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Prerequisites and objectives If, within 20 days after the expiry of the reasonable period of time, the parties have not agreed on satisfactory compensation, the complainant may ask the DSB for permission to impose trade sanctions against the respondent that has failed to implement.Technically, this is called “suspending concessions or other obligations under the covered agreements” (Article 22.2 of the DSU).Accordingly, the suspension can have the effect of inducing the respondent to achieve implementation.

On the other hand, a WTO-inconsistent tariff on automobiles (a good) can be countered with a tariff surcharge on cheese, furniture or pyjamas (also goods).

In principle, the sanctions should be imposed in the same sector as that in which the violation or other nullification or impairment was found (Article 22.3(a) of the DSU).

For this purpose, the multilateral trade agreements are divided into three groups in accordance with the three parts of Annex 1 to the WTO Agreement (Annex 1A comprises the GATT 1994 and the other multilateral trade agreements on trade in goods, Annex 1B the GATS), and Annex 1C the TRIPS Agreement) (Article 22.3(g) of the DSU). With regard to TRIPS, the categories of intellectual property rights and the obligations under Part III and those under Part IV of the TRIPS Agreement each constitute separate sectors.

Most observers agree that suspending obligations in response to the failure of timely implementation is problematic because it usually results in the complainant responding to a (WTO-inconsistent) trade barrier with another trade barrier, which is contrary to the liberalization philosophy underlying the WTO.

Also, measures erecting trade barriers come at a price because they are nearly always economically harmful not only for the targeted Member but also for the Member imposing those measures.

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