The Effectiveness of the Dispute Settlement Procedure Under WTO - Dissertation Example

The Dispute Settlement Mechanism (DSM) of the World Trade Organisation (WTO), officially known as the Dispute Settlement Understanding (DSU), is the procedure for settling trade disputes between member states that join the WTO. The DSM hailed as a victory of law over politics at the time of its introduction on January 1, 1995, has nevertheless received its share of criticism and critics cite a need for enhancing third party rights, the introduction of an interim review stage, with less-developed nations calling for less expensive dispute settlement that offers them fair protection.

The more controversial set of proposals presented for enhancing the DSU include proposals to enhance the judicial nature of the WTO dispute settlement by creating a permanent Panel body and proposals for enhancing member control over dispute settlement procedures. In addition, proposals exist for reinforcing WTO remedies by providing financial compensation for those who have suffered because of acts violating free trade and proposals for providing financial support for developing countries that participate in the DSU by paying expensive litigation costs.

Despite the criticism of the DSU and the DSM, the view from the more developed world is generally more favorable, with the United States Council on Foreign Relations suggesting that the dispute settlement system presented broad successes in helping Members resolve trade-related disputes and obtain compliance where violations of free trade occurred. It is said that despite the delays where legislative action is required from a member state, the evidence suggests that countries including the more wealthy and powerful states, broadly come into compliance eventually and retaliation is rarely used when the DSU is available as an alternative mechanism to retaliation.

Because nation-states benefit from the rules that guide the WTO and because there are ongoing negotiations that require member states.