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The Dispute Settlement Crisis in the World Trade Organization: Causes and Cures

Author

Listed:
  • Tetyana Payosova

    (Harvard Law School)

  • Gary Clyde Hufbauer

    (Peterson Institute for International Economics)

  • Jeffrey J. Schott

    (Peterson Institute for International Economics)

Abstract

Since its inception in 1995, the World Trade Organization’s (WTO) dispute settlement mechanism has resolved an impressive number of trade disputes and has earned a reputation as the “crown jewel” of the global trading system. Today, however, the mechanism is in crisis. WTO members have failed to negotiate updates to the rulebook, including rules on dispute settlement itself. As a result, the WTO Appellate Body increasingly is asked to render decisions on ambiguous or incomplete WTO rules. Its interpretations of such provisions have provoked charges by the United States and others that binding Appellate Body rulings, which establish precedents for future cases, effectively circumvent the prerogative of member countries to revise the WTO rulebook and thus undercut the national sovereignty of WTO members. For the past few years, US officials have blocked appointments of Appellate Body members to force WTO members to negotiate new rules that address US concerns and limit the scope for judicial overreach. If this problem is not resolved, the Appellate Body soon will not have enough members to review cases and the vaunted WTO dispute settlement system will grind to a halt.

Suggested Citation

  • Tetyana Payosova & Gary Clyde Hufbauer & Jeffrey J. Schott, 2018. "The Dispute Settlement Crisis in the World Trade Organization: Causes and Cures," Policy Briefs PB18-5, Peterson Institute for International Economics.
    • Handle: RePEc:iie:pbrief:pb18-5
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    File URL: https://www.piie.com/publications/policy-briefs/dispute-settlement-crisis-world-trade-organization-causes-and-cures
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    Citations

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    Cited by:

    1. Sjöholm, Fredrik, 2023. "The Return of Borders in the World Economy: An EU-Perspective," Working Paper Series 1469, Research Institute of Industrial Economics.
    2. Martin Braml & Gabriel Felbermayr & Wolfgang Weiß & Fritz Breuss & Christoph Scherrer & Christoph Herrmann & Caroline Glöckle & Benjamin Jung & Tim Krieger & Laura Renner & Bernd Lange, 2018. "Trade War and Its Implications: the Beginning of the End for WTO?," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 71(11), pages 03-29, June.
    3. K. Buysse & D. Essers, 2019. "Cheating tiger, tech-savvy dragon : Are Western concerns about “unfair trade” and “Made in China 2025” justified ?," Economic Review, National Bank of Belgium, issue ii, pages 47-70, September.
    4. Sasidaran Gopalan & Luu Nguyen Trieu Duong & Ramkishen S. Rajan, 2020. "Trade configurations in Asia: Assessing de facto and de jure regionalism," The World Economy, Wiley Blackwell, vol. 43(4), pages 1034-1058, April.
    5. Ian M. Sheldon, 2022. "The United States' power‐based bargaining and the WTO: Has anything really been gained?," Applied Economic Perspectives and Policy, John Wiley & Sons, vol. 44(3), pages 1424-1439, September.
    6. Bown, Chad P. & Keynes, Soumaya, 2020. "Why Trump shot the Sheriffs: The end of WTO dispute settlement 1.0," Journal of Policy Modeling, Elsevier, vol. 42(4), pages 799-819.
    7. Harald Oberhofer & Gerhard Streicher & Yvonne Wolfmayr, 2018. "Policy Brief: Der Handelsstreit zwischen der EU und den USA. Abschaffung von Autozöllen als Ausweg aus dem Konflikt?," WIFO Studies, WIFO, number 61203, April.
    8. Bowen, T. Renee & Broz, James, 2020. "Designing an International Economic Order: A Research Agenda," CEPR Discussion Papers 15407, C.E.P.R. Discussion Papers.
    9. Niclas Frederic Poitiers, 2020. "Institutionelle Aspekte einer neuen Handelsordnung," Wirtschaftsdienst, Springer;ZBW - Leibniz Information Centre for Economics, vol. 100(5), pages 328-332, May.
    10. Purba Mukerji, 2021. "A Panel Study of Factor Accumulation and Export Quality," JRFM, MDPI, vol. 14(9), pages 1-53, September.

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