Table of Contents

1.  Table of Figures  3

2.  List of Abbreviations  4

3.  Introduction  5

4.  The World Trade Organization  5

4.1  The Dispute Settlement Understanding  5

4.1.1  The Implementation Stage  6

4.1.2  Compensation and the Suspension of Concessions  8

5.  The Use of Retaliations in the Dispute Settlement Procedure  9

5.1  Three-Stage Retaliation  9

5.2  Possibility of Arbitration within the DSU  10

6.  The WTO Retaliation System in Practice  11

6.1  Problems within the WTO Retaliation System  11

6.2  Cases of Retaliation under the Dispute Settlement System  12

6.2.1  Statistical Overview of Retaliations within the WTO  12

7.  Conclusion  14

Bibliography   15

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1.  Table of Figures  

Fig.  : 1 “A Flow Chart of the Panel Process  7

Fig.  : 2 “Retaliation Requests within the WTO  12

Fig.  : 3 “Targets by Country within the WTO-Retaliation System  13

Fig.  : 4 “Retaliation Requests  13

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2.  List of Abbreviations  

ADR  Alternative Dispute Resolution  

DSB  Dispute Settlement Body  

DSU  Dispute Settlement Understanding  

GATT  General Agreement on Tariffs and Trade  

LDC  Least Developed Country  

RPT.  Reasonable Period of Time  

SCOO  Suspension of Concessions or other Obligations  

WTO  World Trade Organization  

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3. Introduction

Dispute settlement is the central pillar of the multilateral trading system. In the World Trade Organization (WTO) it is the unique contribution to the stability of the global economy. There is the Dispute Settlement Understanding (DSU) within the WTO then to solve problems in the trading system. What to do in the face of noncompliance within the DSU? When all else fails, Retaliations under Article 22 of the DSU of the WTO represent the countermeasures of last resort. This essay intends to discuss aspects of the WTO-Retaliation System.

Part one of the essay offers an introductory background to World Trade Organization. Chapter 4.1 summarizes the Dispute Settlement Understanding followed by the examination of the Implementation Stage and the Compensation and the Suspension of Concessions. Chapter 5 of the essay looks on The Use of Retaliations in the Dispute Settlement Procedure and gives an theoretical introduction to the Three-Stage-Retaliation and the Possibility of Arbitration in the DSU. Part 6 discusses the WTO Retaliation System in Practice. Chapter 6.1 especially looks at Problems within the WTO Retaliation System. Finally this seminar paper offers Cases of Retaliation under the Dispute Settlement System including a Statistical Overview of Retaliations within the WTO. And in the end the essay is rounded by a conclusion.

4. The World Trade Organization

What is WTO? “The WTO deals with the rules of trade between nations at a global or near-global level.” ¹ In other words, there are three important sides to the WTO’s work: the WTO is an international agency which encourages trade between member nations, administers global trade agreements and resolves disputes when they arise. ² The third important side to the WTO’s work is to help to settle disputes then. In most cases trade relations involve conflicting interests. Agreements often need interpreting, including those carefully negotiated in the WTO-system. To settle these differences in agreement is through some neutral procedure based on a legal foundation which is agreed also. That is the idea behind the dispute settlement process written into the WTO agreements. ³ The dispute settlement procedure of the WTO is governed by the Understanding on Rules and Procedures Governing the Settlement of Disputes. With certain exceptions, the DSU is uniformly applicable to differences that arise in the context of all WTO agreements (DSU Article 1).

4.1 The Dispute Settlement Understanding

The settlement of disputes is contemplated by the WTO as “the central pillar of the multilateral trading system, and the WTO’s unique contribution to the stability of the global economy.” The WTO demands that all its members respect the rules in the interest of a safer and more consistent multilateral trade system. In this sense, WTO members have agreed that, when they judge that other members have broken trade rules, they shall refer the issue to the dispute settlement system of the WTO rather than adopting unilateral actions. ⁴ This involves complying with the agreed

¹ World Trade Organization, The WTO, 5 ^th ed., Geneva: WTO 2010, p. 11.

² Ferguson, I.F., The World Trade Organization: Background and Issues, Congressional Research Service (2007), pp. 2-6.

³ E.g. World Trade Organization, The WTO, pp. 11-12.

⁴ E.g. World Trade Organization, The WTO, p. 57.

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