WTO Dispute Settlement Mechanism (DSM)
🧭 What is DSM?
DSM, or the Dispute Settlement Mechanism, is a judicial framework under the World Trade Organization (WTO) that aims to resolve trade disputes among member countries fairly and according to rules.
Its objectives are:
✅ To resolve disputes peacefully
✅ To maintain stability and trust in global trade
📌 Key Features of DSM
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Feature
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Description
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⚖️ Rules-based legal process
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It follows a systematic legal procedure
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🌍 Only member states can file disputes
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Individuals or companies cannot file cases
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📜 Covers agreements like GATT, GATS, TRIPS
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Disputes must be based on these agreements and rules
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🕒 Time-bound resolution
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Final decisions are ideally made within 1 to 1.5 years
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🔢 Steps of WTO Dispute Settlement Process
- 📩 Consultation
• Countries attempt to resolve the issue through mutual discussion (within 60 days)
- ⚖️ Panel Formation
• If unresolved, WTO forms a 3-member panel to examine the case
- 📑 Panel Report
• After hearing both sides, the panel submits a report (within 6–9 months)
- 🏛️ Appellate Body
• If any party is dissatisfied, it may appeal the panel’s decision to the Appellate Body
- 📢 Adoption by DSB (Dispute Settlement Body)
• The final report is adopted by WTO’s DSB
- 🛠️ Implementation
• The guilty country is directed to comply with the ruling and make necessary changes
- ❗ Retaliation
• If the ruling is not followed, the other country may impose higher tariffs (with WTO’s approval)
🏛️ WTO Appellate Body – Current Status
• The Appellate Body has been inactive since 2019 because the United States blocked appointment of new members.
• This has led to a deadlock in the dispute resolution process.
🇮🇳 India's Key Cases under DSM
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Case
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Outcome for India
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India vs USA (Solar Panel Case)
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India lost
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India vs USA (Poultry Import Ban)
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India lost
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India vs Australia (Sugar Export Subsidy)
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Process ongoing
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India vs USA (Steel & Aluminum Duties)
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India won, but USA did not comply
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🧠 Suggestions for UPSC Mains Answer Writing
Question: How effective is WTO’s Dispute Settlement Mechanism in ensuring fair global trade?
📝 Points to include:
• Overview of WTO-DSM and its structured process
• Its benefits as a fair and law-based mechanism
• Challenges like Appellate Body paralysis
• Reforms needed – e.g., restoring multilateral functioning
✅ Conclusion:
“WTO’s Dispute Settlement Mechanism is a cornerstone of international trade governance, offering a rule-based platform for member countries to resolve disputes. However, challenges such as the non-functional Appellate Body have weakened its effectiveness. India should aim to leverage DSM both strategically and legally for protecting its trade interests.”
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