Critically evaluate the role of the United States of America in the World Trade Organization (WTO) dispute settlement mechanism and its implications for the future of the WTO. (2020, 15 Marks)
The WTO’s Dispute Settlement Understanding (DSU) was the crown jewel of the Uruguay Round: under negative consensus, the loser could no longer block a ruling. The United States did more than any member to build this court, and it has done most to disable it. That paradox frames any evaluation.
Architect and principal user
- In the Uruguay Round Washington demanded binding, quasi-automatic adjudication, accepting in exchange Article 23’s ban on unilateral retaliation.
- It became the heaviest user as complainant and respondent, bringing repeated cases against Chinese subsidies, IP practices and export restrictions, and usually complied with adverse rulings.
From user to blocker
- The Obama administration blocked a South Korean member’s reappointment in May 2016; from 2017 the US vetoed every appointment, under both parties.
- The Appellate Body (seven members, three per appeal) fell below quorum on 11 December 2019, when the terms of India’s Ujal Singh Bhatia and the American Thomas R. Graham ended. The last member left in November 2020.
The American case, stated fairly
- Judicial overreach: rulings that “add to or diminish” members’ rights, contrary to Article 3.2, notably on zeroing, public bodies and safeguards.
- De facto precedent, obiter dicta and routine breach of the 90-day limit.
- Rules written for market economies cannot discipline Chinese state capitalism, yet the Appellate Body narrowed the tools to do so.
Critique
- The grievances cluster around trade remedies, where the US lost most often; critics read a generalised losing streak. Washington also pocketed favourable rulings while rejecting adverse ones.
- The remedy is disproportionate: for years the US tabled no reform text and kept the veto. Its March 2026 reform paper went further, questioning MFN itself.
- G. John Ikenberry’s After Victory (2001) holds that hegemonic order rests on strategic restraint, a hegemon binding itself to institutions; the blockade abandons it. Realists such as John J. Mearsheimer see confirmation that institutions reflect power.
Implications for the WTO’s future
- Appeals into the void: of 25 panel reports issued in 2020–22, 18 were appealed to the non-existent body. Former Deputy Director-General Alan Wm. Wolff (2026) names the United States and India as its chief users.
- Fragmentation: the MPIA (61 participants, roughly 60% of world trade) restores appeal for some, but had fully decided only two cases by end-2025. The US and India stay outside.
- Unilateralism unchecked: the US rejected the 2022 Section 232 panels on security grounds; the 2025 tariffs met no appellate check.
- Power over rules: trade migrates to 387 regional agreements and bilateral deals, and small economies lose the one forum where they could beat a large one.
- Stalled reform: MC12’s pledge of a fully functioning system “by 2024” was missed, and MC14 (2026) produced nothing on it.
Conclusion
US grievances about overreach are partly valid, but disabling the court has cost the system more than any error of the court. The WTO’s future depends on reform that meets American concerns without restoring a loser’s veto. India, which won US — Carbon Steel (2014), should press for it and stop appealing into the void itself.