Abstract
Abstract‘The US won a $7.5 Billion award from the World Trade Organization against the European Union, who has for many years treated the USA very badly on Trade due to Tariffs, Trade Barriers, and more. This case going on for years, a nice victory’, tweeted President Trump on 3 October 2019. The United States (US) won not only the highest amount of retaliation ever adjudicated in the history of the WTO but also an ongoing right to retaliate on an annual basis until such time as the EU had complied by either removing the subsidies it granted Airbus or somehow neutralizing their adverse effects on Boeing. In light of the facts of the case, this ruling has two major shortcomings. First, in sharp contrast with the statutory language and practice until now, the Arbitrator effectively introduced a permanent liability rule into the WTO system through the backdoor. Second, given the way the decision and the associated award has been written, it is simply impossible for the EU to comply because (a) the contested subsidies are no longer in existence and (b) no guidance has been provided on how the EU might go about removing their adverse effects on Boeing if it sought to achieve compliance. Thus, in all likelihood, the EU is saddled with a ruling that obligates it to cough up an annual sum of $7.5 billion USD for an indefinite time period.
Highlights
Somewhat predictably, the European Union (EU) reacted vehemently to this unprecedented level of retaliation and noted that the formal report of the Arbitrator raised some “serious concerns”
The Arbitrator decided that two separate launch aid (LA)/MSF15 subsidy schemes applicable to two specific planes (AX350XWB and A380XWB) had not been removed and were inconsistent with the EU’s obligations
The Arbitrator, on the other hand, had to observe Article 7.10 of Subsidies and Countervailing Measures (SCM) which states: In the event that a party to the dispute requests arbitration under paragraph 6 of Article 22 of the DSU, the Arbitrator shall determine whether the countermeasures are commensurate with the degree and nature of the adverse effects determined to exist
Summary
The statutory language detailing the Arbitrator’s task is set out in Article 22.7 of DSU. The Arbitrator in EC–Bananas III (Article 22.6–EC) held that the purpose of retaliation is to induce compliance (§6.3). It cannot though, in the name of inducing compliance run afoul of Article 22.4 of DSU. In the name of inducing compliance run afoul of Article 22.4 of DSU When it comes to calculating the level of retaliation, its Article 22.4 of DSU, and not its potential persuasive effect to implement, that matters.. As Anderson (2002), one of the Arbitrators in this case explained, the review of compliance with Article 22.3 was rather minimal It makes sense because of a clear precedent: in US-COOL (Article 22.6-US), the Arbitrators came up. With a comprehensive formulation to this effect, which, with very minor changes (mostly, of linguistic nature) has been reproduced in every report ever since
Sign-in/Register to view highlights & summary Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
