The dispute settlement system of the WTO largely reflects the structure of its predecessor, or what was known as the General Agreement on Tariffs and Trade. The GATT was generally considered to be the basis of multi-lateral trade order. The system has been reinforced, and condensed, as a result of the trade agreement reform revolving around the Mid-Term Review Ministerial Meeting, which was held in Montreal in December 1988, according to WTO.ORG (2014). “The Uruguay Round Understanding on Rules and Procedures Governing the Settlement of Disputes”, or “DSU”, was a critical component that bolstered the present settlement system proportionately- broadening the self-regulating autonomy of the WTO which was agreed-upon during the Mid-Term Review regarding adoption of panels, as well as adapting regular appellate body findings (Legal texts: the WTO agreements). The DSU has enacted an integrated system which permits WTO Members to base claims on the multi-lateral trade agreement sections of the” Annexes to the Agreement establishing the WTO” . In accordance, a Dispute Settlement Body, or DSB, assumes authority through the use of General Councils during the dispute resolution process. The DSU highlights the significance of consultation during the dispute resolution process- the DSU requires WTO members to enter into a consultation within thirty days of a request to consult with another member. If there is no consultation leading to settlement, or a settlement is denied, after sixty days the complaining party may request the institution of a panel. The members to the dispute may find an agreement alternatively through the use of good offices, conciliation, mediation and arbitration- which encouraged as opposed to proceeding to the next step- establishing a panel. When a dispute is not-settled by consulting the DSU will require establishing a panel, unless the DSB decides by consensus that it would not be in the interests of all parties to establish the panel. Panels are usually made-up of three people with familiar backgrounds regarding the focus of the dispute and are from countries other than the countries in which the parties involved currently reside. Decisions by the DSU panel are usually made within six months- or in urgent cases three months. One of the important new features of the DSU is the concept of the appellate body. An appellate body is established by 7 members, 3 of which serve on one case. The appeal body is concerned with issues of law regarding the panel report, as well as the legal interpretation of cases set forth to the panel. Appellate hearings are not to exceed sixty days after the date parties formally notify decisions to appeal. The resulting reports are adopted by the DSB and accepted by parties within thirty days after their issuance to members, unless the panel decides by consensus against their adoption. Once a panel report or the appellate body report is adopted, the party affected has to notify their intention in regards to the implementation of the adopted recommendation. If it is improbable for the party to comply expeditiously, they shall give a reasonable timeframe, which is approved by the DSB within 45 days of adoption of the report, or through arbitration within ninety days of its adoption. The DSB will keep a watchful eye over the implementation of their recommendations until the issue is resolved. Doing business internationally differs greatly from doing business in ones own domestic settings. Some of the differences multinational enterprises encounter include: different cultural and linguistic obstacles, fluctuations in world currencies, international hostilities, different trade controls, different restrictions on investment, different types of litigation for dispute resolution, and different types of political interference. Political interference can come in different forms to the international conglomerate. Some of the more common types of political interference a MNE may encounter include things like quotas, boycotts, and embargoes according to Schaffer, Agusti, Dhooge, & Earle (2011). Quotas are used to limit the amount of imports/exports a country can consume, or a MNE can produce. Boycotts are usually politically motivated, for the international business this becomes difficult establishing a new cultural identity in an overseas market when hostilities become politically motivated. One might think of the Arab boycott on Israeli products as an example of political interference in international business. Embargoes are used by countries to place bans on trade between nations. One classic example is President Eisenhower placing an embargo on the country of Cuba in 1960. This was in response to Castro seizing the Cuban national government from Batista, forming a new communist government with Russia, and expropriating American assets in Cuba. Although political interference may seem altogether insignificant to the international manager finding new ways to market, distribute, or finance a product it is one of the more serious underlying threats to the international business if a risk management strategy is not prepared before a business seeks a new opportunity on foreign soil. References Legal texts: the WTO agreements (2014). From WTO.org. Retrieved from wto.org/english/tratop_e/dispu_e/dispu_e.htm Schaffer R, Agusti F, Dhooge L, & Earle B (2011). International Business Law and Its Environment (8th ed). South-Western College/West. ISBN: 0538473614
Posted on: Wed, 25 Jun 2014 20:16:47 +0000