Read, R A (2005) Trade dispute settlement mechanisms: the WTO dispute settlement understanding in the wake of the GATT. Working Paper. The Department of Economics, Lancaster University.
A critical feature of the GATT Uruguay Round negotiations was the establishment of a new and more effective system of dealing with international trade disputes, known as the WTO Dispute Settlement Understanding (DSU). The original GATT dispute settlement system comprised rudimentary remnants of a more thorough framework contained in the defunct Havana Charter of the International Trade Organization (ITO). By the time of the start of the Uruguay Round negotiations in Punta del Este in 1986, the effectiveness and credibility of the GATT dispute settlement system was being very seriously questioned. The primary reason for the increasing lack of confidence in the system was the propensity of GATT contracting countries to ignore the findings of Panels, resulting in a stalemate in a number of high profile trade disputes. Several trade disputes between the EU and the United States discussed were initiated under the GATT dispute settlement system but remained unresolved. These disputes became increasingly acrimonious as a direct consequence of the failure of the GATT system to enforce a satisfactory resolution. This paper provides an outline of the workings of the GATT and WTO dispute settlement systems underlie several recent trade disputes. The first two sections deal with the GATT system of settling trade disputes. The first details the key elements of the GATT dispute settlement system while the second considers its performance in resolving disputes. Section 3 outlines the origins of the WTO DSU and summarises its principal Articles. The WTO DSU is appraised on the basis of its first nine years of operation in Section 4 followed by a brief discussion of the key issues that have arisen from its operation. The final Section makes some concluding comments on the relative efficacy of the GATT and WTO dispute settlement systems.
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