Dispute Settlement Understanding Essay Example | Topics and Well Written Essays - 3500 words

Dispute Settlement Understanding - Essay Example The members of the WTO are aware of the clear and well established legal procedures available for smooth trading and enforce the relevant rules to settle disputes among themselves. These rules are contained in the understanding on Rules and Procedures Governing the Settlement of Disputes (through Dispute Settlement Understanding or DSU)2 . The strict legal and policy framework of the DSU helps in promoting adherence to rules which are negotiated by WTO Members and since the rule of law rather than the rule of power is applicable and important, the DSU rules are beneficial for small and medium sized countries engage in worldwide trade so that there is very little scope for unilateral trade actions by large countries3. There are automatic establishments of panels to review complaints and disputes by WTO members and specific timelines are also established throughout the process so that all disputes are resolved quickly and efficiently. If the disputes are addressed in favour of a particular member, there are also provisions for a right to appeal against panel decision to a permanent Appellate Body on issues of law and automatic adoption of panel reports4. The WTO Members are encouraged to resolve disputes through consultations and for most disputes, reaching to the state of panel decision may also not be necessary5. If panel decisions are taken, the panel report and the Appellate Body report are adopted by WTO members and at a meeting of the Dispute Settlement Body, it becomes a WTO ruling. The members who are found to violate obligations are given a period of time to comply with the ruling in whatever manner possible. The member is given a time period within which it has to comply with the ruling. If the member fails to comply with the ruling, within the prescribed time limits, then it has to offer compensation to the complaining member during the time of pending compliance with the ruling. When there is disagreement on compensation, then the complaining member may be authorised to retaliate and take action until the other member has actually complied with the ruling. A rule based system seems to provide for a framework that helps to manage international trade relations and the trade disputes. The best method of resolving trade disputes have been considered as consultations and negotiations and when the consultations fail, then the dispute settlement provisions are utilised and panel decision may be sought.6 When even panel decisions fail, appeals are made to the Appellate Body and the legal provisions are identified and implemented. The DSU facilitates smoother trade transactions and exports between countries and also helps individual member countries to defend measures which may be challenged by the other trading partners7. In this assignment we will discuss the effects of Article 4, 6 and 23 of the