I thought I understood the Clove Cigarettes compliance/suspension process, but based on the U.S. statement at today's DSB meeting, I'm no longer sure that I do:
• Second, we are concerned by the erratic behavior of Indonesia in relation to whether to sequence proceedings under Article 21.5 and Article 22 of the DSU.
• Indeed, Indonesia itself initially proposed a sequencing agreement to the United States, with which the United States agreed in principle. Subsequently, however, Indonesia stated it was no longer interested in entering into a sequencing agreement and proceeded to file its request for authorization to suspend concessions.
• There appears to be no question that the parties disagree whether the United States has brought its measure into conformity with the DSB's recommendations and rulings. The issue is whether there will be agreement between the parties on the procedures to be followed to resolve that disagreement. It would appear that Indonesia is of the view that sequencing is not required under the DSU and that issues of compliance may be resolved as part of the Article 22 arbitration. WTO Members and reports adopted by the DSB appear to have reached disparate views on this issue.
• Regardless, the United States considers that the parties had agreed in principle to procedures to govern any questions relating to compliance. We would therefore expect Indonesia to revert to its original proposal to first obtain a DSB ruling on the issue of compliance before engaging in and completing an Article 22.6 arbitration. Even at this juncture, it is open to the parties to enter into an agreement to suspend the Article 22.6 arbitration during the pendency of an Article 21.5 compliance proceeding.
I had been assuming the 21.5/22 process was all settled, and everyone agreed on the approach, but I guess not.
