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REPERTORY OF APPELLATE BODY REPORTS

Recourse to the DSU for violations of the covered agreements


ON THIS PAGE:

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


R.0.1 US — Continued Suspension / Canada — Continued Suspension, paras. 371-373 and footnote 782     back to top
(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     back to top
(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     back to top
(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     back to top
(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     back to top
(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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