Globalization has a role to create either free trade activities, capital, service or labor regardless of a national restriction and it is the process to integrate the whole of economy aspects.[1] It is assumed that to create of them achieved is more existence of integrated countries.[2] By cooperating countries, the higher income will be obtained, and a living standard increases.[3] The World Bank had proven in its report that there was a connection between integration and poverty reduction.[4] The less underdeveloped countries integrate into the world economy, the higher poverty is.[5]
Indisputably, certain aspects are needed to achieve higher income and living standard when countries are integrated. One of them is multilateral trading system that can provide a rule of game for trading activities. International Trading Organization (ITO) that had pioneered the establishment of international organization in the last 1940s[6] with the GATT as a binding rule was successful to bridge the trading activities. However, the norms that were contained in the GATT, which was criticized for insufficient of the teeth to encourage compliance, was deemed diplomatic.[7]Consequently, it could not sufficiently provide clarity and predictability for parties.
The necessary of trading system that was based on a rule-oriented system, rather than power through diplomacy, is the right step as this can provide a predictability and prolonged investment in a business.[8] The Dispute Settlement Understanding system of the WTO offers a system that is secure and predictable based on a rule approach as a central element.[9] Thus, many developing countries expect that this new approach would side to them or at least balance.
Unfortunately, the fact is so far from the expectation of developing members. Some cases decided by either Panel or Appellate Body show implicitly that the ‘power’ system is still exist in particularly conducted by developed countries. Another problem is participation of them in DSU is still poor.[1] Accordingly, this essay will examine the effectiveness of DSU whether it has been ideal or should be reform by mentioning the obstacles. In a more general perspective, this also analyzes the existence of WTO that initially promotes the global welfare whether it has been achieved or is still far from the aims.