DSU Article 22.2 allows WTO complainants, in the event of non-compliance, to "request authorization from the DSB to suspend the application to the Member concerned of concessions or other obligations under the covered agreements." How explicit must they be in this suspension request? Do they have to specify an amount of suspension? Is it OK just to identify a formula that can be used to calculate the amount? How detailed must that formula be? This is from the U.S. statement, at the January 12 DSB meeting, related to the India - Solar Cells (DS456) dispute:
- Third, India argues that the United States’ request for authorization failed to specify a proposed level of suspension.
- This too is simply incorrect.
- The U.S. request states the following: “the United States requests authorization from the DSB to suspend concessions or other obligations with respect to India at an annual level based on a formula commensurate with the trade effects caused to the interests of the United States by the failure of India to comply with the recommendations and rulings of the DSB.”
- Thus, the U.S. request sets out the “level of suspension proposed”, in the terms of Article 22.6, in the form of a formula commensurate with the trade effects caused to the interests of the United States.
- The United States notes that Members’ requests to suspend concessions under Article 22.2 of the DSU commonly express the proposed level of suspension in the form of a formula rather than a specific monetary amount.4
4See, e.g., United States – Measures Affecting the Production and Sale of Clove Cigarettes: Recourse to Article 22.2 of the DSU by Indonesia (WT/DS406/12) (“…the level of suspension proposed is equivalent on an annual basis to the nullification or impairment of benefits accruing to Indonesia…”); European Communities – Measures Affecting the Approval and Marketing of Biotech Products: Recourse to Article 22.2 of the DSU by the United States (WT/DS291/39) (“…the United States requests authorization from the Dispute Settlement Body ("DSB") to suspend concessions and other obligations with respect to the European Communities under the covered agreements at an annual level equivalent to the annual level of nullification or impairment of benefits accruing to the United States resulting from the European Communities' failure to bring measures of the European Communities and its member States concerning the approval and marketing of biotech products into compliance with the recommendations and rulings of the DSB…”); and, in United States – Continued Dumping and Subsidy Offset Act of 2000 (DS217 and DS234), requests by the European Union (WT/DS217/22), Brazil (WT/DS217/20), Japan (WT/DS217/24), Korea (WT/DS217/25), Canada (WT/DS234/25), Mexico (WT/DS234/26), Chile (WT/DS217/21), and India (WT/DS217/23).
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- Second, with regard to the comments made today by Canada, China, and Brazil, we note as an initial matter that the suggestion that the U.S. request does not specify a proposed level of suspension is incorrect.
- As explained earlier, the U.S. request clearly states that “the United States requests authorization from the DSB to suspend concessions or other obligations with respect to India at an annual level based on a formula commensurate with the trade effects caused to the interests of the United States by the failure of India to comply with the recommendations and rulings of the DSB.”
- It is unclear whether these Members intend to suggest a request under Article 22.2 of the DSU should specify a monetary amount or include a detailed formula, but neither is required by the text of the DSU.
- We would refer these delegations to prior requests made under Article 22.2 of the DSU. While some requests have assigned a monetary value to the proposed level of suspension,others have not. Several requests have been made for a level of suspension commensurate with the annual level of nullification and impairment. While some such requests may have included an indicative monetary value for the first year, the request was nevertheless for an amount to be determined formula as commensurate with the annual level of nullification and impairment.
- We would also note India’s request for authorization in the dispute United States – Continued Dumping and Subsidy Offset Act of 2000 (WT/DS217). We find it interesting that India complains that the U.S. request does not specify a monetary value for the proposed level of suspension, when India itself has not included such a value in the past.
- In any event, the DSB need not debate today what some Members consider “should” be included in an Article 22.2 request, as opposed to what the text of the DSU requires. The U.S. request did in fact specify the proposed level of suspension consistent with Article 22.2 of the DSU.
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- Regarding the EU’s statement, we continue to be surprised by a suggestion by any delegate that the U.S. request is somehow deficient and does not specify the proposed level of suspension requested. It does: “the United States requests authorization from the DSB to suspend concessions or other obligations with respect to India at an annual level based on a formula commensurate with the trade effects caused to the interests of the United States by the failure of India to comply with the recommendations and rulings of the DSB.”
- Consider the EU’s request under Article 22.2 of the DSU in United States – Measures Affecting Trade in Large Civil Aircraft (Second Complaint) (WT/DS353). There, the EU “request[ed] the DSB to grant authorization to the European Union to take countermeasures that are appropriate, and commensurate with the degree and nature of the adverse effects determined to exist, respectively.” This statement is not unlike the framing of the U.S. request. We would also refer delegations to other requests, such as Indonesia’s request in United States – Measures Affecting the Production and Sale of Clove Cigarettes (WT/DS406), where Indonesia did not include a monetary value or a detailed formula. That request is almost identical to the request that the United States submitted in this dispute.
A full list of DSU Article 22.2 suspension requests is available here (DSC subscribers only). Most of the requests indicate specific monetary amounts, but the U.S. is correct that some of them are more vague about things.
It seems to me that at some point in the process, the party proposing to suspend concessions or other obligations needs to indicate with some specificity the amount of the suspension, either by providing an actual amount or by offering a detailed formula to be used in calculating the amount. Ideally, this would be set out in the Article 22.2 suspension request. If it is not, the responding party has no way to evaluate whether it should object to the proposed level of suspension and therefore whether to have the matter referred to arbitration. As a result, the Article 22.6 process could be undermined.
Alternatively, I suppose, the responding party could object even without having any sense of the proposed level, and then during the Article 22.6 arbitration process the complainant would offer more details. As long as the Arbitrator is able to evaluate whether the level of proposed suspension is equivalent to the level of nullification or impairment, the process should work.