Chapter 2 of this Report begins with a short discussion of the role of multilateral institutions in sustaining cooperation among nations. It then proceeds to examine decision-making in the WTO, with particular reference to agenda formation. The final part of the Chapter focuses on the WTO’s Dispute Settlement Mechanism (DSM). The specific recommendations of this Chapter relate to decision-making and dispute settlement.
It is no surprise that decisions about the reach and content of WTO rules have been among the most contentious issues in the sixty-year history of the multilateral trading system. The negotiating and rule-making priorities established within the WTO are a crucial determinant of how well the institution serves the interests of its diverse constituents. A core challenge is to shape the agenda in a way that both respects the interests of the entire membership while at the same time securing the continued commitment of all parties. In pursuit of this balance, the Commission recommends that consideration be given to the circumstances in which a “critical mass” approach to decision-making might apply. The key implication of this approach is that not all Members would necessarily be expected to make commitments in the policy area concerned. We are aware of the sensitivities inherent in this proposition and have taken care to spell out criteria that would need to be met in adopting such an approach. Among the criteria for considering a critical mass approach to defining the agenda are the need to identify a positive global welfare benefit, to protect the principle of non-discrimination, and to accommodate explicitly the income distribution effects of rule-making.
As far as dispute settlement is concerned, the Report has focused on those aspects of reform that could improve access to the procedures for the smaller and weaker Members of the WTO. In this connection, the Commission recommends that Members be given a right to the services of a Dispute Settlement Ombudsman whose role would be to mediate between potential disputants upon the request of one party at a stage prior to launching a formal complaint. Such a procedure would allow recourse to the good offices of an independent party prior to any formal bilateral consultations.
The Commission is aware of recent improvements that have been made in enhancing the transparency and accessibility of dispute settlement proceedings and recommends that these initiatives be sustained and strengthened, particularly in relation to hearings that are made open to the public and in allowing the submission of amicus curiae briefs before panels and the Appellate Body (AB).
One of the greatest successes of the WTO dispute settlement system, like that of the General Agreement on Tariffs and Trade (GATT) before it, has been the high degree of compliant behaviour by Members in respect of findings. Nevertheless, where Members neither comply nor offer compensatory trade policy action, the option for aggrieved parties to take retaliatory measures is neither attractive when seen against the objectives of the WTO Agreement nor feasible when small economies are pitted against large ones. In light of this, the Commission recommends that consideration be given to WTO Members accepting an obligation to provide cash compensation to aggrieved parties where compliance or trade-related compensation is not forthcoming.