The Political Economy of International Trade Law: Essays in Honor of Robert E. Hudec

By Daniel L. M. Kennedy; James D. Southwick | Go to book overview

22
“Inducing compliance” in WTO dispute settlement*
DAVID PALMETER AND STANIMIR A. ALEXANDROV

Ultimately, I would favor a system in which sanctions would come for violating any provision of a trade agreement.

President William J. Clinton1

Sanctioning authority is rarely granted by treaty, rarely used when granted, and likely to be ineffective when used.

Abram Chayes and Antonia Handler Chayes2

When a Member of the World Trade Organization (WTO) fails to conform its practices to the rulings and recommendations contained in an adopted dispute settlement report, the prevailing party may be authorized by the WTO's Dispute Settlement Body (DSB) to take action against the WTO interests of the offending Member. Pursuant to the WTO's Understanding on Rules and Procedures Governing the Settlement of Disputes–the Dispute Settlement Understanding, or DSU–this action takestheformofthe “suspension” “ofconcessionsorotherobligations. Insimple terms, this means that if the inconsistent measure is not brought into conformity, and if the parties cannot agree on compensation for this inconsistency, the prevailing Member may impose restrictions on the trade of the other Member. If the offending Member objects to the level of the suspension proposed by the prevailing Member, it may request binding arbitration.3

Arbitration over the level of suspension of trade concessions occurred for the first time in the WTO in the Bananas dispute between the United States and the

____________________
*
The authors advised the Government of Brazil in the Brazil–Aircraft case discussed in this article. However, the views expressed are their own, and do not necessarily reflect those of the Government of Brazil or any other client of their firm. We are grateful for the comments–many in vigorous disagreement–of the participants in the conference honoring Professor Hudec. We would also like to thank the participants in the Seminar on the WTO Dispute Settlement System, Institute of International Economic Law, Georgetown University Law Center, and the participants in the 8th Geneva Global Arbitration Forum for their comments on earlier versions of this essay.
1
Seattle Post-Intelligencer, Dec. 1, 1999, at 1.
2
Abram Chayes and Antonia Handler Chayes, The New Sovereignty:Compliance With International Regulatory Agreements 32–33 (Harvard University Press, 1995).
3
Understanding on Rules and Procedures Governing the Settlement of Disputes, Art. 22.2.

-646-

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