Restoration of fully functional dispute settlement system of WTO top-most priority, says India

Abu Dhabi: India on Wednesday said that restoration of the fully functional dispute settlement system of the World Trade Organisation (WTO) is the "top-most" priority.

The appellate body of the system had been non-functional since December 2019 due to the blocking of the appointment of its members or judges by the US and this had called into question the WTO's overall credibility and the rules-based trade order it upholds.

This was flagged by India during the working session on Dispute Settlement (DS) Reforms, at the WTO's 13th Ministerial Conference here.

Commerce and Industry Minister Piyush Goyal along with a high-level official team is attending the four-day conference which started on February 26.

"India emphatically called for the restoration of the appellate body as the top-most priority of any reform process, along for effective formalisation of the ongoing informal dispute settlement reform discussions among some members at the WTO," an official statement said.

The WTO is discussing to undertake reforms in the dispute settlement system, which is described as a "Crown jewel" of the Geneva-based 166-member global trade watchdog.

India also wants formalisation of the ongoing "informal" dispute settlement reform discussions.

The informal deliberations are creating hindrance for several nations to participate in the talks and such discussions made it extremely difficult for developing countries to participate effectively.

"India reiterated its long-standing position that a credible and reliable WTO DS system is the bedrock of an equitable, effective, secure and predictable multilateral trading system," it said.

India emphasized that the outcome of any reform process should provide for the restoration of the appellate body, which remains a "top-most" priority for India.

"As a way forward, India sought the immediate and effective formalization and multilateralization of the informal DS reform process by rectifying the procedural and substantive defects," it added.

India proposed a three-point action plan for members and that included providing opportunity to members to bring in new proposals at any stage.

Besides monitoring global exports and imports, the WTO adjudicates trade disputes among the member countries. The dispute settlement body (DSB) is one of the important arms of the organisation.

There are two main ways to settle a dispute once a complaint has been filed in the WTO. The countries find a mutually agreed solution, particularly during the phase of bilateral consultations; and through adjudication, which includes ruling by a panel and if not satisfied, challenging that ruling at the appellate body.

The appellate body is the apex institution for adjudicating disputes.

The smooth functioning of the WTO's dispute settlement mechanism hit a roadblock when the US blocked appointments of members in the appellate body (AB). Though the AB stopped functioning on December 10, 2019, the panels are still working.

Since December 2019, over 20 appeals have been filed in the AB.

According to experts, the US wants to weaken the two-tier system of the dispute settlement mechanism and they do not intend to restore the appellate body.

Developing countries, on the other hand, are of the strong view that a two-tier system is fundamental for the smooth functioning of the dispute settlement mechanism.

Certain developed nations have suggested reforming DSB and that includes finding appropriate alternatives to litigation.

The alternatives include conciliation and mediation; the panels BE restricted to address only those matters, which are necessary to resolve the dispute and resist the urge to pontificate; and no judicial overreach so that members could exercise their power to regulate domestic policies.