Edited by William A. Kerr and James D. Gaisford
Chapter 46: Dispute Settlement, Compensation and Retaliation under the WTO
Robert Read One of the key outcomes of the General Agreement on Tariﬀs and Trade (GATT) Uruguay Round negotiations was the creation of more eﬀective system for dealing with international trade disputes, the World Trade Organization’s (WTO) Dispute Settlement Understanding (DSU). This entered into force on 1 January 1995. The DSU succeeded the original GATT system for dispute settlement which had become increasingly unable to resolve major trade conﬂicts between its Member countries. This chapter outlines the structure and operation of the WTO trade dispute settlement system, particularly with respect to the implementation of dispute panel ﬁndings and the issues of compensation and retaliation. The ﬁrst section provides an overview of the objectives of the DSU in the context of the shortcomings of the previous GATT dispute settlement system. The next section summarizes the key articles and procedures of the DSU. This is followed by a discussion of the DSU framework for the suspension of concessions, compensation and retaliation supported by illustrative examples from recent cases. The ﬁnal section oﬀers a brief critique of the key issues that have arisen in the ﬁrst decade or so of the operation of the DSU. The origins of the WTO dispute settlement system Prior to the introduction of the DSU, the GATT system of dispute settlement had been functioning more or less successfully for almost 50 years in spite of its evident shortcomings. The new WTO DSU was the outcome of a thorough overhaul of the GATT system although...
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