Deficiencies and Improvement Proposals for Retaliation Mechanism in WTO Dispute Settlement Understanding

As the last-resort enforcement mechanism within the WTO framework, the effectiveness and regime of Retaliation have been subjects of ongoing concern and scrutiny. This paper presents an in-depth analysis of the Retaliation Mechanism in WTO Dispute Settlement Understanding (DSU), highlighting its notable deficiencies and the various proposals aimed at enhancing its function. The defects can be split into procedural problems and substantial problems, including the “sequencing problem” of DSU Article21.5 and Article 22, flaws in the arbitration process, and the mechanism’s overall limited effectiveness in ensuring compliance and rebalancing interests among member states. Through detailed analysis of relevant judicial cases and consideration of suggested reforms, this paper explores the potential future improvements to make the Retaliation Mechanism more robust and equitable. This review aims not only to assess the current challenges but also to suggest feasible enhancements that could significantly optimize the mechanism's efficacy in resolving international trade disputes.