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ON THIS PAGE:
> US — Certain EC Products, para. 120
> US — Cotton Yarn, para. 120
> Mexico — Taxes on Soft Drinks, para. 77
> US — Continued Suspension / Canada
— Continued Suspension, paras. 303, 305-307, 309-310
> US — Continued Suspension / Canada
— Continued Suspension, para. 315
> US — Continued Suspension / Canada
— Continued Suspension, para. 348
> US — Continued Suspension / Canada
— Continued Suspension, para. 352
> US — Continued Suspension / Canada
— Continued Suspension, para. 387
> US — Continued Suspension / Canada
— Continued Suspension, paras. 388-389
> EC — Bananas III (Article 21.5
— Ecuador II) / EC — Bananas III (Article 21.5 — US), para. 249
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S.9.1 US — Certain EC Products, para. 120
(WT/DS165/AB/R)
The obligation of WTO Members not to suspend concessions or
other obligations without prior DSB authorization is explicitly
set out in Articles 22.6 and 23.2(c), not in Article 3.7 of the DSU …
We consider, however, that if a Member has acted in breach of Articles
22.6 and 23.2(c) of the DSU, that Member has also, in view of the nature
and content of Article 3.7, last sentence, necessarily acted contrary to
the latter provision.
S.9.2 US
— Cotton Yarn, para. 120
(WT/DS192/AB/R)
Our view is supported further by the rules of general international
law on state responsibility, which require that countermeasures in
response to breaches by states of their international obligations be
commensurate with the injury suffered. In the same vein, we note that
Article 22.4 of the DSU stipulates that the suspension of concessions
shall be equivalent to the level of nullification or impairment. This
provision of the DSU has been interpreted consistently as not justifying
punitive damages. These two examples illustrate the consequences of
breaches by states of their international obligations, whereas a
safeguard action is merely a remedy to WTO-consistent “fair trade”
activity. It would be absurd if the breach of an international
obligation were sanctioned by proportionate counter measures, while, in
the absence of such breach, a WTO Member would be subject to a
disproportionate and, hence, “punitive”, attribution of serious
damage not wholly caused by its exports. In our view, such an exorbitant
derogation from the principle of proportionality in respect of the
attribution of serious damage could be justified only if the drafters of
the ATC had expressly provided for it, which is not the case.
S.9.3 Mexico
— Taxes on Soft Drinks, para. 77
(WT/DS308/AB/R)
We observe, furthermore, that Mexico’s interpretation of Article
XX(d) disregards the fact that the GATT 1994 and the DSU specify the
actions that a WTO Member may take if it considers that another WTO
Member has acted inconsistently with its obligations under the GATT 1994
or any of the other covered agreements. … By the same logic,
such action under Article XX(d) would evade the specific and detailed
rules that apply when a WTO Member seeks to take countermeasures in
response to another Member’s failure to comply with rulings and
recommendations of the DSB pursuant to Article XXIII:2 of the GATT 1994
and Articles 22 and 23 of the DSU. Mexico’s interpretation would allow
WTO Members to adopt WTO-inconsistent measures based upon a unilateral
determination that another Member has breached its WTO obligations,
in contradiction with Articles 22 and 23 of the DSU and Article XXIII:2
of the GATT 1994.
S.9.4 US
— Continued Suspension / Canada — Continued Suspension,
paras. 303, 305-307, 309-310
(WT/DS320/AB/R,
WT/DS321/AB/R)
The suspension of concessions may not be maintained indefinitely. The
authorization to suspend concessions is contingent and limited in time.
Article 22.8 of the DSU provides that the suspension of concessions
shall be “temporary” and shall only be applied until one of the
three resolutive conditions set out in that provision obtains, namely,
when:
… the measure found to be inconsistent with a covered agreement has
been removed, or the Member that must implement recommendations or
rulings provides a solution to the nullification or impairment of
benefits, or a mutually satisfactory solution is reached.
…
Reading the first sentence of Article 22.8 as a whole, the “removal”
of “the measure found to be inconsistent” should be properly
understood to require nothing less than substantive removal of the
inconsistent measure. Substantive removal may be achieved by repealing
the inconsistent measure. Where a WTO Member adopts an implementing
measure that replaces the inconsistent measure, the implementing measure
must bring about substantive compliance, that is, compliance with the
DSB’s recommendations and rulings and consistency with the covered
agreements. We recognize that the first condition in Article 22.8may be
understood more narrowly as referring only to compliance with the DSB’s
recommendations and rulings. However, a dispute could not be brought to
its finality unless the implementing measure rectifies the
inconsistencies found in the DSB’s recommendations and rulings and is
not in other ways inconsistent with the covered agreements. Interpreting
the first condition as requiring substantive compliance, therefore, will
ensure that the first condition in Article 22.8 achieves the result
obtained under the other two conditions in the same provision, that is,
the final and substantive resolution of a dispute. …
In terms of the first condition in Article 22.8, therefore, the
application of the suspension of concessions may continue until the
removal of the measure found by the DSB to be inconsistent results in
substantive compliance. If a disagreement arises as to whether
substantive compliance is achieved, the fulfilment of the first
condition in Article 22.8 cannot be confirmed unless the disagreement is
resolved through multilateral dispute settlement. Thus, the suspension
of concessions continues to apply pending the outcome of the dispute
settlement proceedings concerning the first resolutive condition in
Article 22.8. If, by recourse to a multilateral dispute settlement
process, the implementing measure is found to bring about substantive
compliance, the suspension of concessions may no longer be applied
pursuant to the first condition in Article 22.8 and cessation of the
suspension is required.
This interpretation is supported by the second sentence of Article
22.8 … The second sentence of Article 22.8 requires surveillance by
the DSB until its recommendations to bring a measure into conformity
with the covered agreements have been implemented. In other words, DSB
surveillance is required until substantive compliance is achieved.
…
… We agree that the three conditions in Article 22.8 are
alternatives to each other. However, they are alternatives leading to
the same result, that is, the termination of the suspension of
concessions and final resolution of a dispute. It is difficult to
envisage how a dispute could be finally resolved merely because the
inconsistent measure is formally removed, regardless of whether
substantive compliance has been achieved. …
Although Article 22.8 sets forth the resolutive conditions under
which the suspension of concessions must cease to apply, it does not
identify the procedures to be followed should a dispute arise as to
whether one of the conditions has been satisfied. This does not mean
that Members can remain passive once concessions have been suspended
pursuant to the DSB’s authorization. The requirement that the
suspension of concessions must be temporary indicates that the
suspension of concessions, as the last resort available under the DSU
when compliance is not achieved, is an abnormal state of affairs that is
not meant to remain indefinitely. Members must act in a cooperative
manner so that the normal state of affairs, that is, compliance with the
covered agreements and absence of the suspension of concessions, may be
restored as quickly as possible. Thus, both the suspending Member and
the implementing Member share the responsibility to ensure that the
application of the suspension of concessions is “temporary”.
Moreover, the fulfilment of the first resolutive condition in Article
22.8 requires certain actions from both Members. The implementing Member
is required to remove the measure found to be inconsistent with a
covered agreement. At the same time, the suspending Member is required
to ensure that the suspension of concessions is only applied within the
limits of Article 22.8. Where, as in this dispute, an implementing
measure is taken and Members disagree as to whether this measure
achieves substantive compliance, both Members have a duty to engage in
WTO dispute settlement in order to establish whether the conditions in
Article 22.8 have been met and whether, as a consequence, the suspension
of concessions must be terminated. Once substantive compliance has been
confirmed through WTO dispute settlement procedures, the authorization
to suspend concessions lapses by operation of law (ipso jure),
because it has been determined that one of the resolutive conditions
pursuant to Article 22.8 is fulfilled. …
S.9.5 US
— Continued Suspension / Canada — Continued Suspension,
para. 315
(WT/DS320/AB/R, WT/DS321/AB/R)
… In sum, a presumption of good faith, which can be claimed by both
parties, does not offer a clear answer to the question of when
inconsistencies arising from the original measure should be considered
to have been removed within the meaning of Article 22.8 of the DSU.
S.9.6 US
— Continued Suspension / Canada — Continued Suspension,
para. 348
(WT/DS320/AB/R, WT/DS321/AB/R)
… Thus, initiation of Article 21.5 proceedings by either Member, as
soon as possible, to examine the consistency with the covered agreements
of Directive 2003/74/EC would contribute to a prompt resolution of the
disagreement as to whether the inconsistent measure has been removed and
whether the suspension of concessions must be terminated pursuant to
Article 22.8.
S.9.7 US
— Continued Suspension / Canada — Continued Suspension,
para. 352
(WT/DS320/AB/R, WT/DS321/AB/R)
… In the post-suspension stage of a dispute, however, an original
respondent would initiate Article 21.5 panel proceedings for a specific
reason: to obtain a multilateral confirmation that its implementing
measure has achieved substantive compliance, so as to render the
continued application of the suspension of concessions unlawful pursuant
to Article 22.8. The situation is thus one of those envisaged under
Article 3.3, in that the original respondent considers that its benefits
under the covered agreement are being impaired by the suspension of
concessions maintained by the original complainant, which is denied by
the suspending Member. The task of an Article 21.5 panel, established at
the request of the original respondent, is to determine whether the
implementing measure brings about substantive compliance. There is
nothing “abstract” about such a determination; it results in an
adjudication with real consequences, including, in particular, whether
the application of the suspension of concessions may continue.
S.9.8 US
— Continued Suspension / Canada — Continued Suspension,
para. 387
(WT/DS320/AB/R, WT/DS321/AB/R)
… The Panel’s finding that, by maintaining the suspension of
concessions, the United States and Canada are seeking the redress of a
violation without abiding by the rules of the DSU thus appears to
presuppose what is yet to be established, that is, that the inconsistent
measure against which the suspension of concessions was authorized
(Directive 96/22/EC) has actually been “removed” within the meaning
of Article 22.8 by Directive 2003/74/EC. This finding of the Panel flows
from its erroneous approach of considering Articles 23.1 and 23.2(a)
completely separately from the requirements of Article 22.8, which we
discussed and rejected earlier.
S.9.9 US
— Continued Suspension / Canada — Continued Suspension,
paras. 388-389
(WT/DS320/AB/R, WT/DS321/AB/R)
… We fail to see the relevance of the distinction between an
authorization and an obligation to suspend concessions for purposes of
analysing whether the United States and Canada are seeking the redress
of a violation concerning Directive 2003/74/EC. The relevant question
before the Panel was whether the authorization to suspend concessions
had lapsed because one of three conditions in Article 22.8 has been met.
In the absence of a finding in WTO dispute settlement that the first
condition in Article 22.8 had been met, the authorization to suspend
concessions did not cease to be legally valid.
In addition, the Panel observed that “[i]n none of the
circumstances foreseen by [the first sentence of] Article 22.8 does this
provision require a decision of the DSB”. We agree that, under the
first sentence of Article 22.8, a decision of the DSB is not required if
Members reach a mutually agreed solution. Similarly, a DSB decision is
not required if the suspending Member does not dispute that the measure
found to be inconsistent with a covered agreement has been removed.
However, where a disagreement arises as to whether the measure found to
be inconsistent has indeed been removed, this disagreement must be
resolved through Article 21.5 proceedings to determine whether the
suspension of concessions is still applied consistently with the
objective conditions under Article 22.8 or must be terminated. Under
such circumstances, DSB decisions are required for the dispute to
proceed pursuant to the rules of the DSU, including the decision to
establish a panel and the adoption of the panel or Appellate Body
reports examining the implementing measure. Moreover, the second
sentence of Article 22.8 requires the DSB to keep under surveillance the
implementation of adopted recommendations and rulings in cases where
concessions have been suspended. Article 22.8 therefore clearly
contemplates an ongoing role of the DSB in reviewing the implementation
of recommendations and rulings, thus confirming that a dispute
concerning implementation should be subject to multilateral resolution
and not be decided on the basis of a unilateral declaration of
compliance or non-compliance.
S.9.10 EC
— Bananas III (Article 21.5 — Ecuador II) / EC — Bananas III (Article 21.5
— US), para. 249
(WT/DS27/AB/RW2/ECU, WT/DS27/AB/RW/USA,
WT/DS27/AB/RW2/ECU/Corr.1,
WT/DS27/AB/RW/USA/Corr.1)
… Article 22.1 of the DSU provides that suspension of concessions
is a temporary measure “available” in the event that it has been
determined that the original DSB recommendations and rulings have not
been fully implemented by the end of the reasonable period of time. The
term “available” indicates that, once suspension of concessions is
authorized, it is within the Members’ discretion to exercise that
authorization subject to the conditions set out in Article 22.8. …
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The texts reproduced here do not have the legal standing of the original
documents which are entrusted and kept at the WTO Secretariat in Geneva.
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