Publication Date

9-8-2009

Abstract

[Excerpt] Dispute settlement in the World Trade Organization (WTO) is carried out under the WTO Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU). In effect since January 1995, the DSU provides for consultations between disputing parties, panels and appeals, and possible retaliation if a defending party fails to comply with a WTO decision by an established deadline. Automatic establishment of panels, adoption of panel and appellate reports, and authorization of requests to retaliate, along with deadlines and improved multilateral oversight of compliance, are aimed at producing a more expeditious and effective system than had existed under the General Agreement on Tariffs and Trade (GATT). To date, 398 complaints have been filed, approximately half involving the United States as complainant or defendant.

Expressing dissatisfaction with WTO dispute settlement results in the trade remedy area, Congress, in the Trade Act of 2002, directed the executive branch to address dispute settlement in WTO negotiations. WTO Members have been negotiating DSU revisions in the currently stalled Doha Development Round of trade negotiations but no final agreement on the DSU has been reached. Use of the DSU has revealed procedural gaps, particularly affecting the compliance phase of a dispute. These include a failure to coordinate procedures for requesting retaliation with procedures for tasking a WTO panel with determining whether a defending Member has complied in a case and the absence of a procedure for withdrawing trade sanctions imposed by a complaining Member where the defending Member believes it has fulfilled its WTO obligations. As a result, disputing Members have entered into bilateral agreements permitting retaliation and compliance panel processes to progress on an agreed schedule and have initiated new dispute proceedings aimed at removing retaliatory measures.

Where a U.S. law or regulation is at issue in a WTO case, the adoption by the WTO of a panel or Appellate Body report finding that the measure violates a WTO agreement does not give the report direct legal effect in this country; thus federal law is not affected until Congress or the executive branch, as the case may be, takes action to remove the offending measure. Where a restrictive foreign trade practice is at issue, Section 301 of the Trade Act of 1974 provides a mechanism by which the United States Trade Representative (USTR) may challenge the measure in a WTO dispute settlement proceeding and authorizes the USTR to take retaliatory action if the defending Member has not complied with the resulting WTO decision. Although Section 301 was challenged in the WTO on the ground that it requires the USTR to act unilaterally in WTO-related trade disputes in violation of DSU provisions requiring resort to multilateral WTO dispute settlement, the United States was ultimately found not to be in violation of its DSU obligations.

H.R. 496 (Rangel) would create an Office of the Congressional Trade Enforcer (CTE) that would, inter alia, investigate restrictive foreign trade practices in light of WTO obligations and call on the USTR to initiate WTO dispute proceedings where the CTE finds that WTO violations have occurred; express congressional dissatisfaction with WTO dispute settlement decisions finding that the U.S. practice of “zeroing” (i.e., disregarding non-dumped sales in the calculation of dumping margins) violates the WTO Antidumping Agreement and with decisions of the WTO Appellate Body generally; and place restrictions on the Department of Commerce in implementing the revised antidumping methodology that it adopted in 2007 in response to the WTO “zeroing” decisions. S. 363 (Snowe), would give the U.S. Court of International Trade exclusive jurisdiction to review de novo certain USTR determinations under Section 301 of the Trade Act of 1974, which may in some cases involve the initiation and conduct of WTO disputes; the bill would also amend various Section 301 authorities themselves.

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Suggested Citation
Grimmett, J. J. (2009). Dispute settlement in the World Trade Organization (WTO): An overview. Washington, DC: Author.
http://digitalcommons.ilr.cornell.edu/key_workplace/656

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