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Monday, December 19, 2011

WTO Dispute Settlement: Status of U.S. Compliance in Pending Cases

Jeanne J. Grimmett
Legislative Attorney

Although the United States has complied with adverse rulings in many past World Trade Organization (WTO) disputes, there are currently 14 cases in which rulings have not yet been implemented or the United States has taken action and the dispute has not been fully resolved. Under WTO dispute settlement rules, a WTO Member will generally be given a reasonable period of time to comply with an adverse WTO decision. While the Member is expected to remove the offending measure by the end of this period, compensation and temporary retaliation are available if the Member has not acted or has not taken adequate remedial action by this time. Either disputing party may request a compliance panel if there is disagreement over whether a Member has complied in a case.

Ten unresolved cases involve trade remedies, including a long-standing dispute with Japan over a provision of U.S. antidumping (AD) law and another with various WTO Members over the Continued Dumping and Subsidy Offset Act of 2000. The Offset Act was repealed as of October 2005, but remains the target of sanctions by the European Union (EU) and Japan due to continued payments to U.S. firms authorized under the repealer (P.L. 109-171). Seven of the trade remedy disputes involve “zeroing,” a practice under which the Department of Commerce (DOC), in calculating dumping margins in AD proceedings, disregards non-dumped sales. The practice was challenged by the EU (DS294/DS350), Japan (DS322), and Mexico (DS344), resulting in broad WTO prohibitions on its use. The United States took administrative action to resolve one aspect of DS294 by abandoning zeroing in original AD investigations, but has yet to comply fully either in this case or in DS350, 322, or 344. While the EU (in DS294) and Japan requested the WTO to authorize sanctions, each agreed to suspend U.S.-requested arbitration of their sanctions proposals in 2010 on the understanding that the United States would resolve outstanding issues by September 7, 2011; the deadline has since been extended to January 6, 2012, for the EU, and to November 30, 2011, for Japan. In December 2010 DOC proposed to eliminate zeroing in later stages of AD proceedings, but has not finalized a new policy. A compliance panel requested by Mexico in DS344 plans to issue its report by March 2012. The United States is expected to comply by November 24, 2011, in a zeroing dispute with Korea (DS402); by March 17, 2012, in Brazil’s challenge (DS382); and by July 2, 2012, in a dispute with Vietnam (DS404). In a case filed by China mainly involving countervailing duty issues (DS379), the parties have agreed on a compliance period ending February 12, 2012.

The United States and Antigua have been consulting on outstanding issues in Antigua’s challenge of U.S. online gambling restrictions (DS285); compensation agreements that the United States entered into with various WTO Members in exchange for withdrawing its WTO gambling commitments, an action which the United States took to resolve the case, will not enter into effect until issues with Antigua are settled. P.L. 109-171 repealed a WTO-inconsistent cotton program at issue in Brazil’s complaint over U.S. cotton subsidies (DS267), but other programs were also successfully challenged and the United States was later found not to have fully complied. The United States has since made statutory and administrative changes affecting the export credit guarantee program faulted in the case. While Brazil has received WTO authorization to retaliate, the United States and Brazil signed a framework agreement in June 2010 aimed at permanently resolving the dispute. The agreement includes Brazil’s pledge not to impose sanctions during the life of the agreement and foresees possible legislative resolution of the dispute in the 2012 farm bill. Also unsettled are long-pending disputes with the European Union (EU) over a music copyright law (DS160) and a statutory trademark provision affecting property confiscated by Cuba (DS176).

Date of Report: November 25, 2011
Number of Pages: 97
Order Number: RL32014
Price: $29.95

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