Foreword ........................................................ v
Acknowledgements .............................................. vii
List of Tables and Figures ..................................... xv
List of Abbreviations ........................................ xvii
1 Overview ..................................................... 1
I Introduction to WTO Dispute Settlement: The Best
Vote of Confidence for the Multilateral Trading System ... 1
A Consultations .......................................... 2
B Adjudication by Panels ................................. 3
C The Implementation of Rulings .......................... 4
II Problems Presented: Retaliation, a Flaw in the
Successful System? ....................................... 5
A First Concern: The (In)effectiveness of WTO
Retaliation ............................................ 6
B Second Concern: Debates Regarding the Purpose(s)
of WTO Retaliation ..................................... 8
i Inducing Compliance ................................ 8
ii A Means of Obtaining Some Form of Temporary
Compensation ....................................... 9
iii Rebalancing ....................................... 10
iv 'To Deter Inefficient Breach but to Encourage
Efficient Breach' ................................. 10
III WTO Law in Relation to Other Legal Systems .............. 11
A WTO Law in Relation to Public International Law ....... 11
i WTO Remedies and Public International Law
Remedies: Inclusive or Exclusive From the
System? ........................................... 12
B WTO Law in Relation to Contract ....................... 14
IV The Objective and Plan of the Book ...................... 15
2 Retaliation in the Multilateral Trading System .............. 17
Overview .................................................... 17
I Temporary Remedies in the DSU ........................... 18
A Compensation in GATT/WTO Dispute Settlement ........... 19
B What is 'Retaliation' in the Context of the
Multilateral Trading System? .......................... 22
II Law to Retaliate Under GATT and WTO Dispute Settlement .. 23
A Retaliation Cases in GATT Dispute Settlement .......... 23
B Substantive Rules of GATT Retaliation ................. 24
C Substantive Rules of WTO Retaliation .................. 26
i The Basic Elements of WTO Retaliation in the
Multilateral DSU Framework ........................ 26
ii Three Principles and Calculation Methods of
Retaliation in the DSU ............................ 31
iii Countermeasures Under the SCM Agreement ........... 37
III Retaliation in Regional Trade Agreements ................ 44
Summary ................................................. 48
3 Shortcomings of WTO Retaliation and Reform Proposals ........ 49
Overview .................................................... 49
I The Shortcomings and Problems Inherent in WTO
Retaliation ............................................. 50
A 'Shooting [Oneself] in the Foot' ...................... 51
B Contrary to the Basic Principle of the WTO ............ 52
C Imposing an Inappropriate Burden on Innocent
Industries ............................................ 53
D Lack of Inducement Power for the Measures that Have
Strong Domestic Political Support ..................... 54
E Continued Sanctions ................................... 55
F Lack of Retaliating Capacity for Small Developing
Countries and Least-Developed Countries ............... 56
II Proposals to Enhance WTO Retaliation and the
Criticisms .............................................. 58
A Collective Retaliation ................................ 60
B Transferrable Retaliatory Rights ...................... 63
C Financial/Monetary Compensation ....................... 64
D Compulsory Compensation ............................... 66
E Automatic Application of Cross-Retaliation ............ 66
F Retroactive Remedies .................................. 67
Summary ................................................. 68
4 Purposed-based Approach in Evaluating Effectiveness ......... 70
Overview .................................................... 70
I Compliance, Implementation, Effectiveness and Purpose-
based Approach .......................................... 71
A The Distinction Between Implementation, Compliance
and Effectiveness ..................................... 71
B A Purpose-based Approach to Effectiveness ............. 73
C The Importance of Identifying the Purpose of
Retaliation and the Uncertainty on the Purpose(s)
of WTO Retaliation .................................... 75
II Debates Regarding the Purpose of RetaHation ............. 77
A The Purpose of Retaliation: Inducing Compliance vs
Rebalancing ........................................... 78
i Inducing Compliance ............................... 78
ii Rebalancing ....................................... 81
Summary ..................................................... 83
5 Legal Quests in Searching for the Purposes of Retaliation ... 84
Overview .................................................... 84
I First Quest: Reference to Remedies Under the ILC
Draft Articles on State Responsibility .................. 85
A Remedies Under the ILC Draft Articles ................. 86
i Cessation and Non-Repetition ...................... 86
ii Reparation ........................................ 87
iii Restitution ....................................... 88
iv Compensation ...................................... 88
v Satisfaction ...................................... 89
vi Countermeasures ................................... 89
B Contracting Out of Remedies Under State
Responsibility ........................................ 90
C Reference to the ILC Draft Articles in Determining
the Purpose of WTO Retaliation in Brazil—Aircraft:
Sound or Unsound Approach? ............................ 93
II Second Quest: Reference to Contract Remedies from Law
and Economics Perspective ............................... 94
A Property or Liability Rules and Their Relevance
in WTO Law ............................................ 95
i Property Rules .................................... 96
ii Liability Rules ................................... 97
B Evaluating WTO Entitlements from the Perspective
of Protection Rules ................................... 98
i The Debate over Protection Rules of WTO
Entitlements: Property or Liability Rules ......... 99
ii WTO Law Accommodates Some Amount of Intra-
Contractual Flexibility, Yet WTO Entidements are
Protected by a Property Rule ..................... 100
iii WTO Enforcement in the Context of Property
Rules Protection ................................. 101
III Third Quest: Article 22.6 Arbitrators' Statements
With Regard to the Purpose of Retaliation .............. 103
A The Purpose of 'Inducing Compliance' with
'Equivalent' Level Requirement ....................... 103
B The Purpose of 'Inducing Compliance' with
'Appropriate' Level Requirement ...................... 105
C Inducing Compliance is 'Not the Only Purpose'
Pursued by Retaliation ............................... 106
IV Fourth Quest: Interpretation of Article 22 of the DSU
in Accordance with the Customary Rules of
Interpretation to Clarify the Purposes of WTO
Retaliation ............................................ 107
A The Customary Rules of Interpretation ................ 108
i Good Faith ....................................... 108
ii Ordinary Meaning ................................. 109
iii The Context, and the Object and Purpose of
a Treaty ......................................... 110
iv Relevant Rules of International Law .............. 110
v Supplementary Means of Interpretation ............ 112
B Interpretation of Article 22 of the DSU in
Accordance with the Customary Rules of
Interpretation ....................................... 112
i Contracted In: The Customary Rules of
Interpretation ................................... 113
ii The Multiple Purposes Identified from the
Text of Article 22 of the DSU .................... 113
iii Multiple Purposes Carried Out in the Context
of Article 22 of the DSU ......................... 114
iv Multiple Purposes in the Light of the Object
and Purpose of WTO Dispute Settlement ............ 118
v The Assessment of Remedies Provisions Under the
ГГО Charter, the GATT 1947 and the Uruguay
Round Draft Texts as Supplementary Means of
Interpretation .................................... 120
Summary .................................................... 124
6 Retaliation to Induce an Amicable Settlement as Another
Competing Purpose and the Effectiveness of WTO
Retaliation ................................................ 126
Overview ................................................... 126
I Amicable Settlements in the Multilateral Trading
System ................................................. 127
A A Brief Historical Context of Amicable Settlements
in the GATT Practice ................................. 128
B Amicable Settlement in WTO Dispute Settlement ........ 128
i Notification Obligation of MAS ................... 130
ii Consistent with Covered Agreement ................ 131
C Amicable Settlements at Non-Implementation Level
Induced by Retaliation ............................... 132
i 'Greater Market Access' Reached in EC—Hormones ... 133
ii 'Cash Payments' in US—Upland Cotton .............. 136
iii 'GSP Facilitation' Reached in US—Clove
Cigarettes ....................................... 137
D The Purpose of Inducing a Mutually Agreeable
Solution (Final Settlement) .......................... 139
i Retaliation Inducing a Mutually Agreeable
Solution: A Defeat for the Winning Party? ........ 141
ii Retaliation Inducing a Mutually Agreeable
Solution: Systemic Implications and Third
Parties' Interests ............................... 141
iii Solutions Allowing the Continuity of
Inconsistent Measures: Legal or Illegal? ......... 145
II The Question About the Effectiveness of WTO
Retaliation ............................................ 146
III A Way Forward .......................................... 149
Summary ................................................ 151
7 Concluding Remarks ......................................... 152
I Summary of the Book .................................... 152
II Final Observations ..................................... 154
Bibliography .................................................. 157
Index ......................................................... 179
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