The WTO Dispute Settlement System and the alternative interim arbitration of the MPIA

Abstract

The WTO Dispute Settlement System, created in 1994 consists of a structure to ensure rule-based decisions and compliance with its provisions. With the standoff created by the United States in 2015, due to the disagreement in the Appellate Body's judgments, which was effectively blocked in December 2019. This scenario produced a number of deadlocked cases, in which WTO members began to "appeal into the void" and, therefore, circumvent WTO rules. Faced with the non-functioning multilateral trade system, a number of WTO members approved an alternative mechanism to provide second instance decisions, known as the Multi-Party Interim Appeal Arbitration Arrangement (MPIA). Since its establishment in 2020, there is an award found in DS591 between Colombia and the European Union. The MPIA's alternative mechanism, although quite recent, enables the debate about a potential fragmentation of the jurisprudence of the WTO, considering that only 25 members adhered to the mechanism. Furthermore, due to the reluctant position of the United States in blocking the Appellate Body and ensuring its protectionism based on the allegation of national security, the multilateral trade system will fragment into a set of plurilateral and regional rules, resembling the international investment protection system, composed by bilateral and regional rules.