infonet-economy

On 1 January 1995, the Understanding on Rules and Procedures
Governing the Settlement of Disputes (Dispute Settlement
Understanding; DSU) entered into force. Since 1998, negotiations to
review and reform the DSU have taken place ("DSU review"), however without yielding any result so far.

The DSU review exercise has only attracted limited academic interest so far. This lack of interest in Members' proposals and negotiations is rather astonishing, particularly if judged in the light of the general explosion of literature on the World Trade Organisation (WTO),
including on its dispute settlement system. Whereas even single
adjudicating decisions such as the rulings in the Shrimp/Turtle or the
Bananas Cases have each become the subject of countless contributions, the efforts of the entire WTO community to make the DSU evolve further have long been neglected. Only recently, a certain academic interest in these negotiations and in the submitted proposals can be noticed.
The over-emphasis of the DSU literature on rulings and recommendations, and the parallel lack of interest in the political discussions on the DSU, is questionable from both an analytical and a practical perspective. From the analytical point of view, it creates a general perception in which the role of the adjudicating bodies tends to be chronically overstated and where the intergovernmental, member driven character of the Organisation is largely overlooked. Practically, such a distorted assessment may lead to policy recommendations or actions which are out of tune with political realities and which may undermine the sustainability of the system.

The DSU review negotiations, albeit unsuccessful so far, have brought forth a variety of proposals in the last seven years. These submissions are supposed to contribute to improvements and clarifications of the mechanism. Not only is the DSU review of interest in its own right, but it also offers a reflection of the experience that WTO Members have gathered in ten years of dispute settlement practice. In doing so, the discussions are revealing with regard to the general degree of satisfaction of Members with the system. They can also serve as an indicator for problems or tensions in the mechanism and for changes in the position of certain Members in and towards the system. Finally, the DSU review discussions assist us in establishing some hypotheses on the future evolution of the WTO dispute settlement mechanism.

This chapter seeks to contribute to the DSU literature by retracing the negotiating process in its context and by analysing the main reasons why the negotiations have failed so far. Part 2 analyses the negotiations that have taken place between 1997 and 2004. In Part 3, the reasons for the failure to bring the negotiations to a successful conclusion so far will be discussed, based on a brief presentation of major proposals. Part 4 presents some elements of a "DSU Review in practice", i.e. practical steps that Members and adjudicating bodies have undertaken to adapt DSU practice to changing circumstances and requirements without modifying the text of the DSU. Part 5 concludes.