How the WTO Settles Trade Disputes

Under GATT, a losing country could block a ruling against itself, so disputes often went unresolved. The WTO's dispute settlement system changed this: panels hear complaints, an Appellate Body reviews legal issues, and rulings are adopted unless all members agree to reject them. If a country does not comply, the winner may be authorized to retaliate with trade sanctions.

Hundreds of disputes have been filed, by large and small members alike; Antigua and Barbuda won a case against the United States over online gambling, and Brazil won a case against US cotton subsidies. Supporters argue the system made trade law enforceable and reduced the risk of trade wars.

However, the United States objected that the Appellate Body overstepped its mandate, and from 2017 it blocked new appointments. From December 2019 the Appellate Body lacked enough members to hear appeals, so losing parties could appeal 'into the void', and some members created an interim arbitration arrangement.