The World Trade Organization (WTO) dispute settlement mechanism has taken great strides towards establishing the rule of law in international trade, that is, a rule-oriented international trading system. In the old dispute settlement system under the General Agreement on Tariffs and Trade (GATT) 1947, which preceded the present dispute settlement system, the contracting parties established panels to resolve trade disputes when they arose among Contracting Parties regarding the interpretation and application of rules of the GATT 1947. This article looks at the role of the Appellate Body in the WTO, and provides an overview of the major principles of WTO jurisprudence that have been established by the Appellate Body. It also considers two sets of critique: for some the Appellate Body has been too literal in its interpretations; whereas, for others, the Appellate Body has overstepped its mandate by going beyond interpretation and into rule making.
Alan O'Neil Sykes
What is the purpose of the World Trade Organization (WTO) dispute settlement mechanism (DSM)? This seemingly simple question has become a source of considerable academic debate. All commentators agree that one purpose of the system is to encourage compliance with WTO obligations, at least some of the time. Beyond this point of partial agreement, however, lie a variety of additional perspectives. This article investigates the extent to which the purpose of the DSM is to ensure compliance, pointing to differing views on whether the system is meant to facilitate efficient breach (and hence the limits of retaliation) or if it is meant to rebalance concessions following breach of obligations. It looks at the legal debate on the purpose of the DSM and explains how it allows members the option to violate WTO obligations for a measured ‘price’ that is tied to the harm done by the violation to the complainants. The article argues that the logic of the system can be best understood ‘as a way to facilitate efficient adjustment of the bargain over time’.