Remedies under the WTO Legal System
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1 Remedies under the WTO Legal System By R. Rajesh Babu M A RTI N U S NIJHOFF PUBLISHERS LEIDEN BOSTON 2012
2 CONTENTS Acknowledgment Abbreviations xiii xv 1. Introduction.: 1 1. Introduction 1 2. Scope and Objective 3 3. General Introduction to the Volume Remedies under International Law Remedies under WTO Law 8 3.3* Enforcement of Remedies under WTO Law WTO Remedies and Developing Countries General Features of the WTO Dispute Settlement Understanding Introduction GATT Dispute Settlement ( ) The Havana Charter and the GATT The General Agreement in Tariffs and Trade, Dispute Settlement in GATT 1947 (Articles XXII and XXIII) Compliance and Enforcement in the GATT Era Summary of the GATT Era The Uruguay Round: Rethinking on Compliance and Enforcement The WTO Dispute Settlement Understanding The Dispute Settlement Understanding: An Introduction The WTO Dispute Settlement Process: Pre-Implementation Stage Compliance with and Enforcement of Adopted Reports: The Implementation Stage Surveillance of Implementation Special and Additional Rules and Procedure for Dispute Settlement 35
3 viii CONTENTS 4.1. Article 4.7 of the SCM Agreement Prohibition of Unilateralism Jurisdiction Compulsory Jurisdiction Scope of Jurisdiction Nature of Claims Other Means of Dispute Settlement in the DSU Good Offices, Conciliation or Mediation Arbitration Pursuant to Article 25 of the DSU Remedies under International Law Introduction Remedies in International Law in Context The ILC's Articles on State Responsibility for Internationally Wrongful Acts...: Historical Development of the Articles General Overview of the Articles Legal Status of the Articles Basic Concepts Underlying the Articles Distinction between Primary and Secondary Obligations The Concept of'injured State' and 'Injury' Residual Nature of the Articles Legal Consequences of the International Responsibility of a State 68, 4.1. Obligations Arising out of an International Wrongful Act Cessation of the Wrongful Act Assurance and Guarantees of Non-Repetition Reparation for Injury Caused Definition of Injury and Establishing the Causal Link Forms of Reparation ^ 5. Conclusion 3. _» 4. Remedies under WTO Law, 3n 1. Introduction < ijj 2. The Relationship between WTO Law and Er } International Law WTO Law as Lex Specialis - Understanding the ^ Connection ^ o> 3 Q. V
4 CONTENTS ix Concept of Lex Specialis in International Law WTO Law as "Lex Specialis" Applicable Law in the WTO DSU - the Possible Wider Relationship Customary Rules of Interpretation under International Law and the WTO -the Minimum Level of Interaction Customary Rules of Interpretation under International Law Customary Rules of Interpretation in the WTO Non Liquet in the WTO and International Law - A Possible Fall Out Nature of WTO Obligations: Bilateral or Collective? Access to the WTO Dispute Settlement System: Legal Standing Material Aspects of Remedies under the WTO Dispute Settlement System Object and Purpose of Remedies Nature and Content of Remedies under the DSU Recommendation to 'Bring the Measures into Conformity': The Ultimate Remedy under the WTO Special Rules on Remedies: Subsidies Practice - "Withdrawal" vs. "Bring into Conformity" Suggest Ways to Comply - the Non-binding Option Legal Effect of Rulings under Article Value of GATT/WTO Reports as Precedent The Prospective Nature of Remedies Implementation of Adverse DSB Rulings: The Procedural Aspect of Remedies Prompt Compliance ' Concept of Compliance Reasonable Period of Time for Implementation The Procedure Scope of Article 21.3 (c) Arbitration Factors Determining the Reasonable Period of Time 164
5 X CONTENTS Special Rules in the SCM Agreement Nature of the Burden of Proof "Surveillance" During the Reasonable Period Disagreements Regarding Implementation: The Compliance Review Procedure The Compliance Review Procedure Scope of the Article 21.5 Review "Measures" Taken to Comply The Relationship between Article's 21.5 and 22: The Problem of Sequencing Statement of the Problem The EC - US Controversy: the EC- Banana Case The Panel/Arbitration Findings Bilateral Understanding: The Ad hoc Solution Compensation: Remedy for Non-Compliance Remedies for Non-Compliance Compensation as a Remedy Cases where Compensation was Opted for as a Remedy Problems with WTO Compensation Proposals for Improving Compensation as a Remedy Compulsory/ Mandatory Compensation Financial/Money Compensation Retrospective Compensation Remedies for Non-violation and Situation Claims Remedies for Non-violation Claims 208, 8.2. Situation Complaints Preliminary Conclusions Enforcing Remedies under WTO Law Introduction Enforcement Record of the WTO: The Data Use of Terms Enforcement of Remedies in International Law Is International Law 'Law'? A Brief Look at the Old Debate Customary Rules on Countermeasures: The ILC Articles Preclusion of Wrongfulness of Countermeasures Conditions Limiting the Application of Countermeasures in International Law 229
6 CONTENTS Xi Object of Countermeasures Countermeasures must be Directed only Against the State Responsible Countermeasures are Temporary Measures Reversibility of Object of Countermeasures Non-Termination of Substantive Obligations Countermeasures must be Proportionate Obligations not Affected by Countermeasures Procedural Conditions ' '..'..' Termination of Countermeasures Lex Specialis Enforcement Provisions in Other International Law Regimes Applicability of Customary Rules of Countermeasures in WTO Law Countermeasures in WTO Law Suspension of Obligation and Retaliation under GATT From GATT to WTO: Remedies for Non-Compliance Object and Purpose of Countermeasures in the WTO The Compliance vs. Rebalancing Debate General Features of Countermeasures in the WTO The Bilateral Nature of Countermeasures Temporal Character of Countermeasures Prospective Nature of Countermeasures: Date from which 'Injury' is Calculated Countermeasures to be Consistent with the Covered Agreements Principles and Procedure Governing Countermeasures General Conditions for Countermeasures Choice between Suspension of "Concessions" and "Other Obligations" Other Requirements: Methodology Paper and Product Coverage Specific Rules and Procedures for Countermeasures Retaliation and Cross-Retaliation: The Hierarchy of Responses : Rules and Procedure for Granting Cross-Retaliation Scope and Power of Review of Article 22.6 Arbitrators 280
7 Xii CONTENTS 6.4. Burden of Proof Level of Countermeasures: The Principle of Proportionality The Concept of Proportionality in International Law The WTO Countermeasures and the Principle of Proportionality Determination of'equivalence' in Countermeasures Cases Appropriate' Countermeasures in the SCM Agreement: The Exception Assessment of Level of Countermeasures - The Methodology Assessment of "Equivalence" Mirror Legislation as Equivalent Countermeasure The "Carousel" Type Retaliation Surveillance of Implementation Instances of Countermeasures in the WTO: The Cases The EC-Bananas Case The EC - Hormones Case The US- Tax Treatment for "Foreign Sales Corporations" Case The Aircraft Subsidy Cases The US - Offset Act of {Byrd Amendment) Case The US -Gambling andbetting Services Case The Issues Raised by these Cases The Effectiveness of Countermeasures in WTO Law o. 1. Effectiveness of Countermeasures: The Institutional Dilemma Preliminary Conclusions WTO Remedies arid the Developing Countries Introduction The Problem of Identifying "Developing Countries" Differential Treatment in International Law The S&D Principle as a Permanent Exception to International Law: Some Preliminary Observations The GATT 1947 and the Developing Countries Differential Treatment in the GATT GATT Dispute Settlement and the Developing Countries 358
8 CONTENTS Xiii 3.3. The Developing Countries' Attempt to Improve the GATT Dispute Settlement The Uruguay Round and Special and Differential Treatment The WTO and the Developing Countries The WTO Remedies and Special and Differential Treatment for the Developing Countries The WTO DSU and S&D Treatment Provisions Remedies under the WTO DSU and S&D Treatment for Developing Countries Legal Effect of S&D Treatment Provisions in WTO Law S&D Provisions in DSU: Law and Practice The Pre-Implementation Stage Implementing the DSB's Rulings WTO Jurisprudence on Remedies and S&D Provisions Reviewing the DSU: Making S&D Provisions More Precise, Operational and Effective Special Procedures Involving LDCs Observations Interpretation by the Panel/Appellate Body: Bias against Developing Countries Countermeasures and the Developing Countries' Interests The Developing Countries' Attempted Countermeasures: The Cases The EC - Bananas (Ecuador) Case The US - Gambling and Betting Case The US - Subsidies on Upland Cotton Case Observations Improving Enforcement under the WTO: Some Proposals Mandatory Monetary/Financial Compensation Joint or Collective Retaliation The Retrospective Effect of Remedies The Direct Effect of WTO Rulings Automatic Option to Cross-Retaliate for Developing Countries 434
9 XIV CONTENTS The Preclusion of Threshold or De Minimis Proceedings Auctioning Countermeasures Other Proposals Preliminary Conclusion Summary and Conclusions The WTO Dispute Settlement as an Extraordinary System Remedies under the DSU: Extraordinary or Archaic? 'Cessation' as the 'Only' Remedy for Breach of WTO Obligations Remedies for Non-Compliance: The Buy-Out Option? Procedural Remedies: The Additional Problem Developing Countries: The Casualty? Contribution of Remedies to the DSU's Success: The Paradox Improving the Remedies: Some Thoughts and Recommendations Looking for Improving Remedies within the WTO Text Improving Remedies through Negotiations 466 Bibliography 471 Jndex 493
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