Dispute Settlement Body (DSB) Explained

The Dispute Settlement Body (DSB) is a diplomatic body dealing with trade disputes between the members of WTO. It is convened by the General Council of the WTO and consists of representatives from all WTO member states.

The DSB administers the dispute settlement system by establishing dispute settlement panels, referring matters to arbitration, and adopting panel, appellate body and arbitration reports. It is also responsible for monitoring the implementation of recommendations and rulings contained in such reports and authorizing suspension of concessions when those recommendations and rulings are not followed.

A Little More on the Dispute Settlement Body

All members of the WTO, by virtue of their membership, agree to use the multilateral system of settling disputes. If they believe any of their fellow member states have adopted a trade policy or are involved in an action that contradicts the WTO agreement, they can approach the DSB to resolve the issue.

A trade dispute may arise when a member state violates any agreements contained in the Final Act of the Uruguay Round. The Final Act is annexed by the Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU).

If a member state believes another fellow member state has breached the terms of the agreement, it can call for a consultation with other states. The consultation has 60 days after receiving the request to resolve the dispute. If it fails, the complainant state can appeal to establish a dispute settlement panel, unless DSB by consensus decides anything else. The Secretariat then sets up a panel with three members on an ad hoc basis. The panel asks the parties to submit their position verbally or in writing. The proceedings are confidential and only the representatives of the concerned states are allowed to attend the proceeding or submit before the panel. The panel makes a decision after hearing the submissions and makes recommendations to the DSB. The final version of the report is distributed to the parties involved in the dispute. Then after two weeks, it is circulated among all the WTO members.

Reverse consensus rule is followed in adopting the report. The report is adopted unless there is a consensus of the members against adoption or a party involved in the dispute gives notice for appealing before the Appellate Body. The report needs to be adopted within 60 days from the circulation. The parties involved may approach the standing Appellate Body if they are not satisfied with the legal interpretations developed by the panel in the report.

The Appellate Body has seven members, each serving four-year terms. It is appointed by the DSB with representatives from different WTO member states. They are the individuals with proven knowledge of international trade and laws. Three members from the Appellate body hears the appeal of the party and may uphold the legal interpretations and recommendations made by the panel or they can modify or reverse it.

Usually, the Appellate body gets 60 days to review the appeal, at the most 90 days are allowed. Members can comment on the report of the Appellate Body, but they do not have the power to derail it. If within the 30 days of circulation, DSB doesn’t decide by consensus not to adopt the report, the report is adopted by the DSB and the parties have to accept it unconditionally.

After adopting the report, the respondent state gets 30 days to inform the DSB about the implementation of the recommendations and rulings. If they find it impossible to implement it right away, they can appeal for a reasonable time to comply, This time period should not exceed 15 months.

If they cannot reach a consensus regarding the time period, an arbitrator is appointed by agreement to the parties to settle the issue. If there is a dispute regarding the measures taken by the respondent state to comply with the report, a panel can resolve it. It is preferably the same panel which heard the case.

Even if the respondent state declares that they have taken measures according to the recommendations and the panel and complainant state are satisfied with the measure, the DSB monitors the implementation of the recommendations.

References for Dispute Settlement Body


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