From Paralysis to Renewal:

Crisis Tracing and Systemic Reform of the WTO Dispute Settlement Mechanism

Abstract

The increasing complexity of international disputes and the significant shifts in political and economic relations underscore the imperative for reforming the current WTO dispute settlement mechanism. The paralysis of the Appellate Body and the diminishing authority and credibility of the mechanism, exacerbated by the United States' trend toward de-judicialization, reveal fundamental flaws in WTO rules and the fragility of the multilateral trading system. Key factors contributing to the crisis include the challenges of adapting traditional rules to the new environment, the encroachment of sovereign interests, the risks of politicization, and the inadequacies of institutional design and effectiveness. At the core of the crisis is the clash between the inherent deficiencies of the system and the proactive judicialization trend, which necessitates centering reform efforts on rehabilitating the Appellate Body's judicial functions. Systemic reforms should follow a two-pronged approach: modernizing the rules while improving institutional mechanisms. Additionally, reform efforts should focus on redefining the boundaries of judicialization and adjusting the dispute settlement models within the framework of regional trade agreements, thereby enhancing the resilience of the system and establishing a more inclusive and diverse dispute settlement mechanism.