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These bound concessions are just one form of WTO obligations. The complainant is thus allowed to impose countermeasures that would otherwise be inconsistent with the WTO Agreement , in response to a violation or to non-violation nullification or impairment. Such suspension of obligations takes place on a discriminatory basis only against the Member that failed to implement. Retaliation is the final and most serious consequence a non-implementing Member faces in the WTO dispute settlement system Article 3.
Although retaliation requires prior approval by the DSB 1 , the countermeasures are applied selectively by one Member against another. There is some debate whether the purpose of the suspension of obligations is to enforce recommendations and rulings, or merely to rebalance reciprocal trade benefits at a new and lower level. Irrespective of the answer, it is clear that the suspension of obligations has the effect of rebalancing mutual trade benefits.
It is also clear that the complainants who suspend obligations often do so with the intention of inducing compliance. Accordingly, the suspension can have the effect of inducing the respondent to achieve implementation.
The DSU also makes clear that the suspension of obligations is temporary and that the DSB is to keep the situation under surveillance as long as there is no implementation.
The issue remains on the agenda of the DSB at the request of the complaining party until it is resolved. Most observers agree that suspending obligations in response to the failure of timely implementation is problematic because it usually results in the complainant responding to a WTO-inconsistent trade barrier with another trade barrier, which is contrary to the liberalization philosophy underlying the WTO.
Also, measures erecting trade barriers come at a price because they are nearly always economically harmful not only for the targeted Member but also for the Member imposing those measures. That said, it is important to note that it is the last resort in the dispute settlement system and is not actually used in most cases. It is clearly the exception, not the rule, for a dispute to go this far and not be resolved at an earlier stage through more constructive means.
At the same time, the suspension of obligations is prospective rather than retroactive; it covers only the time-period after the DSB has granted authorization, not the whole period during which the measure in question was applied or the entire period of the dispute. Regarding the type of obligations to be suspended, the DSU imposes certain requirements. In principle, the sanctions should be imposed in the same sector as that in which the violation or other nullification or impairment was found Article Within these agreements, sectors are defined.
With respect to goods, all goods belong to the same sector Article The general principle is that the complainant should first seek to suspend obligations in the same sector as that in which the violation or other nullification or impairment was found. This means that, for example, the response to a violation in the area of patents should also relate to patents. If the violation occurred in the area of distribution services, then the countermeasure should also be in this area.
On the other hand, a WTO-inconsistent tariff on automobiles a good can be countered with a tariff surcharge on cheese, furniture or pyjamas also goods. However, if the complainant considers it impracticable or ineffective to remain within the same sector, the sanctions can be imposed in a different sector under the same agreement Article This option has no relevance in the area of goods, but, for example, a violation with regard to patents could be countered with countermeasures in the area of trademarks, and a violation in the area of distribution services could be countered in the area of health services.
In turn, if the complainant considers it impracticable or ineffective to remain within the same agreement, and the circumstances are serious enough, the countermeasures can be taken under another agreement Article The objective of this hierarchy is to minimize the chances of actions spilling over into unrelated sectors while at the same time allowing the actions to be effective.
Particularly for smaller and developing country Members, the possibility of suspending obligations under a different sector or different agreement can be quite important. First, smaller and developing countries do not always import goods and services or intellectual property rights in sufficient quantities in the same sectors as those in which the violation or other nullification or impairment took place.
Second, the suspension in the same sector or under the same agreement could be ineffective or impracticable because the bilateral trade relationship is asymmetrical in that it is relatively important for the complainant and relatively unimportant for the respondent, particularly if the latter is a big trading nation. For these reasons, it is important for developing countries to be able to use methods of suspending obligations that do not result in trade barriers.
According to the view of some Members and trade law experts, Articles 8. This assumes that the violation or other nullification or impairment affected exports of the complainant and that the suspension of obligations would aim to harm imports from the respondent, as it is most commonly but not necessarily the case.
Prerequisites and objectives If, within 20 days after the expiry of the reasonable period of time, the parties have not agreed on satisfactory compensation, the complainant may ask the DSB for permission to impose trade sanctions against the respondent that has failed to implement. You need scripting enabled to see which chapters you have completed Introduction to the WTO dispute settlement system. Historic development of the WTO dispute settlement system.
WTO Bodies involved in the dispute settlement process. Possible object of a complaint — Jurisdiction of Panels and the Appellate Body.
The process — Stages in a typical WTO dispute settlement case. Legal effect of panel and appellate body reports and DSB recommendations and rulings.
Dispute Settlement without recourse to Panels and the Appellate Body. Participation in dispute settlement proceedings. Legal issues arising in WTO dispute settlement proceedings. Developing countries in WTO dispute settlement. Evaluation of the WTO dispute settlement system: