Trade agreements on the basis of reciprocity are instruments used by governments to achieve trade liberalization. The reciprocal exchange of market access rights which occurs through such agreements amounts to an international exchange of domestic political support between governments that helps policymakers to overcome the protectionist bias of uncoordinated trade policies. In order to protect the negotiated balance of rights and obligations from eroding -e.g., by trade restrictions which one government may introduce in violation of the trade agreement in order to enhance its political support from import-competing interests - trade agreements usually include dispute settlement mechanisms based on diplomatic and/or adjudicative procedures. Such a dispute settlement mechanism is also included in the multilateral trading system. Based on the rudimentary provisions of two articles in the General Agreement on Tariffs and Trade (GATT) 1947, i.e., Article XXll on Consultations and Article XXlll on Nullification or Impairment of Benefits, dispute settlement developed gradually through evolving practice and occasional codifications thereof. With the exception of an anti-legalist phase in the '1960 the trend went from an initially rather diplomacy-oriented mechanism towards a more adjudication-oriented one.
The conclusion of the Uruguay Round of Multicultural Trade Negotiations brought the establishment of the World Trade Organization (WTO) on 1 January 1995. According to Article III.3 of the WTO Agreement, dispute settlement is one of the key functions of the WTO, The rules of the mechanism are laid down in detail in the Understanding on Rules and Procedures Governing the Settlement of Disputes in short: (Dispute Settlement Understanding; DSU) in Annex 2 of the WTO Agreement. The DSU has both incorporated the inherited concept of GATT Dispute settlement and it has codified the practices that had evolved previously into a consolidated text. In addition, it has brought important innovations (see below). The mechanism has been used actively by Members in the first ten years of its existence. At the same time, it has been a topic of much academic interest and debate. Moreover, Members have been involved in negotiations to review and reform the mechanism since late 1997, however, without coming to an agreement so far.
This article gives an overview of the WTO dispute settlement mechanism eleven years after it became operational. Chapter - briefly presents the structure of the mechanism. Chapter - includes basic data on the use of the system between 1995 and 2005 and its perception in academic literature. Specific paragraphs focus on the experience of India in the system. Chapter - deals with efforts of Members to further develop the DSU in the DSU review negotiations. Again, specific attention is given to the role of India in this exercise. Chapter - concludes and attempts to give an outlook on the challenges that await the DSU in the coming years.
HISTORY OF WTO
The World Trade Organization (WTO) is an organization that intends to supervise and liberalize international trade. The organization officially commenced on January 1, 1995 under the Marrakech Agreement, replacing the General Agreement on Tariffs and Trade (GATT), which commenced in 1948. The organization deals with regulation of trade between participating countries; it provides a framework for negotiating and formalizing trade agreements, and a dispute resolution process aimed at enforcing participants' adherence to WTO agreements which are signed by representatives of member governments and ratified by their parliaments. Most of the issues that the WTO focuses on derive from previous trade negotiations, especially from the Uruguay Round (1986–1994). The organization is attempting to complete negotiations on the Doha Development Round, which was launched in 2001 with an explicit focus on addressing the needs of developing countries. As of June 2012,...