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D Co nesionat Res.r SrdeA
Dispute Settlement in U.S. Trade Agreements
The United States traditionally has championed the use of
effective and reciprocal dispute settlement (DS)
mechanisms to enforce commitments in the World Trade
Organization (WTO) and in U.S. free trade agreements
(FTAs). While effective and enforceable DS has been a
longstanding U.S. trade negotiating objective, its use has
been controversial at times over the outcome of adverse
decisions, especially those that may require Congress to
change U.S. law to become compliant with the decision.
Dispute Settlement at the WTO
The WTO was established in 1995 after eight years of trade
negotiations in the Uruguay Round among members of the
General Agreement on Tariffs and Trade (GATT) - the
predecessor to the WTO during 1947-1994. The WTO
administers a system of agreements on trade liberalization
and rules in goods (including tariff and non-tariff barriers),
services, and intellectual property rights. Through its
Dispute Settlement Understanding (DSU), the WTO
provides an enforceable means to settle disputes regarding
obligations under these agreements.
Under the GATT, dispute settlement was largely viewed as
ineffective because there were no fixed timetables and
decisions could be blocked by a party, which frequently led
to no resolution of disputes. In defining U.S. aims for the
Uruguay Round, Congress sought to achieve major reform
in the GATT dispute settlement system in the following
U.S. trade negotiating objective:
...to ensure that such mechanisms within the GATT
and GATT agreements provide for more effective
and expeditious resolution of disputes and enable
better enforcement of United States rights. -
Omnibus Trade and Competitiveness Act of 1988,
(P.L. 100-418)
The DSU was credited with strengthening the DS system by
imposing stricter deadlines and making it easier to establish
panels, adopt panel reports (DS decisions), and to authorize
retaliation, if necessary. It also reversed the process for
adopting a panel report by providing that a report can be
blocked only by consent of all members.
How it Works
The DSU established the process for the settlement of
disputes for the WTO system of agreements. It commits
members not to make unilateral determinations of
violations or impose penalties, but rather to take disputes to
adjudication under DSU rules and procedures. As a first
step, the DSU encourages the settlement of disputes
through consultations and requires a party to enter into
consultation with a requesting party within 30 days of
receipt of the request.
If a dispute cannot be resolved within 60 days of a request
for consultations, or if a party denies a request for
consultation, the complaining party may request the
establishment of a panel. The DSU sets the procedures for
choosing panel members and establishes a panel's terms of
reference. A panel typically is composed of three well-
qualified government and/or non-governmental individuals
from third party members not a party to the dispute
recommended to the parties by the WTO Secretariat. If
members cannot agree on panelists, they are chosen by the
Director-General.
Dispute panels hear cases and issue reports to disputing
parties and then to all WTO Members within nine months
of a panel's establishment. Third parties may join if they
have a substantial interest in the proceedings. Decisions
may be appealed to the Appellate Body, a standing body of
seven persons serving four year terms, unaffiliated with any
government, and having recognized expertise in
international trade law. An appeal is limited to issues of law
and legal interpretation and should be completed within one
year.
WTO DS Core Objectives
[the DS system] serves to preserve the rights and
obligations of Members under the covered
agreements, and to clarify the existing provisions of
those agreements in accordance with customary rules
of interpretation of public international law.
Recommendations and rulings of the DSB cannot add
to or diminish the rights and obligations provided in
the covered agreements. Art. 3.2 DSU
Once DSU proceedings are completed, the reports are
presented for adoption by the Dispute Settlement Body
(DSB). If a violation is found, the member must bring the
offending measure into conformity with WTO obligations.
It may choose to change its practice and the parties
negotiate to establish a reasonable timeframe for
implementation. If the respondent does not bring its
measure into conformity in a reasonable period of time, or
its responsive action is not acceptable to the complaining
Member, the parties may negotiate compensation.
Alternatively, the complaining Member may request that
the DSB authorize it to suspend obligations, thereby giving
permission for the complainant to retaliate through the
withdrawal of tariff concessions or otherwise suspend WTO
benefits equivalent to the effect of the offending practice.
Procedures set specific timetables, although delays often
occur. To date, 524 cases have been filed at the DSB,
excluding cases that were subsequently consolidated. As of
the end of 2015, the United States was a direct party to 232
cases (Table 1).
https://crsreports.cong ress.gov
May 1, 2017](ViewImageLocal?handle=hein.crs/govearu0001&div=1&collection=&method=preview&ext=.png&size=3)
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