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Trade Retaliation: The "Carousel" Approach , Record No.: RS20715, Date: March 05, 2002 1 (March 5, 2002)

handle is hein.tera/crser0169 and id is 1 raw text is: Order Code RS20715 Updated March 5, 2002 Trade Retaliation: The Carousel Approach Lenore Sek Specialist in International Trade and Finance Foreign Affairs, Defense, and Trade Division Summary Section 407 of the Trade and Development Act of 2000 (P.L. 106-200) requires the U.S. Trade Representative (USTR) to periodically revise the list of products subject to retaliation when another country fails to implement a World Trade Organization (WTO) dispute decision. This periodic revision of the product list has become known as carousel retaliation. The intent of switching products is to exert more pressure on a trading partner to comply with a WTO ruling. The impetus for more pressure came principally from U.S. banana and livestock exporters, who had become frustrated with the European Union (EU) and its repeated postponement of compliance with WTO dispute rulings. To date, the USTR has not revised a product list under Section 407, but credits the threat of action under carousel authority with helping to resolve the banana case, and says that carousel authority might be used as leverage in the future. An EU challenge of U.S. carousel retaliation still stands in the WTO dispute process. Setting the Stage: The WTO Banana and Beef Disputes Many U.S. policymakers have expressed concern over the effectiveness of the WTO dispute resolution process to convince other countries to remove various trade barriers. Two WTO dispute cases were especially exasperating to U.S. exporters because of the length of time to decide the cases and the improbability that the losing party would change its practices. These involved banana and beef trade disputes with the European Union (EU). They were the main reason that Congress considered alternative ways to pressure a trading partner to implement a WTO dispute decision. All WTO disputes follow a procedure that normally takes about 2-3 years from start to finish. Disputes are administered by the WTO members, who act as the Dispute Settlement Body (DSB). Parties to the dispute first engage in consultations. If a satisfactory solution is not reached, the complainant may request a panel to hear the 1 For more information on these cases, see CRS Report RS20130, The US.-European Union Banana Dispute and CRS Report RS20142, The U S.-European Meat Hormone Dispute, both by Charles E. Hanrahan.. Congressional Research Service o0o The Library of Congress CRS Report for Congress Received through the CRS Web

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