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> US — Continued Suspension / Canada — Continued Suspension, paras. 371-373 and footnote 782
> US — Continued Suspension / Canada — Continued Suspension, paras. 374-375
> US — Continued Suspension / Canada — Continued Suspension, para. 378
> US — Continued Suspension / Canada — Continued Suspension, paras. 381-384
> US — Continued Suspension / Canada — Continued Suspension, para. 387
> US — Continued Suspension / Canada — Continued Suspension, paras. 396, 398-399
> US — Continued Suspension / Canada — Continued Suspension,
paras. 402-404
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R.0.1 US — Continued Suspension / Canada
— Continued Suspension, paras. 371-373 and footnote 782
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(WT/DS320/AB/R,
WT/DS321/AB/R)
As the Appellate Body has explained, Article 23.1 lays down the
fundamental obligation of WTO Members to have recourse to the rules and
procedures of the DSU when seeking redress of a violation of the covered
agreements. Article 23 restricts WTO Members’ conduct in two respects.
First, Article 23.1 establishes the WTO dispute settlement system as the
exclusive forum for the resolution of such disputes and requires adherence
to the rules of the DSU. Secondly, Article 23.2 prohibits certain
unilateral action by a WTO Member. Thus, a Member cannot unilaterally: (i)
determine that a violation has occurred, benefits have been nullified or
impaired, or that the attainment of any objective of the covered
agreements has been impeded; (ii) determine the duration of the reasonable
period of time for implementation; or (iii) decide to suspend concessions
and determine the level thereof.
… We share the view of the panel in US — Section 301 Trade Act that
the terms “[i]n such cases, Members shall” used in the chapeau of
Article 23.2 make clear that Article 23.2 is “explicitly linked to, and
has to be read together with and subject to, Article 23.1”. Therefore,
the specific prohibitions of unilateral actions in Article 23.2 must be
understood in the context of the overarching provision of Article 23.1. In
other words, the unilateral actions prohibited by Article 23.2 are those
taken by a Member with a view to seeking redress of a violation. Moreover,
the phrase “[i]n such cases, Members shall” at the beginning of
Article 23.2 indicates that the specific obligations set forth in its
subparagraphs clarify and illustrate the scope of the general and ongoing
obligation in Article 23.1. This does not mean, however, that the scope of
Article 23.1 is exhausted by the situations described in Article 23.2.782
Seeking the redress of a violation is of course not by itself
prohibited by Article 23.1 of the DSU. Rather, to be in breach of Article
23.1, a Member must be seeking redress without having recourse to, or
abiding by, the rules of the DSU.
R.0.2 US — Continued Suspension / Canada — Continued Suspension,
paras. 374-375
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(WT/DS320/AB/R, WT/DS321/AB/R)
An initial question that arises in this case is whether the continued
application of a previously authorized suspension of concessions can be
said to constitute the seeking of redress. On the one hand, the
authorization to suspend concessions can be said to be the result of a
previous act of seeking redress that involved initiating a dispute. On the
other hand, the continued application of the suspension of concessions can
be said to reflect a continuous act of seeking redress for a violation
found by the DSB that has not yet been rectified. In any event, the
suspension of concessions that has been duly authorized by the DSB will
not constitute a violation of Article 23.1, as long as it is consistent
with other rules of the DSU, including paragraphs 2 through 8 of Article
22, even if the continued application of the suspension of concessions is
regarded as an action or part of a process of “seeking the redress”.
This is because, before obtaining the DSB’s authorization to suspend
concessions, a Member must initiate a dispute settlement process in which
it challenges the consistency with the covered agreements of a measure
taken by another Member. The Member initiating the process will only be
authorized to suspend concessions when the measure is found by the panel
(and the Appellate Body, if appealed) to be inconsistent with the covered
agreements and the Member taking the measure fails to implement the panel’s
(or Appellate Body’s) findings within a reasonable period of time or, if
it takes a measure to comply, that measure is found by the panel (and the
Appellate Body) in compliance proceedings not to have brought the Member
concerned into compliance. In other words, the Member will only be able to
suspend concessions pursuant to the DSB’s authorization after having had
extensive recourse to, and abided by, the rules and procedures of the DSU,
consistent with the requirements of Article 23.1.
This does not mean that Article 23.1 ceases to apply once the
suspension of concessions has been authorized by the DSB. Article 23.2(c)
specifically refers to Article 22 of the DSU. Paragraph 8 of this
provision states that the suspension of concessions shall only be applied
until the inconsistent measure has been removed or one of the other two
conditions in Article 22.8 is met. Thus, if the Member subject to the
suspension of concessions takes an implementing measure and that measure
is found in WTO dispute settlement proceedings to bring this Member into
substantive compliance, the suspension of concessions would no longer be
consistent with Article 22.8 of the DSU, and, as a result, would become a
unilateral action prohibited by Articles 23.1 and 23.2. In other words,
the requirements in Article 22.8 and Article 23 apply and must be read
together in the post-suspension stage of a dispute. Therefore, Article 23
must be seen as containing an ongoing obligation and continues to apply
even after the suspension of concessions has been duly authorized by the
DSB.
R.0.3 US — Continued Suspension / Canada — Continued Suspension, para. 378
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(WT/DS320/AB/R, WT/DS321/AB/R)
… The requirements in Article 22 and those in Article 23 must be read
together, in the post-suspension stage of the dispute, to determine the
legality of the continued suspension when an implementing measure has been
taken. Thus, we share the view of the United States and Canada that, in
order to determine whether they acted inconsistently with Article 23 by
continuing the suspension of concessions subsequent to the notification of
Directive 2003/74/EC, the Panel had to first determine whether the
suspension of concessions was being applied consistently with Article 22.8
of the DSU.
R.0.4 US — Continued Suspension / Canada — Continued Suspension,
paras. 381-384 back to top
(WT/DS320/AB/R, WT/DS321/AB/R)
… Requiring termination of the suspension of concessions simply
because a Member declares that it has removed the inconsistent measure,
without a multilateral determination that substantive compliance has
indeed been achieved, would undermine the important function of the
suspension of concessions in inducing compliance. This would significantly
weaken the effectiveness of the WTO dispute settlement system and its
ability to provide security and predictability to the multilateral trading
system.
The European Communities additionally submits that its position is
consistent with the approach taken in the Articles on Responsibility of
States for Internationally Wrongful Acts (the “Articles on State
Responsibility”), which require that countermeasures be suspended if the
internationally wrongful act has ceased and the dispute is pending before
a tribunal that has the authority to make decisions binding upon the
parties. Yet, the Articles on State Responsibility do not lend support to
the European Communities’ position. For example, Article 53 provides
that countermeasures must be terminated as soon as the State “has
complied with its obligations” in relation to the internationally
wrongful act. Thus, relevant principles under international law, as
reflected in the Articles on State Responsibility, support the proposition
that countermeasures may continue until such time as the responsible State
has ceased the wrongful act by fully complying with its obligations.
In sum, the suspension of concessions maintained by the United States
and Canada has been duly authorized by the DSB and was obtained through
recourse to the relevant rules and procedures of the DSU, consistently
with Article 23.1 of the DSU. Pursuant to Article 22.8, the legality of
the continued suspension of concessions depends on whether the measure
found to be inconsistent in EC — Hormones has been removed, and
this requires substantive compliance. We therefore find that the
Panel erred in considering that the European Communities’ claims under
Articles 23.2(a), 23.1, and 21.5 may be examined “completely separately”
from whether the European Communities implemented the DSB’s
recommendations and rulings in EC — Hormones.
The DSB’s authorization does not mean that Article 23 becomes
irrelevant. Rather, as Article 23.2(c) specifies, the suspension of
concessions is subject to Article 22, including the requirement in Article
22.8 that it shall only be applied until such time as the measure found to
be inconsistent with the covered agreements has been removed. Therefore,
the suspension of concessions by the United States and Canada would be in
breach of Article 23.2(c), and consequently Article 23.1, if it were
established in WTO dispute settlement that the inconsistent measure has
indeed been removed within the meaning of Article 22.8 and the suspension
is not immediately terminated. Article 22.8 thus provides relevant context
for the analysis of the issues appealed under Article 23. Moreover, the
application of DSB-authorized suspension of concessions is temporary and
subject to the objective conditions laid down in Article 22.8. The United
States, Canada, as well as the European Communities, have the shared
responsibility to ensure that the suspension of concessions is not applied
beyond the time foreseen in Article 22.8. Consequently, the United States
and Canada have a duty to engage actively in dispute settlement
proceedings concerning whether the suspension of concessions is applied
consistently with such conditions. Failing to do so could be contrary to
the overarching principle in Article 23.1 prohibiting Members from seeking
redress without having recourse to, or abiding by the rules of, the DSU.
…
R.0.5 US — Continued Suspension / Canada — Continued Suspension, para. 387
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(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.
R.0.6 US
— Continued Suspension / Canada — Continued Suspension, paras. 396, 398-399 back to top
(WT/DS320/AB/R, WT/DS321/AB/R)
We share the view of the panel in US — Section 301 Trade Act
that
a “determination” within the meaning of Article 23.2(a) “implies a
high degree of firmness or immutability, i.e. a more or less final
decision by a Member in respect of the WTO consistency of a measure taken
by another Member”. Moreover, preliminary opinions or views expressed
without a clear intention to seek redress are not covered by Article
23.2(a). The statements made by delegates of the United States and Canada,
on which the Panel focused its attention, were made shortly after the
European Communities notified Directive 2003/74/EC to the DSB. The
statements were made at the two DSB meetings held, respectively, two weeks
and five weeks from the DSB meeting at which Directive 2003/74/ECwas
notified by the European Communities. These statements, therefore, seem no
more than initial reactions to the European Communities’ self-proclaimed
compliance with the DSB’s recommendations and rulings in EC — Hormones.
Considering the complexity of the issues that arise with respect to the
consistency of Directive 2003/74/EC (as demonstrated in sections VI and
VII of the Report), it is reasonable to assume that the United States and
Canada needed some time before forming a definitive view regarding whether
the European Communities had brought itself into compliance. We thus share
the United States’ and Canada’s view that the statements at the DSB
meetings lack sufficient amount of “firmness or immutability” for them
to constitute a determination within the meaning of Article 23.2(a).
…
Moreover, DSB statements are not intended to have legal effects and do
not have the legal status of a definitive determination in themselves.
Rather, they are views expressed by Members and should not be considered
to prejudice Members’ position in the context of a dispute. As the
United States rightly points out, “[s]tatements made by Members at DSB
meetings, especially those expressing a view as to the WTO consistency of
another Member’s measures or actions, are generally diplomatic or
political in nature” and “generally have no legal effect or status in
and of themselves”.
The Panel’s finding that DSB statements could constitute a definitive
determination concerning the WTO-inconsistency of a Member’s measure
could adversely affect WTO Members’ ability to freely express their
views on the potential compatibility with the covered agreements of
measures adopted by other Members. This would result in a “chilling”
effect on those statements, because Members would refrain from expressing
their views at DSB meetings regarding the WTO-inconsistency of other
Members’ measures lest such statements be found to constitute a
violation of Article 23. If this were the case, the DSB would be inhibited
from properly carrying out its function, pursuant to Article 21.6 of the
DSU, to keep under surveillance the implementation of its recommendations
and rulings.
R.0.7 US — Continued Suspension / Canada — Continued Suspension,
paras. 402-404
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(WT/DS320/AB/R, WT/DS321/AB/R)
The Panel went on to find that, even if the DSB statements were
considered to be provisional, “the subsequent continuation of the
suspension of concessions by [the United States and Canada] without
alteration and without saying that [they were] still studying [Directive
2003/74/EC]” confirmed that they made such a “determination”. …
…
… until the removal of the European Communities’ inconsistent
measure was determined through WTO dispute settlement, the United States’
and Canada’s authorization to suspend concessions did not lapse. Under
these circumstances, the suspension of concessions applied pursuant to the
DSB’s authorization in respect of Directive 96/22/EC was maintained
through recourse to, and abiding by, the rules and procedures of the DSU.
Its continuation thus did not “confirm” that the United States and
Canada made a unilateral determination regarding Directive 2003/74/EC, as
the Panel found, in violation of Article 23.2(a) of the DSU.
The United States further asserts that, by inferring the existence of a
“determination” within the meaning of Article 23.2(a) on the basis of
the continued suspension of concessions, the Panel effectively read into
Article 23 a deadline by which a unilateral determination inconsistent
with Article 23.2(a) will be imputed to a Member, even though Article 23
contains no such deadline. The European Communities contends that the
Panel correctly observed that the deadline by which a Member shall have
recourse to the DSU pursuant to Articles 23.1 and 23.2(a) “was not an
issue before the Panel”. However, without a proper identification of the
time at which the continued suspension of concessions would be found to
constitute a unilateral determination inconsistent with the DSU, WTO
Members would be unsure as to when or for how long they could properly
rely on a DSB authorization to suspend concessions. Such an outcome is
contrary to the DSU’s objective of providing security and
predictability. In any event, given that we have found above that an
original respondent may initiate Article 21.5 proceedings, and that the
authority to suspend concessions lapses once one of the three conditions
in Article 22.8 is met, we feel no need to further explore this question.
782. As the panel in US — Section 301 Trade Act pointed out,
the prohibitions mentioned in Article 23.2 are examples of conduct that
contradicts the rules and procedures of the DSU which, under the
obligation in Article 23.1 to “abide by the rules and procedures” of
the DSU, Members are obligated to follow. These rules and procedures cover
more than those specifically mentioned in Article 23.2 and “[t]here is a
great deal more State conduct which can violate the general obligation in
Article 23.1 to have recourse to, and abide by, the rules and procedures
of the DSU than the instances especially singled out in Article 23.2”
(Panel Report, US — Section 301 Trade Act, para. 7.45) (footnote
omitted). back to text
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