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Institute for Workplace Studies----------------- Professor Samuel B. Bacharach
School of Industrial & Labor Relations-------- Director, Institute for Workplace Studies
Cornell University
16 East 34th Street, 4th floor---------------------- Stuart Basefsky
New York, NY 10016 -------------------------------Director, IWS News Bureau
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Congressional Research Service (CRS)

 

Dispute Settlement in the World Trade Organization (WTO): An Overview

Jeanne J. Grimmett, Legislative Attorney

April 8, 2010

http://opencrs.com/document/RS20088/2010-04-08/download/1013/

[full-text, 15 pages]

 

Summary

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, 405 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 that would, inter

alia, investigate restrictive foreign trade practices in light of WTO obligations and call on the

USTR to pursue WTO cases where alleged violations are found; express congressional

dissatisfaction with WTO decisions; and restrict implementation of a revised methodology for

calculating dumping margins adopted by the Commerce Department in 2007 in response to

adverse WTO decisions. S. 363 (Snowe) would grant 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,

and would amend various Section 301 authorities themselves. S. 1466 (Stabenow) and S. 1982

(Brown) would establish mechanisms under the Trade Act of 1974 requiring the USTR to identify

particularly harmful foreign trade practices and, where appropriate, to initiate WTO cases to

remedy these practices.

 

Contents

Background ...............................................................................................................................1

WTO Dispute Settlement Understanding.....................................................................................1

Steps in a WTO Dispute..............................................................................................................3

Consultations (Article 4) .......................................................................................................3

Establishing a Dispute Panel (Articles 6, 8) ...........................................................................3

Panel Proceedings (Articles 12, 15, Appendix 3) ...................................................................4

Adoption of Panel Reports/Appellate Review (Articles 16, 17, 20)........................................4

Implementation of Panel and Appellate Body Reports (Article 21) ........................................5

Compliance Panels (Article 21.5) ..........................................................................................5

Compensation and Suspension of Concessions (Article 22) ...................................................5

Use of Multilateral Dispute Settlement Procedures ......................................................................7

Compliance Issues ......................................................................................................................7

“Sequencing” ........................................................................................................................7

Removal of Retaliatory Measures..........................................................................................7

WTO Dispute Settlement and U.S. Law ......................................................................................9

Legal Effect of WTO Decisions.............................................................................................9

Section 301 of the Trade Act ...............................................................................................10

111th Congress Legislation ........................................................................................................12

 

Contacts

Author Contact Information ......................................................................................................12

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This information is provided to subscribers, friends, faculty, students and alumni of the School of Industrial & Labor Relations (ILR). It is a service of the Institute for Workplace Studies (IWS) in New York City. Stuart Basefsky is responsible for the selection of the contents which is intended to keep researchers, companies, workers, and governments aware of the latest information related to ILR disciplines as it becomes available for the purposes of research, understanding and debate. The content does not reflect the opinions or positions of Cornell University, the School of Industrial & Labor Relations, or that of Mr. Basefsky and should not be construed as such. The service is unique in that it provides the original source documentation, via links, behind the news and research of the day. Use of the information provided is unrestricted. However, it is requested that users acknowledge that the information was found via the IWS Documented News Service.

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Institute for Workplace Studies 
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