One of the key features of the WTO is its Dispute Settlement system , formally known as the “Understanding on Rules and Procedures Governing the Settlement of Disputes”. It was negotiated during the Uruguay Round and is a legally-binding agreement that both commits and enables members of the WTO to settle their trade disputes. According to many commentators, the strength of the WTO owes a lot to its impartial dispute settlement system that gives equal weightage to all its membership, with special and differential treatment for its developing and least developed membership.
Both developed and developing countries have been active users of the system. The system is based on clearly-defined rules, with timetables for completing a case. First rulings are made by a panel and appeals based on points of law are possible. More than 330 disputes have been brought to the WTO since it was set up in 1995 and with a few exceptions, compliance and implementation has been achieved in all the rest.
Without a means of dealing with trade disputes effectively, chances of serious political conflict between unequally placed trading partners are very high. Another very positive aspect of the DSU can be understood through the decisions in two landmark disputes on the EC-Sugar and US-Cotton dispute. The decisions of the Panels in these two disputes have achieved what was proving difficult to achieve through negotiations i.e. it forced the EC and US to change their policy and practice with regard to these two major commodities of interest to developing countries.
Nevertheless, there are certain problems with the system and they are concentrated along the lines of timely enforcement of decisions. The first major reason for this is the lack of political will and secondly, the sometimes lengthy system of amendments to legislation in national parliaments. These issues are now being addressed through negotiations in the special session of the dispute settlement body.