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![handle is hein.crs/goveqah0001 and id is 1 raw text is: Informing the IegisIative debate sinee 1914
Updated July 17, 2024
Dispute Settlement in the WTO and U.S. Trade Agreements
Since the 1980s, Congress has declared that a principal
trade negotiating objective of the United States is the
establishment and use of dispute settlement (DS)
mechanisms to enforce commitments in U.S. trade
agreements. Since 1975, Congress has set principal
negotiating objectives for dispute settlement and the
enforcement of trade agreements within Trade Promotion
Authority (TPA) legislation. In the most recent TPA (Title
I, P.L. 114-26, expired in 2021), Congress directed the U.S.
Trade Representative (USTR) to seek provisions in trade
agreements providing for resolution of disputes between
governments under those trade agreements in an effective,
timely, transparent, equitable, and reasoned manner.
USTR monitors compliance with U.S. trade agreements,
and pursues enforcement through bilateral engagement, DS
procedures, and other trade policy tools.
The most recent U.S. free trade agreement (FTA), the 2020
U.S.-Mexico-Canada Agreement (USMCA), made various
changes to past FTA DS procedures and created new
mechanisms. The Biden Administration is not pursuing new
comprehensive FTAs, and instead is negotiating targeted
initiatives that cover some trade issues. It is unclear what
potential obligations may be subject to enforcement,
however, which some Members of Congress have raised as
a concern. While DS has been a long-standing U.S. trade
negotiating objective, the DS system of the World Trade
Organization (WTO) has also become controversial for
U.S. policymakers, in large part due to adverse dispute
panel decisions against the United States, particularly over
the use of trade remedies. Some Members have urged the
Administration to work with WTO members toward
reforms that improve the speed and predictability of
dispute settlement (see e.g., H.Res. 382, 117th Congress).
spute Settlement at the WTO
The WTO was established in 1995 after the Uruguay Round
of negotiations among members of the 1947 General
Agreement on Tariffs and Trade (GATT). The WTO
administers a system of agreements, covering goods and
services trade, intellectual property rights, subsidies, and
other issues. The WTO Dispute Settlement Understanding
(DSU) provides a forum to settle disputes regarding the
various WTO agreements.
The establishment of the WTO's DSU was in response to
concerns expressed by the United States and other GATT
member concerns that the GATT DS was ineffective largely
because there were no fixed timetables and a disputing
party could block decisions, which often led to unresolved
disputes. Congress, in defining U.S. aims for the Uruguay
Round, wanted 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 (P.L. 100-418).
Observers credited the DSU for strengthening the DS
system by imposing stricter deadlines, and making it easier
to establish panels, adopt panel reports, and authorize
retaliation for noncompliance.
The DSU commits members to take disputes to adjudication
under its rules and procedures rather than make unilateral
determinations of violations and impose penalties. As a first
step, the DSU encourages settlement of disputes through
consultations. If a dispute is unresolved within 60 days of a
request for consultations, or if a party denies a request, the
complaining party may request the establishment of a panel.
A panel is composed of three well-qualified government
and/or non-governmental individuals from members not
party to the dispute.
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
Dispute panels hear cases and are to issue their reports to
the disputing parties, and then to all WTO members, within
nine months from the establishment of the panel. Third
parties may join the proceedings if they have a substantial
interest. Until 2019, decisions could be appealed to the
Appellate Body (AB), a standing body of seven jurists
serving four-year terms, who had expertise in international
trade law. Since 2016, the United States has blocked the
process to appoint new AB panelists, which led to the body
ceasing to function in 2019. The U.S. action was motivated
by various concerns about WTO DS, including over
perceived judicial overreach in panel decisions. U.S.
action was also an attempt to prompt WTO members to
consider reforms. Panels can continue to hear cases, but
those that are appealed may remain unresolved and
retaliation cannot be authorized. The European Union and
some other WTO members established an appeal arbitration
arrangement under Art. 25 DSU to hear their own cases.
See CRS Report R46852, The WTO'sAppellate Body: Key
Disputes and Controversies.
Once DSU proceedings are completed, the final reports are
presented for adoption by the Dispute Settlement Body
(DSB), a plenary committee of the WTO. If a violation is
found, the member must bring the offending measure into
conformity with WTO obligations. It may voluntarily
change its practice and the parties may negotiate a
reasonable timeframe for implementation. If the
respondent does not bring its measure into conformity, or
its action is not acceptable to the complainant, the parties
may negotiate compensation. The complainant may also
request that the DSB authorize retaliation, e.g., withdrawal
of tariff concessions. While specific timetables apply,](ViewImageLocal?handle=hein.crs/goveqah0001&div=1&collection=&method=preview&ext=.png&size=3)