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Trade disputes WTO dispute settlement procedures Sanctions Examples Pressure valves / safeguards in GATT / WTO Countries may temporarily raise protection in extraordinary circumstances Balance-of-payments crises: to reduce excess imports

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trade disputes

Trade disputes

WTO dispute settlement procedures

Sanctions

Examples

pressure valves safeguards in gatt wto
Pressure valves / safeguards in GATT / WTO

Countries may temporarily raise protection in extraordinary circumstances

  • Balance-of-payments crises: to reduce excess imports
  • Countervailing duties: to compensate for foreign export subsidies
  • Antidumping: to respond to unfair foreign competition, dumping
pressure valves safeguards
Pressure valves / safeguards
  • Decision about countervailing duties / antidumping tariffs handled by national trade administration in importing country
    • typically initiated by local producers facing increasing import competition
  • Foreign exporters rarely agree with assessment of countervailing duties / antidumping tariffs
    • trade dispute
what s a trade dispute in wto
What’s a trade dispute in WTO?
  • One member government believes that another member government is violating an agreement or a commitment made to the WTO
    • In addition to “unfair” antidumping levies, cases often focus on non-tariff barriers and administrative trade practices

Note: initial antidumping determination purely national process

the wto dispute settlement process
The WTO dispute settlement process
  • Emphasis on consultations and voluntary settlement of disputes
  • Detailed schedules for formal dispute settlement process
    • complaint to Dispute Settlement Body
    • expert panel
    • report and proposed resolution
    • process for appeals
the panel process
The panel process
  • Complaint and consultation
    • 60 days for bilateral discussions
  • Establishment of panel
    • must be done within 45 days
  • Final panel report to parties
    • max 6 months after establishment of panel, includes conclusions and recommendations
  • Final panel report to all DSB members
    • 3 weeks after parties have received it
  • Report automatically adopted after 60 days if there is no consensus against it
appeals
Appeals
  • The panel’s ruling can be appealed by either party
  • Appeals examined by three person group from permanent 7-member Appellate Body
    • Appellate Body report in 60-90 days
  • New report accepted or rejected by DSB within 30 days
    • rejection requires consensus
after adoption of panel report
After adoption of panel report
  • Country at fault must reform its policy according to recommendations
    • statement of intent within 30 days
    • compliance required within “reasonable” period of time
  • Alternative is to negotiate payment of mutually acceptable compensation
    • 20 days for negotiations
  • Trade sanctions can be authorized by DSB if compensation is not agreed upon
sanctions
Sanctions
  • Retaliatory action – suspension of concession and obligations – should primarily be in same sector
    • some possibilities to retaliate in areas of other WTO agreements
  • Level of retaliation to match injury
    • arbitration by original panel
  • How effective is retaliation?
    • How can small countries “hurt” the US?
wto disputes 1995 2003
WTO disputes 1995-2003
  • 282 cases reported to DSB
  • 64 resolved through consultations or suspended
  • 69 adopted panel reports
  • 16 active panels
  • 133 pending or ongoing consultation
  • only 4 cases where retaliation has been authorized
retaliation authorized in 4 cases
Retaliation authorized in 4 cases
  • Foreign sales corporations
    • EU complaint about tax benefits to exports. Level of retaliation: USD 4,043 million. Not yet implemented
  • Airplane subsidies
    • Canadian complaint about Brazilian subsidies. Level of retaliation: CAD 344 million. Not yet implemented
retaliation authorized in 4 cases12
Retaliation authorized in 4 cases
  • Bananas
    • Latin American countries and US complaint about EU banana import regime. Value of retaliation: USD 393 million. Withdrawn after agreement.
  • Hormones
    • US and Canadian complaint about EU ban of imports of hormone treated meat products. Level of retaliation: USD 125 million. In force.
the banana case
The Banana case
  • The establishment of the Single Market 1992 required unified banana policy
    • widely different national policies
  • Distinct interest groups
    • protection of EU producers
    • support to former colonies
    • support to EU distributors
    • consumer interest for cheap bananas
  • Heavy lobbying of EU decision makers
    • effective alliance in favor of protection
eu s 1993 banana policy
EU:s 1993 banana policy
  • Tariff free quotas for ACP bananas
    • based on “best” year before 1991
  • More restrictive tariff quotas for dollar bananas
  • Quota licensing system for dollar bananas included shares reserved for ACP banana importers

=> Clear discrimination of dollar bananas

wto dispute settlement
WTO dispute settlement
  • Ecuador, Guatemala, Honduras, Mexico, and Panama filed complaint with WTO in 1996
    • joined by US, to defend interests of US banana companies
  • Support for complaint from WTO panel and Appellate Body
    • but EU unwilling to change until sanctions were imposed
gm next big case
GM: next big case?

Genetically Modified (GM) food products

  • EU unwilling to allow imports of GM foods
    • health / safety: GM food may affect human genes
    • discussion about labeling and tracing GM
  • US strongly opposed to import restrictions
  • Unwillingness to take problem to WTO
    • US would probably win case, but lose publicity war
    • standing of WTO may weaken if it makes unpopular decisions