On The WTO Panel's Terms Of Reference

Compulsory jurisdiction is an important characteristic of dispute settlement mechanism of WTO. The terms of reference of the panel decides the compulsory jurisdiction of the dispute settlement mechanism. Therefore research the terms of reference of the panel has a profound meaning. The relationship between the terms of reference of the panel and consultation is not invariable. The panel adopts a quite different attitude compared with that in GATT system, when it interprets the DSU clauses. That greatly reduces the importance of the consultation.Serious problems are existed both in the WTO panel's and appeal body's legal interpretation which not only conflicts with the clauses of WTO dispute settlement legal system, but the most important of all, it breaks the balance of WTO members'right and obligation, at the same time, it infringes the sovereignty of the members.This paper redefines the relationship between the consultation and the terms of reference of the panel based on interpreting methods of WTO treaty. And this paper also analyzes the deep-rooted reason of current mistake is that, with the establishment of WTO quasi-judicial dispute settlement mechanism, judicial organ tends to have an obvious judicial activism when it explains and adopts the treaty. The judicial organ infringes the general council's legislative power by explaining the treaty, and then it infringes the sovereignty of the members. Judicial activism can cause very severe problems, and what's worse, it can even endangers the validity of WTO dispute settlement mechanism. In order to restrain judicial activism, the practical function of DSB should be emphasized, so that the panel and appeal body can be restricted. Moreover, in order to protect the sovereignty of the members, the balance between textual interpretation and teleological interpretation should be kept when interpreting the treaty.