2 Dispute settlement under the WTO
In initial negotiations after World War II for the creation of a multilateral trading system, negotiating countries failed to adopt the Havana Charter, which would have led to the creation of the International Trade Organization (ITO). The GATT, as a provisional agreement, by default became a permanent framework for the multilateral trading system. It established an anaemic institutional structure that member countries, by consensus, elaborated over time. Initial disputes were referred to the Chairman of the Contracting Parties for rulings on the legality of disputed measures – a process for which there was no provision in the GATT – and then evolved into the creation of five member Working Parties, comprising representatives of the two parties in dispute (member countries) and representatives of three other countries. These Working Parties were conceived as largely serving a diplomatic or conciliatory function where attempts were made to work out compromises acceptable to both disputing parties. In turn, by the mid-1950s Working Parties had evolved into something similar to the current Panels, typically comprising five individuals in their personal capacities and excluding representatives of the countries in dispute. These Panels would hear confidential written and oral submissions from the parties and make recommendations to the General Council of the GATT, which, by convention, required a positive consensus (including the acquiescence of the losing party) for their adoption. In the event of adoption, the Contracting Parties would recommend remedial measures to the party found in violation of its GATT obligations and in the event of failure to...
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