The WTO’s mechanism for resolving international trade disputes emphasizes consensus building over unilateral action. The rules governing the system are set forth in the Dispute Settlement Understanding (DSU). The task of adjudicating disputes is delegated to the Dispute Settlement Body (DSB), a special assembly of the WTO’s General Council, which includes all WTO members. The DSB appoints the seven members of the WTO’s Appellate Body.
The multi-stage process of dispute settlement begins with a request for informal consultations between the parties. If the consultations fail to resolve the dispute, the complaining party may request the appointment of a three-member investigative panel. After receiving oral and written submissions from the parties, the panel issues its report and recommendations.
A party may seek appellate review of a panel report, but only with respect to issues of law and legal interpretations developed by the panel. Appeals are heard by three of the seven members of the Appellate Body. The Appellate Body may uphold, modify or reverse the panel’s report.
A panel or Appellate Body report must be adopted by the DSB without amendment unless the DSB decides by a consensus of all its members to reject the report. The respondent may request a reasonable time to comply with the recommendations of a report. If the respondent fails to comply, the complainant may seek compensation or request authorization from the DSB to engage in retaliation.
The DSU provides for a parallel process of binding arbitration if both parties agree to arbitrate their dispute instead of submitting it to a DSB panel. In addition, a party subject to an adverse decision by the DSB may seek arbitration as a matter of right.
It should be noted that many of the covered agreements annexed to the Marrakesh Agreement, such as the Anti-Dumping Agreement or the Customs Valuation Agreement, include specialized dispute settlement procedures that are only applicable to certain types of disputes.
In this 2012 interview, the late John H. Jackson, a former GULC faculty member, discusses the WTO's dispute settlement mechanism and the pivotal role he played in establishing it.