G20 Leaders Commit To WTO Reforms, To Have A Fully-Functional Dispute Settlement System By 2024

The dispute settlement mechanism of the WTO has been derailed due to a non-functional appellate body since December 2019
G20 Leaders Commit To WTO Reforms, To Have A Fully-Functional Dispute Settlement System By 2024

The G20 leaders on Saturday expressed their commitment to conduct discussions for having a “fully and well-functioning” dispute settlement system of the World Trade Organisation (WTO) by 2024.

Besides formulating norms for global exports and imports, the Geneva-based 164-member multi-lateral body adjudicates trade disputes among the member countries.

The dispute settlement mechanism of the WTO has been derailed due to a non-functional appellate body since December 2019.

"We reiterate the need to pursue WTO reform to improve all its functions through an inclusive member-driven process, and remain committed to conducting discussions with a view to having a fully and well-functioning dispute settlement system accessible to all members by 2024,” the G20 declaration said.

It said that the leaders expressed commitment to work constructively to ensure positive outcomes at the WTO's Thirteenth Ministerial Conference (MC13).

MC, which is the highest decision-making body of the WTO, is scheduled to meet in February next year in Abu Dhabi.

There are two main ways to settle a dispute once a complaint has been filed in the WTO - the countries find a mutually agreed solution, particularly during the phase of bilateral consultations; and through adjudication which includes ruling by a panel and if not satisfied, challenging that ruling at the appellate body.

The appellate body is the apex institution for adjudicating disputes.

Smooth functioning of the WTO's dispute settlement mechanism hit a roadblock when the US blocked appointments of members in the appellate body (AB). Though the AB stopped functioning on December 10, 2019, the panels are still working.

Since December 2019, as many as 24 appeals have been filed before the appellate body.

According to international trade experts, the US wants to weaken the two-tier system of the dispute settlement mechanism and does not intend to restore the appellate body.

Developing countries, on the other hand, are of the strong view that a two-tier system is fundamental for the smooth functioning of the dispute settlement mechanism.

The G20 or Group of 20 is an intergovernmental forum of the world's major developed and developing economies.

It comprises Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, the Republic of Korea, Mexico, Russia, Saudi Arabia, South Africa, Turkey, the UK, the US, and the European Union (EU).

Collectively, the G20 accounts for 85 per cent of the global GDP, 75 per cent of international trade, and two-thirds of the world population, making it the premier forum for international economic cooperation.

“We reaffirm that a rules-based, non-discriminatory, fair, open, inclusive, equitable, sustainable and transparent multilateral trading system, with WTO at its core, is indispensable,” the declaration said adding the leaders also agreed to ensure that trade and environment policies should be mutually supportive, consistent with WTO and multilateral environmental agreements.

They also recognized the importance of WTO's 'Aid for Trade' initiative to enable developing countries, notably LDCs (least developed countries), to effectively participate in global trade, including through enhanced local value creation.

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