ICC Document & publication

Cross-Retaliation Under The WTO Dispute Settlement Mechanism Involving TRIPS Provisions

Under the World Trade Organization’s (WTO) Dispute Settlement Understanding (DSU), a complainant party may suspend benefits under the WTO Agreements if the respondent party has not come into compliance with its obligations under the WTO Agreements as determined by the WTO Dispute Settlement Body (DSB).

The WTO’s DSU provides in certain circumstances for “cross-retaliation” by complainant parties – suspending benefits relating to WTO Agreements or sectors not the subject of the underlying dispute. Some countries have proposed to cross-retaliate by suspending obligations under the WTO’s Agreement on Trade-Related Aspects of Intellectual Property (TRIPS).

According to Article 64 of TRIPS1 , the DSU applies to the settlement of disputes under TRIPS, with the exceptions established therein. Further, Appendix 1 of the DSU expressly mentions TRIPS as one of the agreements covered by the DSU. Therefore, the DSB authorizes the suspension of rights and obligations under TRIPS as a result of commercial disputes before the WTO. Two legal questions have been raised in this context.

Two legal questions have been raised in this context:

1. Whether suspension of rights and obligations under TRIPS would affect obligations under WIPO Treaties

2. The application of the national treatment principle provided for in TRIPS in relation to cross-retaliation measures

Practical considerations

The DSB authorized suspension of IP rights in the Ecuador vs. EC (bananas) and Antigua & Barbuda vs. US disputes (gambling services) as well as in the Brazil vs. US dispute (cotton), but suspension of IP rights has never taken place. Despite the lack of concrete cases, ICC has tried to identify some special circumstances and problems raised by cross-retaliation by means of the suspension of rights and obligations under TRIPS in the context of WTO disputes.

1. Uncertainty as to whether suspension of IP rights generates compliance with WTO obligations

2. The required temporary effect of the suspension of IP rights

3. The required proportionality between the level of suspension and the damage suffered

4. Possible damage affecting parties not involved in the dispute

Highlights

  • Relationship with WIPO treaties and national treatment principles
  • Effect on compliance with WTO obligations
  • Problems relating to the required temporary nature of the suspension
  • Proportionality between the level of suspension and the damage suffered
  • Possible damage affecting parties not involved in the dispute
  • Careful consideration of potential problems required before taking any decision concerning the suspension of IP rights