How the EU is shaping the WTO dispute settlement reform

Horváthy, Balázs (2024) How the EU is shaping the WTO dispute settlement reform. In: Twenty years in the European Union: Membership experiences and visions for enlargement. Széchenyi István Egyetem Deák Ferenc Állam- és Jogtudományi Kar Európa-tanulmányok Központ, Győr, pp. 93-108. ISBN 9786156443373

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Abstract

The EU plays a pivotal role in shaping the reform of the WTO dispute settlement mechanism, especially in light of the current Appellate Body crisis since 2019. The paper examines these efforts made by the EU to maintain a rule-based multilateral trading system. The EU was already a key contributor to WTO dispute settlement reform efforts even in the Doha Round negotiations, launched in 2001 and aimed at agreeing also on improvements of the Dispute Settlement Understanding. The EU pushed for reforms that would address concerns related to the transparency and efficiency of the mechanism, specifically the length of disputes, access for developing countries, and the implementation of the decisions. Although the Doha Round ultimately stalled, the EU’s contributions laid important basis for future reform discussions. In the current crisis, the EU’s proposal has been originally based on the European Commission's 2018 concept paper on WTO modernization, in which dispute settlement reform has been a key focus. The EU proposal emphasizes the importance of maintaining the binding, two-tier dispute settlement system; calls to make the mechanism more efficient by speeding up the procedure, addressing the problems over the AB’s ‘judicial overreach’ (as perceived by the US), and makes proposal for the appointment of judges. Moreover, the EU has actively promoted an interim mechanism and played major role in the negotiations on the Multi-Party Interim Appeal Arbitration Arrangement to temporarily bypass the Appellate Body's paralysis and maintain a rules-based dispute resolution framework. The paper concludes that the EU’s approach to the WTO dispute settlement reform reflects its broader objective of strengthening global trade governance, fostering international cooperation, and ensuring that the WTO remains a central pillar of the global trading system.

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