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Wednesday, June 23, 2010

Trade Remedies and the WTO Rules Negotiations

Vivian C. Jones
Specialist in International Trade and Finance

At the November 2001 Ministerial meeting of the World Trade Organization (WTO) in Doha, Qatar, member countries launched a new round of trade talks known as the Doha Development Agenda (DDA). Discussions continue, although negotiations at this time seem to be at an impasse. 

One of the negotiating objectives in the DDA called for "clarifying and improving disciplines" under the WTO Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994 (Antidumping Agreement or ADA) and the WTO Agreement on Subsidies and Countervailing Measures (Subsidies Agreement or ASCM). The frequent use of trade remedies by the United States and other developed nations—and increasingly, developing countries—has come under criticism by some WTO members as being protectionist. In a March 2010 report, the chairman of the rules negotiations mentioned that consensus had been reached on many technical issues, but that there was no agreement on the larger "political" issues. 

Some in Congress cite U.S. use of trade remedies as necessary to protect U.S. firms and workers from unfair competition. Some also credit the existence of trade remedies with helping to increase public support for additional trade liberalization measures. These groups would like increased trade enforcement of trade remedies and intellectual property laws. Others in Congress, especially those who represent U.S. importers, manufacturers, and export-oriented businesses, tend to support liberalizing the ADA and ASCM, in ways that could make use of U.S. trade remedy laws less frequent and relief harder to obtain. For example, there is support in Congress for legislation that would require administering authorities to determine whether or not a trade remedy action is in the overall public interest before such a measure can be imposed. 

DDA negotiations involve Congress because any trade agreement made by the United States must be implemented by legislation, thus Congress also has an important oversight role in trade negotiations. For example, preserving "the ability of the United States to enforce rigorously its trade laws" was included as a principal negotiating objective in legislation granting presidential Trade Promotion Authority—the Trade Act of 2002 (P.L. 107-210). 

In the WTO talks, the positions of major players in trade remedy talks are well-documented by position papers written by WTO members that are circulated through the WTO Negotiating Group on Rules. Major themes that have emerged include limiting the use of trade remedy actions in favor of "price undertakings," reducing the level of duties assessed per action by ending mandatory offsets (also known as "zeroing"), or limiting the duration of trade remedy measures through mandatory "sunset" reviews. Some members also support placing more restrictions on the ability of officials to grant relief to domestic industries through the use of economic interest tests and other administrative procedures and "special and differential treatment" for developing countries. Some countries see revision of the ADA and ASCM and other WTO disciplines on trade remedies as a "make or break" issue if the Doha Development Agenda is to succeed. This report examines trade remedy issues in DDA in three parts. The first part provides background information and contextual analysis. The second section focuses on how these issues fit into the DDA. A third section provides a more specific overview of major reform proposals that are being considered.

Date of Report: June 7, 2010
Number of Pages: 44
Order Number: R40606
Price: $29.95

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