Singapore's Contribution to the WTO Dispute System

When two countries fight over trade, who decides who’s right? For a long time, the answer was basically “the bigger country wins.” That changed in 1995. And Singapore helped make it happen.

This is part of my retelling of “50 Years of Singapore and the United Nations” (Tommy Koh, Li Lin Chang, Joanna Koh, 2015, ISBN: 978-9814713030).

Chapter 15 is written by Margaret Liang, who was Singapore’s actual negotiator for dispute settlement during the Uruguay Round of trade talks. She was in the room when the rules got written. This isn’t theory. This is a firsthand account.

The Old System Was Broken

Before the World Trade Organization (WTO) existed, trade disputes were handled under the GATT system. GATT stands for General Agreement on Tariffs and Trade. It had been around since the 1940s, and its dispute process had some serious problems.

Here’s the big one: if a country broke the trade rules and someone filed a complaint, the country that broke the rules could actually block the investigation. Yes, really. The accused could stop the panel from even being set up. They could also block the final report from being adopted.

There were no deadlines either. Cases could drag on forever. And even when a ruling did get through, there was no real enforcement. Countries could just ignore it.

For small countries like Singapore, this was a nightmare. If a bigger trading partner slapped unfair restrictions on your exports, you had almost no way to fight back. The rules existed on paper, but they had no teeth.

Why Singapore Cared So Much

Singapore’s economy runs on trade. Always has. The country depends on access to global markets. So having clear, fair trade rules isn’t just nice to have. It’s survival.

Without a strong dispute system, big countries could use their economic muscle to push smaller countries around. They could impose restrictions, and small nations had no real recourse. Singapore needed a system where rules actually mattered and where even a small country could challenge a big one.

That’s why Singapore pushed hard for reform. Margaret Liang was right there at the negotiating table, working to build something better.

Building the New System

The Uruguay Round negotiations ran from 1986 to 1993. These were massive, complex trade talks involving dozens of countries. Dispute settlement reform was one piece of a much larger puzzle.

Liang worked closely with a group of “like-minded” countries: the US, Canada, Hong Kong, Switzerland, and Uruguay. Together, they pushed to make the dispute process more rules-based and less political.

The key fights were over a few big questions.

Should the process be automatic? Under the old system, you needed everyone to agree before a panel could be set up. The US and Canada wanted to flip that. Make panels automatic unless everyone agrees to stop them. That’s a huge difference. It means the accused can’t just block the case anymore.

What about countries acting on their own? The US had laws (called Section 301 and Super 301) that let it take trade action against other countries without going through GATT at all. Many countries, especially developing ones, wanted that stopped.

Should there be an appeals process? The US and Canada pushed for an Appellate Body, basically a court of appeals for trade disputes. Singapore and some others had concerns about this at first. Adding an appeals stage would make the process take longer. But eventually everyone agreed it would focus on narrow legal questions and add about three months. A fair trade-off.

There was also a 12-country coalition called the De La Paix group (named after a hotel in Geneva where they first met). It included Australia, Canada, Japan, Korea, New Zealand, Singapore, and others. They helped bridge the gap between developing countries and major developed ones.

The Big Deal: Reverse Consensus

The most important change was something called “reverse consensus.” Under the old system, you needed consensus to move a case forward. Under the new system, you need consensus to stop a case.

Think about that for a second. Before, one country could block everything. Now, every single country would have to agree to stop a case. That basically never happens. So panels get set up. Reports get adopted. Rulings get enforced. Automatically.

This was the US proposal, backed by the EU. And it changed everything. In exchange, the new rules banned countries from taking unilateral trade actions outside the system. So the US gave up its ability to act alone, and got a system where disputes actually get resolved. Fair trade.

What the New System Looks Like

The WTO Dispute Settlement Understanding (DSU) came into force on January 1, 1995. Here’s what it brought:

Fixed deadlines. Every stage of the process now has a timeline. No more endless delays.

Automatic panels. Unless there’s consensus not to, panels get set up, reports get adopted, and enforcement happens. No more blocking by the accused.

An appeals process. If you disagree with a panel decision, you can appeal to a standing Appellate Body.

Real enforcement. If a country doesn’t follow a ruling, the winning side can retaliate. That means imposing trade restrictions on the losing country until they comply.

These four changes turned the dispute system from a suggestion box into something that actually works.

Singapore’s First WTO Case

Here’s a cool detail. Singapore was the very first country to use the new WTO dispute system. On January 10, 1995, just ten days after the WTO came into force, Singapore filed a complaint against Malaysia.

The issue? Malaysia had banned imports of two types of petrochemicals (polyethylene and polypropylene) unless companies got a special permit. Malaysia was a major market for Singapore’s petrochemical producers, and this ban was hitting them hard.

The dispute team included See Chak Mun as team leader, Lee Sieu Kin from the Attorney General’s Chambers, Margaret Liang herself, and officials from the Trade Development Board and Ministry of Trade and Industry.

Under the new rules, both countries had to sit down for consultations within 30 days. They got an extra 30 days for more talks. If that didn’t work, Singapore could request a formal panel.

It took three rounds of consultations instead of the usual two (Malaysia asked for an extra one). But it worked. Malaysia withdrew the permit scheme and replaced it with an automatic licensing system that followed WTO rules.

No panel was needed. No lengthy legal battle. The system worked exactly as designed.

Liang calls this a key lesson: the WTO dispute system is an effective tool for all members, regardless of size. It worked well for Singapore.

Singapore as a Neutral Party

There’s another way Singapore contributes to the WTO dispute system. Because Singapore has an open trading system and is seen as neutral in most trade disputes, the WTO often asks Singaporeans to serve as panelists or chairs in other countries’ cases.

Several Singapore officials have done this over the years, including Ambassadors Tommy Koh and See Chak Mun, and Margaret Liang herself. She served as panelist and chair in disputes involving Chile, the EU, the US, Peru, and Korea.

For a small country with a limited pool of trade experts, that’s a big contribution. And it builds expertise that Singapore can tap into if it ever needs to fight its own cases.

The System Isn’t Perfect

Liang is honest about the problems. The biggest complaint from businesses is that the whole process takes too long. On average, panel and appeals proceedings take about 12 months. After that, the losing side gets another 12 to 15 months to implement the ruling. That’s potentially over two years from start to finish.

There’s also the enforcement problem. What happens when a country wins its case but the losing side just doesn’t comply? The winner can retaliate by imposing trade restrictions. But here’s the catch: if you’re a small country retaliating against a big one, your trade restrictions barely hurt them. You just don’t have enough economic weight.

Some developing countries have proposed alternatives. Instead of retaliation, the losing side should pay money. Those payments could even increase over time if the country keeps ignoring the ruling.

But Liang sees a problem there too. Rich countries could just pay the fines and keep their illegal trade measures in place. They’d essentially buy the right to cheat.

The real challenge, she says, is finding ways to make countries actually follow the rules. That’s still the weakest link in the system.

Why This Matters

Singapore’s story with the WTO dispute system shows something important. Small countries don’t have to accept whatever big countries throw at them. When the rules are clear and the process is fair, even a city-state can stand up to its neighbors and win.

Margaret Liang helped write those rules. And then Singapore became the first country to use them. That’s not a coincidence. Singapore understood better than most how much a fair system matters when you’re small.

The system still needs work. It’s slow. Enforcement is weak. But compared to what existed before, where the accused could block their own trial, it’s a massive improvement. And Singapore played a real part in making it happen.

About the Author of This Chapter: Margaret Liang is Consultant to Singapore’s Ministry of Foreign Affairs for WTO/Trade Issues. She served as Singapore’s Deputy Permanent Representative to the UN/WTO in Geneva from 1999 to 2002 and was Singapore’s negotiator in the Uruguay Round from 1985 to 1992, covering areas including dispute settlement, anti-dumping, subsidies, and safeguards. She has served as panelist and chair in multiple WTO dispute cases.

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