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Tuesday, December 27, 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 The Offset Act was repealed as of October 2005, but remains the target of sanctions by the European Union (EU) and Japan due to continued payments to U.S. firms authorized under the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 these cases 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 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 January 8, 2012, 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 was expected to act by November 24, 2011, in a zeroing dispute with Korea (DS402), and has taken administrative action to comply. A compliance deadline of March 17, 2012, is set in Brazil’s challenge (DS382) and 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: December 6, 2011
Number of Pages: 97
Order Number: RL332014
Price: $29.95

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Friday, December 23, 2011

World Trade Organization Negotiations: The Doha Development Agenda


Ian F. Fergusson
Specialist in International Trade and Finance

The WTO Doha Round of multilateral trade negotiations, begun in November 2001, has entered its 11th year. The negotiations have been characterized by persistent differences among the United States, the European Union, and developing countries on major issues, such as agriculture, industrial tariffs and non-tariff barriers, services, and trade remedies. Partly as a result of being labeled a development round to entice developing countries to participate in the first place, developing countries (including emerging economic powerhouses such as China, Brazil, and India) have sought the reduction of agriculture tariffs and subsidies among developed countries, non-reciprocal market access for manufacturing sectors, and protection for their services industries. The United States, the European Union, and other developed countries have sought increased access to developing countries’ industrial and services sectors while attempting to retain some measure of protection for their agricultural sectors. Given the differences, there is frustration over the ability of WTO member states to reach a comprehensive agreement.

In response to the global economic crisis, the G-20 leading economies have repeatedly called for conclusion of the Doha Round as a way to bolster economic confidence and recovery. WTO Director-General Pascal Lamy referred to 2011 as a window of opportunity to conclude the round and announced an intensive work program to achieve this goal. Yet, despite a flurry of activity in early 2011, the round remains deadlocked as the eighth Ministerial of the WTO is set to occur in December.

The subjects of the current negotiations are draft texts developed and refined by the chairs of the agriculture, industrial, and rules negotiating groups. These texts have been the subject of much disagreement since their initial release in 2007, not least of which by the United States, which views them as not reflecting the state of play in the negotiations.

Agriculture has become the linchpin of the Doha Development Agenda. U.S. goals are reductions in trade-distorting domestic support; elimination of export subsidies, and improved market access in both developed and developing countries. The United States has also sought improved market access for its industrial goods, especially in developing countries. Developed countries generally are seeking improved market access for their services industries in developing countries. In addition, Members of Congress likely will carefully scrutinize any agreement that may require changes to U.S. trade remedy laws.

Several issues are among the most important to developing countries, in addition to concessions on agriculture. One issue, now resolved, pertained to compulsory licensing of medicines and patent protection. Trade facilitation, which aims to improve the efficiency of international trade by harmonizing and streamlining customs procedures, has received strong support from developed and developing countries. A third issue deals with a review of provisions giving special and differential treatment to developing countries along with problems that developing countries are having in implementing current trade obligations.



Date of Report: December 12, 2011
Number of Pages: 27
Order Number: RL32060
Price: $29.95

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Monday, December 19, 2011

U.S.-Japan Economic Relations: Significance, Prospects, and Policy Options


William H. Cooper
Specialist in International Trade and Finance

Japan and the United States are the two largest economic powers. Together they account for over 30% of world domestic product, for a significant portion of international trade in goods and services, and for a major portion of international investment. This economic clout makes the United States and Japan potentially powerful actors in the world economy. Economic conditions in the United States and Japan have a significant impact on the rest of the world. Furthermore, the U.S.-Japan bilateral economic relationship can influence economic conditions in other countries.

The U.S.-Japan economic relationship is very strong and mutually advantageous. The two economies are highly integrated via trade in goods and services—they are large markets for each other’s exports and important sources of imports. More importantly, Japan and the United States are closely connected via capital flows. Japan is a major foreign source of financing of the U.S. national debt and will likely remain so for the foreseeable future, as the mounting U.S. debt needs to be financed and the stock of U.S. domestic savings remains insufficient to meet the demand. Japan is also a significant source of foreign private portfolio and direct investment in the United States, and the United States is the origin of much of the foreign investment in Japan.

The relative significance of Japan and the United States as each other’s economic partner has diminished somewhat with the rise of China as an economic power. For example, China has overtaken Japan and is the largest source of foreign financing of the U.S. national debt. In addition, U.S. economic ties with Canada, Mexico, and China have deepened, further eroding the direct relevance of Japan. Nevertheless, analyses of trade and other economic data suggest that the bilateral relationship remains important, and policy leaders of both countries face the challenge of how to manage it.

During the last decade policy leaders seem to have made a deliberate effort to drastically reduce the friction that prevailed in the economic relationship. On the one hand, this calmer environment has stabilized the bilateral relationship and permitted the two countries to focus their attention on other issues of mutual interest, such as national security. On the other hand, as some have argued, the friendlier environment masks serious problems that require more attention, such as continuing Japanese failure to resolve long-standing market access barriers to U.S. exports. Failure to resolve any of these outstanding issues could cause heightened friction between the two countries.

More generally, other issues regarding U.S.-Japan economic relations may emerge on the agenda of the 112th Congress. U.S. and Japanese leaders have several options on how to manage their relationship, including stronger reliance on the World Trade Organization; special bilateral negotiating frameworks and agreements; or a free trade agreement. On November 11, 2011, Prime Minister Noda announced at a press conference that he decided, after many consultations with potentially affected parties, that “[Japan would] enter into consultations toward participating in the TPP negotiations with the countries concerned on the occasion of the [November 12-13, 2011] APEC Economic Leaders meeting in Honolulu, Hawaii....” Japan’s participation in the TPP will likely be the focal point of U.S.-Japan economic discussion for the foreseeable future.



Date of Report: December 5, 2011
Number of Pages: 22
Order Number: RL32649
Price: $29.95

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Document available via e-mail as a pdf file or in paper form.
To order, e-mail Penny Hill Press or call us at 301-253-0881. Provide a Visa, MasterCard, American Express, or Discover card number, expiration date, and name on the card. Indicate whether you want e-mail or postal delivery. Phone orders are preferred and receive priority processing.

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

Follow us on TWITTER at
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Document available via e-mail as a pdf file or in paper form.
To order, e-mail Penny Hill Press or call us at 301-253-0881. Provide a Visa, MasterCard, American Express, or Discover card number, expiration date, and name on the card. Indicate whether you want e-mail or postal delivery. Phone orders are preferred and receive priority processing.

Thursday, December 15, 2011

Boosting U.S. Exports: Selected Issues for Congress


Shayerah Ilias
Analyst in International Trade and Finance

Ian F. Fergusson
Specialist in International Trade and Finance

Wayne M. Morrison
Specialist in Asian Trade and Finance

M. Angeles Villarreal
Specialist in International Trade and Finance


For many years, the U.S. government has played an active role in promoting U.S. commercial exports of goods and services by administering various forms of export assistance through federal government agencies. Congress has had a long-standing interest in the effectiveness and efficiency of federal export promotion activities and may exercise export promotion authority in a number of ways, including through oversight, authorization, and funding roles.

The recent global economic downturn has renewed congressional interest in U.S. government efforts to expand U.S. exports levels. In addition, in 2010, President Obama introduced a National Export Initiative (NEI), a strategy for doubling U.S. exports by 2015 to generate U.S. jobs. The NEI’s key components are to (1) improve advocacy and trade promotion efforts on behalf of U.S. exporters; (2) increase access to export financing; (3) reinforce efforts to remove barriers to trade, such as through free trade agreements (FTAs); (4) enforce trade rules; and (5) pursue policies to promote strong, sustainable, and balanced global economic growth. The NEI also contains a focus on expanding specific U.S. exports, such as exports from small businesses.

The growing interest in federal export promotion raises a number of issues for the 112th Congress. One debate involves export promotion definitions. Based on varying views, activities that constitute export promotion can range from direct forms of export assistance (such as commercial advocacy or export financing) to broader forms (such as negotiating FTAs). Although the main goal of export promotion policy generally is to boost U.S. exports, policymakers may use export promotion to advance other goals, such as macroeconomic, economic sector-specific, or international trade policy goals, and may differ on how to prioritize such goals.

From an economic perspective, much of the debate over export promotion involves whether some market failure actually has occurred, and whether government intervention can produce net benefits for the economy as a whole. Opponents of export promotion programs dispute that significant market failures have occurred, and warn that government intervention may interfere with efficient operation of the market. Although export promotion might increase the ability of certain U.S. firms to export, a combination of macroeconomic and other factors may determine the overall level of U.S. exports. Another aspect to the economic debate is the existence of foreign countries’ export promotion programs. Supporters of export promotion often argue that such policies are needed to offset the effects of similar programs used by foreign governments.

Congressional debate on the effectiveness of U.S. export promotion has grown with the introduction of the NEI. Many argue that providing export assistance to U.S. firms would be of limited help if such firms faced significant tariff and non-tariff trade barriers and poor protection of intellectual property rights overseas. Thus, it is argued that efforts to ensure foreign compliance with existing trade agreements and the negotiation of new FTAs should be part of a strategy to boost U.S. exports. Others argue that more can be done to address U.S. barriers to exports, such as U.S. export controls on dual-use products, which some contend may be too restrictive and may put U.S. exporters at a disadvantage vis-à-vis foreign competitors. Finally, many argue that greater efforts should be made to induce countries with high savings and relatively low consumption and that are heavily dependent on exporting for their economic growth to implement policies that would make private consumption the engine of future economic growth, which would enhance their demand for U.S. goods and services. The NEI also has drawn greater attention to whether the trade policy structure and organization of the federal government is suited to boosting U.S. exports and supporting U.S. jobs effectively and efficiently.



Date of Report: November 29, 2011
Number of Pages: 33
Order Number: R41929
Price: $29.95

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Document available via e-mail as a pdf file or in paper form.
To order, e-mail Penny Hill Press or call us at 301-253-0881. Provide a Visa, MasterCard, American Express, or Discover card number, expiration date, and name on the card. Indicate whether you want e-mail or postal delivery. Phone orders are preferred and receive priority processing.