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[IWS] CRS: DISPUTE SETTLEMENT in the WORLD TRADE ORGANIZATION (WTO): AN OVERVIEW [8 September 2009]

IWS Documented News Service
_______________________________
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
________________________________________________________________________

Congressional Research Service (CRS)


Dispute Settlement in the World Trade Organization (WTO): An Overview
Jeanne J. Grimmett, Legislative Attorney
September 8, 2009
http://opencrs.com/document/RS20088/2009-09-08/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, 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.

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) ........................................4
Compliance Panels (Article 21.5) ..........................................................................................5
Compensation and Suspension of Concessions (Article 22) ...................................................5
Use of Multilateral Dispute Settlement Procedures ......................................................................6
Compliance Issues ......................................................................................................................6
"Sequencing" ........................................................................................................................6
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 .................................................................................................9
Recent Legislation .................................................................................................................... 11
111th Congress..................................................................................................................... 11
110th Congress.....................................................................................................................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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Stuart Basefsky                   
Director, IWS News Bureau                
Institute for Workplace Studies 
Cornell/ILR School                        
16 E. 34th Street, 4th Floor             
New York, NY 10016                        
                                   
Telephone: (607) 255-2703                
Fax: (607) 255-9641                       
E-mail: smb6@cornell.edu                  
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