WT/DS320/AB/R, United States – Continued Suspension of Obligations in the EC – Hormones Dispute, Report of the Appellate Body issued on 16 October 2008, adopted on 14 November 2008

The European Communities and the United States each appeals certain issues of law and legal interpretations developed in the Panel Report WT/DS320/R. The Panel was established to consider complaints by the European Communities concerning the suspension of concessions or other obligations by the United States against the European Communities because of the latter's alleged failure to comply with the recommendations and rulings of the Dispute Settlement Body (DSB) stemming from the EC – Hormones dispute (WT/DS26). The European Communities asserts that the United States must cease the suspension of concessions because the European Communities adopted Directive 2003/74/EC and notified it to the DSB as a measure taken to comply with the DSB's recommendations and rulings in EC – Hormones. Article 22.8 of the DSU provides that the suspension of concessions shall be "temporary" and shall only be applied until one of the three resolutive conditions set out in that provision obtains, namely, when the measure found to be inconsistent with a covered agreement has been removed, or the Member that must implement recommendations or rulings provides a solution to the nullification or impairment of benefits, or a mutually satisfactory solution is reached. The Appellate Body said that the requirement that the suspension of concessions must be temporary indicates that the suspension of concessions, as the last resort available under the DSU when compliance is not achieved, is an abnormal state of affairs that is not meant to remain indefinitely. Members must act in a cooperative manner so that the normal state of affairs, that is, compliance with the covered agreements and absence of the suspension of concessions, may be restored as quickly as possible. Thus, both the suspending Member and the implementing Member share the responsibility to ensure that the application of the suspension of concessions is "temporary". Moreover, the fulfilment of the first resolutive condition in Article 22.8 requires certain actions from both Members. The implementing Member is required to remove the measure found to be inconsistent with a covered agreement. At the same time, the suspending Member is required to ensure that the suspension of concessions is only applied within the limits of Article 22.8. Where, as in this dispute, an implementing measure is taken and Members disagree as to whether this measure achieves substantive compliance, both Members have a duty to engage in WTO dispute settlement in order to establish whether the conditions in Article 22.8 have been met and whether, as a consequence, the suspension of concessions must be terminated. Once substantive compliance has been confirmed through WTO dispute settlement procedures, the authorization to suspend concessions lapses by operation of law (ipso jure), because it has been determined that one of the resolutive conditions pursuant to Article 22.8 is fulfilled.