the dispute settlement understanding (dsu), Annex 2 of the WTO Agreement, represents a major, if not the major, difference between the WTO and its predecessor, GATT. It provides a coherent and predictable timetable and system of consultation and enforcement of WTO obligations intended to reduce trade barriers and price-distorting policies and to maintain minimum uniform standards.

Initially, under GATT, dispute settlements were processed primarily through diplomatic channels, but over time, they became more adjudicatory (Hudec, 1990 and 1993; Jackson, 1998; Zimmermann, 2005). However, this mechanism was significantly limited because each and every stage of the dispute settlement process – that is, referral of a dispute to a panel procedure, adoption of the panel report, and authorization of the countermeasures – required a positive consensus (WTO, 2003). This meant that the process could be delayed or blocked by a respondent or a losing party. Still, as Jackson (1998) points out, by the mid-1980s it was diplomatically very difficult for a respondent to block a request for a panel procedure. Even the blockage of panel reports was more rare than one would have expected. In a theoretical model by Chang (2002), the low propensity of blocking panel rulings is explained by diplomatic costs and the low degree of legal controversy.

However, as the degree of legal controversy increased following agreements on non-tariff barriers of the Tokyo Round (1973–1979), the incidence of blockage of panel rulings also increased.