Insufficiency in the Dispute Settlement Mechanism of the WTO : Consequences and Implications for the Multilateral Trading System

Trends of trade disputes show that the developed countries are more active in the dispute settlement process of the World Trade Organization (WTO) than the developing countries. Our analyses show that financial strength is an important factor for countries to participate in the dispute settlement process of the WTO. It also plays significant role in winning trade disputes. Therefore, lack of financial strength could be an explanation for the low rate of participation of the small-developing countries in the dispute settlement process. A close look at the Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU) reveals that it has considerable inability to provide feasible remedies against unfair trade practices. This also discourages the small-developing countries to participate in the dispute settlement process. To ensure equitable participation of the developing countries in the dispute settlement process, the WTO should increase legal and technical assistance for the small-developing countries. At the same time the WTO needs to ensure quick resolution of the disputes and replace the provision of "retaliation" with other meaningful remedies.