The process — Stages in a typical WTO dispute settlement case

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6.10 Countermeasures by the prevailing Member (suspension of obligations)

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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. Technically, this is called “suspending concessions or other obligations under the covered agreements” (Article 22.2 of the DSU).

Concessions are, for example, tariff reduction commitments which (WTO) Members have made in multilateral trade negotiations and are bound under Article II of GATT 1994. These bound concessions are just one form of WTO obligations. “Obligations” is the generic term in Article 22 (concessions or other obligations) used in this Guide for the sake of brevity (even though the most typical form practised so far is the suspension of concessions through the imposition of tariff surcharges). Suspending WTO obligations in relation to another Member requires a previous authorization of the DSB. 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. This is informally also called “retaliation” or “sanctions”. 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 3.7 of the DSU). 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. The suspension must be revoked once the Member concerned has fully complied with the DSB’s recommendations and rulings.

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.2


Rules governing the suspension of obligations  back to top

The level of suspension of obligations authorized by the DSB must be “equivalent” to the level of nullification or impairment (Article 22.4 of the DSU). This means that the complainant’s retaliatory response may not go beyond the level of the harm caused by the respondent. 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 22.3(a) of the DSU). For this purpose, the multilateral trade agreements are divided into three groups in accordance with the three parts of Annex 1 to the WTO Agreement (Annex 1A comprises the GATT 1994 and the other multilateral trade agreements on trade in goods, Annex 1B the GATS), and Annex 1C the TRIPS Agreement) (Article 22.3(g) of the DSU). Within these agreements, sectors are defined. With regard to TRIPS, the categories of intellectual property rights and the obligations under Part III and those under Part IV of the TRIPS Agreement each constitute separate sectors. In the GATS, each principal sector as identified in the current “Services Sectoral Classification List” is a sector. With respect to goods, all goods belong to the same sector (Article 22.3(f) of the DSU). 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 22.3(b) of the DSU). 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 22.3(c) of the DSU). 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. The possibility of suspending concessions in other sectors or under another agreement is often referred to as “cross-retaliation”.

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.3 This may make it impossible to suspend obligations at a level equivalent to that of the nullification or impairment committed by the respondent, unless the complainant can suspend obligations in a different sector or under a different agreement. 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. In that case, the effects of the suspension of obligations and the imposition of trade barriers might not even be visible in the respondent’s trade statistics. Third, it might be economically unaffordable for the developing country complainant to impose trade barriers against imports following the suspension of obligations under GATT 1994 or GATS because this would reduce the supply and/or increase the price of these imports on which the complainant’s producers and consumers might depend.

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. Suspending obligations under the TRIPS Agreement is an example of how to do so.4



1. According to the view of some Members and trade law experts, Articles 8.2 and 8.3 of the Agreement on Safeguards provide for a procedure partially departing from Article 22 of the DSU and allow the suspension of concessions immediately after the adoption of the panel (and Appellate Body) report, without prior DSB authorization. back to text

2. See Statistics: the first eight years of experience.  back to text

3. 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. back to text

4. Decision by the Arbitrators, EC — Bananas III (Ecuador) (Article 22.6 — EC). back to text



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This interactive training module is based on the “Handbook on the WTO Dispute Settlement System” published in 2004. The second edition of this handbook published in 2017 can be found at here.

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