Title: Long-Term Relationship over Litigation: Mediation in WTO Dispute Settlement Proceedings
Domain: Law

Question: In the context of the dysfunctional appeal mechanism of the WTO Dispute Settlement Body (DSB) and the need for reform, how can a mediation mechanism be introduced to complement the existing binding procedures, in order to more efficiently resolve trade disputes among member countries while avoiding the potential legal and practical risks it may bring?

Background: 1. The structural crisis of WTO DSM：The Dispute Settlement Mechanism (DSM) of the World Trade Organization (WTO) has been in a dire situation since 2016 as the reappointment of retiring Appellate Body (AB) members has been repeatedly blocked. Subsequently, the AB ceased to function in December 2019, and the final AB members’ terms ultimately expired in January 2021.Members of the World Trade Organization began a discussion on the "reform" of the WTO Dispute Settlement Mechanism (DSM), but still failed to reach a consensus on the core issues. | 2.Mediation has become a new means of resolving international disputes：Can alternative dispute resolution (ADR) effectively resolve disputes among WTO members, thereby securing a more stable position in the WTO dispute settlement mechanism (DSM) and becoming the core issue of WTO dispute settlement? Among various alternative dispute resolution options, mediation stands out particularly due to its advanced nature and complexity, and has once again gained attention.

Definitions: 1. Dispute Settlement Mechanism (DSM)： The formal procedural system of the WTO for handling trade disputes among its Members, with core components being the binding rulings of the Panel and the Appellate Body (AB). | 2. Alternative Dispute Resolution (ADR)： Dispute resolution methods other than litigation (such as WTO Panel/AB proceedings), including mediation, arbitration, negotiation, etc., which are non-binding in nature (except for arbitration). | 3. Non-Tariff Barriers (NTB)： Policy measures restricting trade other than tariffs, such as technical standards and sanitary and phytosanitary regulations, which often trigger complex regulatory disputes. | 4. Specific Trade Concern (STC)：A mechanism allowed by the WTO's Committee on Technical Barriers to Trade (TBT) and Committee on Sanitary and Phytosanitary Measures (SPS), where Members can raise concerns about specific measures and resolve them through discussions in the committees, similar to multilateral mediation. | 5. Investor-State Dispute Settlement (ISDS)： A mechanism in international investment agreements that allows investors to initiate arbitration against the host government, with mediation introduced as an alternative approach in recent years.

Methodology: 1. Case study method: Analyze specific practical cases of mediation in the WTO and free trade agreements, such as the tuna tariff dispute between the EU and Thailand and the Philippines in 2002, the Non-Tariff Barrier (NTB) mediation mechanism of the EU-Korea FTA, and the connection design of mediation and binding procedures in the agreements such as Canada-Korea FTA, CPTPP, etc., to demonstrate the feasibility and limitations of mediation. | 2. Comparative research method: Compare the design differences of mediation clauses in the WTO and FTAs, explain the ambiguity of Article 5 of the DSU, the lack of procedural details making it difficult to apply in practice, and FTAs have solved the ambiguity of procedures through a three-layer design of "general provisions + committee mediation + exclusive procedures", which is innovative. | 3. Normative analysis method: Refer to relevant provisions of the "Dispute Settlement Mechanism" (DSU), the "Vienna Convention on the Law of Treaties" (VCLT), and the "Singapore Convention on Mediation" of the United Nations, construct a demonstration system, and based on the WTO institutional goals, propose reform suggestions for the mediation mechanism.

Answer: 1.Mediation as an Alternative Means to Resolve International Disputes | Alternative Dispute Resolution (ADR) refers to methods of resolving disputes other than litigation, including arbitration, negotiation, good offices, mediation, relevant committee proceedings, and joint interpretation by contracting parties. With the introduction of the United Nations Convention on International Settlement Agreements Resulting from Mediation (Singapore Convention), mediation has received increasing attention. The Singapore Convention aims to promote mediation for international commercial disputes by enforcing mediation outcomes across multiple jurisdictions. Investor-State Dispute Settlement (ISDS) proceedings also hold the potential for mediation, and some recent Free Trade Agreements (FTAs) have introduced mediation procedures under various names and modes as an additional means to settle disputes between contracting parties. | | Mediation is generally defined as any proceeding involving a third party who facilitates negotiations between disputing parties but lacks the authority to render a binding decision. It possesses unique advantages in preserving long-term relationships among stakeholders and has long served as an important tool for resolving sensitive political and diplomatic disputes between states. Meanwhile, mediation has its own shortcomings and limitations. Introducing a new proceeding into the already strained WTO Dispute Settlement Mechanism (DSM) will bring new risks. However, through carefully designed provisions and striking a proper balance between its advantages and disadvantages, mediation may efficiently address certain types of disputes. | 2. Mediation in Trade Agreements | 2.1Mediation in the WTO | Article 5 of the Dispute Settlement Understanding (DSU) provides for mediation and other forms of ADR. Apart from these generic provisions, the DSU and other covered agreements remain silent on the specifics of mediation. The absence of detailed procedural rules has led to the near-total non-utilization of mediation, with its status in the DSM remaining rather ambiguous. Government officials of disputing parties rarely possess the authority or initiative to propose and accept mediation proposals. Even if mediation proceeds and a compromise package that appears mutually beneficial in the long term is reached, officials may still hesitate to accept the agreement due to potential political and legal consequences from domestic constituents. | | Before the Appellate Body’s paralysis, few Members were incentivized to explore mediation due to the lack of detailed rules. Today, Members need to look beyond the existing DSM and elaborate and systematize mediation clauses in WTO agreements to promote mediation as a meaningful alternative in the WTO DSM. | | 2.2Mediation in FTAs | There are three pathways for mediation in FTAs: | General Provisions as an ADR Option: Similar to Article 5 of the DSU, some FTAs include general clauses designating mediation as one of the ADR options, though not all FTAs contain such provisions. | Committee-Responsible Mediation: Committees corresponding to each chapter of FTAs may offer mediation as an option to resolve disputes between contracting parties, which can be either voluntary or mandatory. | Mediation for Specific Types of Disputes: In this category, mediation serves as the exclusive means to resolve disputes arising from specific chapters, such as labor, environmental, and non-tariff barrier (NTB) disputes. The third form has become a viable path because it stipulates detailed provisions in advance, enabling disputing parties to understand how to proceed with mediation. Therefore, the core of promoting mediation in the WTO DSM should lie in detailed stipulation and systematization. | | 3.Reform of the WTO DSM and Mediation | 3.1Advantages and Disadvantages of Mediation | | Advantages: Mediation can resolve disputes promptly at low cost while preserving long-term relationships between disputing parties, achieving a proper balance between long-term cooperation and short-term trade interests. | Disadvantages: Uncertain enforceability; government agencies and officials may face domestic political criticism and legal consequences for settling disputes through mediation; relative inexperience with mediation may lead to prolonged procedures and increased costs. | | 3.2Can Mediation Help Resolve Disputes among Members? | If added to the WTO DSM as an additional option for disputing parties, mediation may help them settle disputes outside of panel or Appellate Body proceedings. Applicable scenarios include disputes with high political sensitivity (e.g., subsidies, national security exceptions), disputes involving outdated treaty provisions (e.g., digital economy regulations), and long-standing complex disputes (e.g., the US-EU large civil aircraft dispute). | | 3.3How to Facilitate Mediation? | To facilitate mediation in the WTO framework, the primary tasks are to elaborate, structure, and systematize mediation clauses in WTO agreements: | | Elaboration: Provide mediation as a readily available option with clear step-by-step guidance. Define key terms in the DSU and consider amending relevant DSU provisions. | Structuring: Prepare thoroughly for logistical and administrative issues related to mediation to ensure smooth initiation and conduct. While mediation itself is non-binding, instruments reflecting its outcomes may evolve into formal agreements if parties commit to honoring the terms, depending on their will. | Systematization: Mediation should be explored, designed, and applied in tandem with the existing WTO DSM, operating effectively only when fully integrated with the overall architecture of the WTO. | | 3.4How to Align Mediation with Panel/Appellate Body Proceedings? | When introducing mediation to the WTO DSM, prioritize systematization. Mediation should serve as a supplementary procedure applicable at all stages of a dispute (pre-panel, parallel, post-panel) with timelines for panel/AB proceedings suspended during mediation. Mediators may be appointed from the three panelists or AB members hearing the case, or recommended by the panel/AB. Clearly restrict the use of information from mediation in subsequent proceedings, such as prohibiting references to mediators’ proposals. | | 3.5How to Manage Novel Challenges and Obstacles? | Avoid Unnecessary Procedural Layers: Introduce reliable procedural safeguards to prevent unreasonable cost and time increases. The addition of mediation is justified only if the system is designed to enable robust mediation that resolves underlying disputes early and avoids process abuse. | Balance Transparency and Confidentiality: Include specific clauses in future mediation procedures to strike a compromise, as both transparency and confidentiality serve legitimate objectives. | Ensure Due Process: Regulate mediators by selecting reliable candidates, establishing strong ethical guidelines, allowing peremptory challenges, and imposing sanctions through the Dispute Settlement Body (DSB) when justified, while preserving procedural flexibility. | Guarantee Enforcement: Transform mediation outcomes into international treaties consistent with the Vienna Convention on the Law of Treaties to render them legally binding; report mediation agreements to the DSB for regular enforcement monitoring, and allow parties to request panel confirmation of the agreement’s validity or initiate retaliation procedures in case of non-compliance.

Checklist: 1. Recognize the WTO dispute settlement crisis due to Appellate Body paralysis and the supplementary role of mediation.  
2. Explain mediation’s features: third-party assistance, party autonomy, long-term relationship preservation, with support from the Singapore Convention and investment practices.  
3. Note Article 5 DSU has vague mediation provisions, leading to almost no use since 1995.  
4. Compare with FTAs that use mediation more widely, some with detailed provisions improving operability.  
5. Highlight mediation’s potential in WTO DSM for sensitive disputes, flexible outcomes, and long-term relations, while identifying challenges like enforcement and transparency.  
6. Suggest WTO reforms: refine mediation rules, coordinate with panels and appeals, and establish enforcement to make mediation viable.