WTO's Dispute Settlement Body (DSB) in crisis: What does this mean for business?

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The WTO's Dispute Settlement Body (DSB), sometimes dubbed the supreme court of world trade, is in crisis due to Washington's refusal to approve any new judges for its appellate division.

What is the Dispute Settlement Body (DSB)?

The General Council convenes as the Dispute Settlement Body (DSB) to deal with disputes between WTO members. Such disputes may arise with respect to any agreement.

The DSB has authority to

1. establish dispute settlement panels,

2. refer matters to arbitration,

3. adopt panel, Appellate Body and arbitration reports,

4. maintain surveillance over the implementation of recommendations and rulings contained in such reports, and

5. authorize suspension of concessions in the event of non-compliance with those recommendations and rulings.

The DSB is made up of all member governments, usually represented by ambassadors or equivalent. In June 2019, the chair is Ambassador David WALKER (New Zealand).

President Donald Trump's administration has accused the DSB of overstepping its authority by issuing broad rulings that he says violate national sovereignty.

WTO members "are working hard to find a solution to the appellate body impasse in time to avoid a paralysis," WTO director general told reporters in Geneva.

"But they are beginning to realise that they have to work also with a scenario where no solution is achieved," he added.

The WTO faces a December deadline when, due to mandatory retirements, the appellate body will not have enough judges to hear cases.

"December is not six months away. December is here with us today," Azevedo said, underscoring the urgency of the crisis.

Trump's trade office has previously argued that no foreign court can ever supercede the US legal system, suggesting the US would never surrender final authority in trade disputes to a non-American entity.

"If we don't have a fully functioning dispute settlement system the work that we do will be compromised in many ways," Azevedo said.

Turning to next week's Group of 20 summit in Osaka, Japan, Azevedo said he was hoping the leaders of the world's largest economies would agree to action on reducing global trade tensions.

"We don't see any signs that this trend is abating," he said of the continuing tit-for-tat tariff battles triggered by Washington.

A meeting between Trump and Chinese President Xi Jinping in Osaka "would be a welcome sign," said Azevedo, Brazil's former envoy to the WTO.




Wish to learn more?

Listen to our WTO Podcast on DSB (10 Min)

Watch our webcast "Introduction to the WTO" (10 Min)

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