Cross-retaliation is a remedy under the WTO's Dispute Settlement Understanding (DSU) that lets a winning complainant suspend concessions in a different sector or even a different covered agreement from the one in which the violation occurred. It is governed by Article 22.3 of the DSU, which establishes a tiered hierarchy: a complainant should first seek to suspend concessions in the same sector as the violation; if that is not "practicable or effective," it may move to another sector under the same agreement; and only if circumstances are "serious enough" may it cross over to a different covered agreement entirely (for example, retaliating under TRIPS for a violation of GATT or GATS).
The remedy is especially important for small economies, which often lack the import volumes needed to make tariff retaliation in goods meaningful against a large trading partner. Suspending intellectual-property protections under TRIPS — effectively allowing domestic actors to copy patented pharmaceuticals, copyrighted media, or trademarked goods — can impose costs on a respondent that conventional tariff retaliation cannot.
Authorisation requires a separate arbitration under Article 22.6 of the DSU, where arbitrators determine whether the proposed level of suspension is equivalent to the nullification or impairment suffered and whether the cross-sector escalation is justified.
The leading real-world examples are:
- Antigua and Barbuda v. United States (US — Gambling, DS285): in 2007 a WTO arbitrator authorised Antigua to suspend up to roughly US$21 million per year in TRIPS obligations after the US failed to bring its cross-border gambling restrictions into compliance with GATS.
- Ecuador v. European Communities (EC — Bananas III, DS27): in 2000 Ecuador received the first-ever cross-retaliation authorisation, permitting suspension of TRIPS concessions against the EC banana regime.
- Brazil v. United States (US — Upland Cotton, DS267): in 2009 arbitrators authorised Brazil to cross-retaliate under TRIPS and GATS in addition to goods.
In practice, authorised cross-retaliation is rarely fully implemented; its value often lies in the leverage it creates for settlement.
Example
In 2007, a WTO arbitrator authorised Antigua and Barbuda to cross-retaliate against the United States under TRIPS in the US — Gambling dispute (DS285), after US restrictions on cross-border online gambling were found to breach GATS commitments.
Frequently asked questions
Under DSU Article 22.3, only if same-sector retaliation is not 'practicable or effective' and, for cross-agreement retaliation, if the circumstances are 'serious enough' to justify it. The level is reviewed by Article 22.6 arbitrators.
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