Non-Compliance in WTO Dispute Settlement: Assessing the Effectiveness of WTO Retaliation from Its Purpose(s)

The issue of non-compliance with the Dispute Settlement Body (DSB) recommendations and rulings emerges when the violator state fails to bring its inconsistent measures into conformity with its WTO obligations within a reasonable period of time. Compensation and suspension of concessions or other obligations (retaliation) are the only remedies provided under WTO law for cases of non-compliance. Many academic writings, as well as statements from WTO Members, have demonstrated pessimism concerning the effectiveness of these remedies, particularly retaliation. The central point of this thesis concerns three main issues: the problems of WTO retaliation, the question of the effectiveness of retaliation, and the purposes of retaliation. This thesis aims to provide another perspective, besides the common “harm-resulted” perspective, for assessing the effectiveness of WTO retaliation. Accordingly, it provides several approaches: (1) identification of the purpose of retaliation in order to assess its effectiveness; (2) analysis of the enquiry whether there are in fact several purposes of WTO retaliation; (3) examination of the question whether the presence of retaliation purposes other than that inducing compliance is within the ambit of WTO law; (4) consideration of retaliation as a way of inducing a mutually agreeable solution; and (5) consideration of the question whether any deviation from strict compliance would undermine the WTO dispute settlement system. On the basis of extensive research on the purposes of WTO retaliation, namely through interpreting Article 22 of the DSU, examining the design of WTO treaty, assessing the academic writings/debates as well as the statements of arbitrators; several conclusions are made, of which the main one is that inducing compliance is not the sole purpose that WTO retaliation can pursue. Therefore compliance is not the only benchmark by which the effectiveness of WTO retaliation should be measured.