Research On The Issue Of Suspension Level Under The WTO Retaliation Arbitration

Understanding on Rules and Procedures Governing the Settlement of Disputes(hereinafter referred to as "DSU")has established the WTO dispute settlement system,which has constituted one of the major achievements of Uruguay Round in 1994.The retaliation system is known as the last resort of WTO dispute settlement system.According to DSU,if a member has failed to perform the recommendations and rulings of the Dispute Settlement Body(hereinafter referred to as "DSB")after the expiration of Reasonable Period of time to make the violating measures consistent with the covered agreements,and the parties haven't agreed on satisfactory compensation,then the injured state is entitled to request authorization from the DSB to suspend the application to the member of concessions other obligations under the covered agreements.DSB shall approve the suspension,unless the DSB decides by consensus to reject the request.If the violating member objects to the level of suspension proposed or asserts that the claimed member has not respect the principles and procedures set forth in the paragraph3(b)or(c)of Article 22 of DSU,the matter shall be referred to arbitration.The retaliation arbitration consists of the arbitration on"Suspension of Concessions" in Article 22,and that on "Countermeasures" stipulated in Article 4 and 7 of Agreement on Subsidies and Countervailing Measures(hereinafter referred to as "SCM").The relevant rules in WTO covered agreement is simple,so in practice it depends on the arbitrators to develop specific determining rules.So far,in the issued arbitration decisions,certain procedural analysis,estimations of suspension level,and calculation methods are criticized and doubted by members and scholars,WTO suspension arbitrations are needed for further improvement.The key point in suspension arbitrations is the determination of suspension level,which has direct relation with the level of remedies for victim member.It is meaningful and helpful for the development of suspension arbitrations and the settlement of trade dispute to research in suspension level on the basis of cases concerned.In order to provide theoretical guidance for the development of suspension arbitrations,this paper,based on the basic rules under covered agreements,utilizes historical analysis method,case analysis method and comparative analysis approach to introduce the WTO retaliation system,the practical situations and specific procedures of suspension arbitrations and the determining principles and approaches by arbitrators,and offers some suggestions for reform in the end.This paper contains three parts:the introduction,the text and the conclusions.the second part are divided into four chapters,Chapter one makes a simple summary of WTO retaliation system,and the relevant provisions,procedures as well as practice of suspensions arbitrations.Chapter two,combining the stipulation under the covered agreements and arbitrations practice,explores the suspension standard under GATT1947,and elaborates the determining principles and approaches applied in two kinds of retaliation:suspensions of concessions and other obligations,and countermeasures under SCM.In general,the arbitration under Article 22.6 of DSU mainly make use of"Equivalent"principle and "Trade-Effect Approach",and for the latter,the"Appropriate" principles and "Subsidy-Amount Method" are applied in the arbitration on countermeasures against the prohibited subsidies(under Article 4.9 of SCM),and the"Commensurate"principles and "the Counterfactual Approach" have been adopted in the arbitration on countermeasures against the Actionable Subsidy(under Article 7.10 of SCM).Chapter three chooses the debate on level of suspension in US-COOL as the clue,and analyzes the challenges confronted with "Trade-Effect Approach" used in the arbitrations under Article 22.6 of DSU,then compares it with the foregoing arbitration cases under Article 22.6 of DSU,the decisions under Article 7.10 of SCM,and analyzes it from the perspective of retaliation's objective.Chapter four summarizes drawbacks in retaliation arbitrations,and makes suggestions for its reform.