DISPUTE SETTLEMENT SYSTEM TRAINING MODULE: CHAPTER
6
The process
— Stages in a typical WTO dispute settlement case
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6.9
Compensation
If the implementing Member does not achieve full compliance by the end of the reasonable period of time, it has to enter into negotiations with the complaining party with a view to agreeing a mutually acceptable compensation (Article 22.2 of the DSU). This compensation does not mean monetary payment; rather, the respondent is supposed to offer a benefit, for example a tariff reduction, which is equivalent to the benefit which the respondent has nullified or impaired by applying its measure.
The parties to
the dispute must agree upon the compensation, which must also be
consistent with the covered agreements (Article
22.1 of
the DSU). This latter requirement is probably one of the reasons
why (WTO) Members have hardly ever been able to work out compensation
in cases reaching this stage. Conformity with the covered agreements
implies, notably, consistency with the most-favoured-nation obligations
(Article
I of GATT 1994, among others). Therefore, WTO
Members other than the complainant(s) would also benefit, if compensation
is offered e.g. in the form of a tariff reduction. This makes compensation
less attractive to both the respondent, for whom this raises the “price”,
and the complainant, who does not get an exclusive benefit. These
obstacles could to some extent be overcome, however, if the parties
were to select a trade benefit (e.g. tariff reduction) in a sector
of particular export interest to the complainant and other Members
had little export interest in that sector or product.
