The European Union notified the WTO Secretariat, on 13 June, of a request for consultations with Indonesia concerning compliance and arbitration issues in the dispute over clove cigarettes between Indonesia and the United States, in which the EU is a third party (DS406).

> All disputes currently in the consultations phase


The EU considers that Indonesia has acted inconsistently with the procedures of the Dispute Settlement Body (DSB) in unilaterally requesting “sanctions” against the US (for failing to comply with the recommendations and rulings of the DSB in the dispute) without requesting a “compliance panel” to consider whether the measures taken by the US were in compliance with what was recommended by the DSB.

The EU also complains that Indonesia rejected the participation of the EU, as a third party, at the compliance/arbitration panel procedures, preventing the interests of the EU from being taken into account.

Both issues, the “sequencing” problem (the possibility of applying sanctions without waiting for the results of a compliance panel) and the participation of third parties at compliance/arbitration procedures, have been a subject of systemic concern by WTO members for a long time and are part of the current negotiations to improve the Dispute Settlement Understanding.

There was disagreement between the United States and Indonesia over compliance, and the matter was referred to arbitration. Indonesia requested “sanctions” against the US for US$ 50.5 million to which the US objected. It was not possible to reach a “sequencing” agreement between both parties and Indonesia claimed it was not necessary to request a “compliance” panel because the US had taken “no action”.

> Further information will be available within the next few days in document WT/DS481/1

What is a request for consultations?

The request for consultations formally initiates a dispute in the WTO. Consultations give the parties an opportunity to discuss the matter and to find a satisfactory solution without proceeding further with litigation. After 60 days, if consultations have failed to resolve the dispute, the complainant may request adjudication by a panel.

> More on consultations
> Current status of disputes

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