Implementation, Compensation and Retaliation: Articles 21 and 22

In one line

The losing member gets a reasonable period to comply, then compensation may be agreed, and only if neither happens may the winner be authorised to withdraw concessions, which it pays for itself.

In exam wording: Articles 21 and 22 of the DSU govern surveillance of implementation of rulings and recommendations, the determination of a reasonable period of time for compliance, compliance proceedings, compensation, and the suspension of concessions or other obligations.

Article 21: implementation

Article 21.1 states the principle: prompt compliance with recommendations or rulings of the DSB is essential to ensure effective resolution of disputes to the benefit of all members.

Article 21.3, the reasonable period of time. At a DSB meeting held within thirty days after adoption, the member concerned shall inform the DSB of its intentions in respect of implementation. If it is impracticable to comply immediately, it shall have a reasonable period of time, which shall be:

(a) the period proposed by the member and approved by the DSB; or, failing approval,

(b) a period mutually agreed by the parties within forty five days after adoption; or, failing agreement,

(c) a period determined through binding arbitration within ninety days after adoption.

In arbitration under (c) a guideline should be that the reasonable period should not exceed fifteen months from adoption, though it may be shorter or longer depending on the particular circumstances.

The fifteen month figure is a guideline, not a limit, and arbitrators have awarded both shorter and longer.

Article 21.5, the compliance panel. Where there is disagreement as to the existence or consistency with a covered agreement of measures taken to comply, such dispute shall be decided through recourse to these dispute settlement procedures, including wherever possible resort to the original panel, which shall circulate its report within ninety days.

Article 21.6, surveillance. The DSB shall keep under surveillance the implementation of adopted recommendations or rulings, and the issue of implementation may be raised by any member at any time. Unless the DSB decides otherwise, the issue shall be placed on the agenda of the DSB meeting after six months following the establishment of the reasonable period and shall remain on the agenda until resolved, with the member concerned providing a written status report at least ten days before each meeting.

Article 21.7 and 21.8 are the developing country provisions. If a matter is raised by a developing country member, the DSB shall consider what further action might be appropriate; and if the case is brought by a developing country member, the DSB shall take into account not only the trade coverage of the measures but also their impact on the economy of the developing country members concerned.