- According to the procedure established by the WTO, the first step to resolve a trade dispute is engaging in the consultation process.
- If two trading partners having a dispute could not resolve at that level, one of them can ask for a settlement of the Dispute Settlement Body (DSB) for hearing.
- The DSB’s ruling can be challenged at the appellate body, the highest court for global trade disputes.
WTO’s Appellate Body
- The Appellate Body is a standing committee of seven members that presides over appeals against judgments passed in trade-related disputes brought by WTO members.
- Members of the Appellate Body have four-year terms.
- In the selection process, WTO members follow the consensus principle, which means that the nomination of the Appellate Body members can only proceed smoothly with the agreement of all 164 members of the WTO.
- The Appellate Body must have at least three sitting members to hear an appeal.
- Since 2019, the Appellate Body has stopped functioning due to rising vacancies. Over the years, the U.S. has consistently blocked the appointment of AB members. The U.S. also vetoes proposals to find solutions to this impasse, including stalling the proposal of the European Union to establish an alternative interim appellate arbitration mechanism.
Why in News?
- A World Trade Organization panel has said that India had violated global trading rules in a dispute with the European Union, Japan and Taiwan over import duties on IT products.
- In 2019, the EU challenged India’s introduction of import duties of between 7.5% and 20% for a wide range of IT products, such as mobile phones and components, as well as integrated circuits, saying they exceeded the maximum rate. Japan and Taiwan filed similar complaints that same year.
- The EU is India’s third largest trading partner, accounting for 10.8% of total Indian trade in 2021, according to the European Commission.
- If India decides to appeal against the ruling, the case will sit in legal purgatory since the WTO’s top appeals bench is no longer functioning due to U.S. opposition to judge appointments.