World Trade Organization:

Issues in Dispute Settlement

NSIAD-00-210: Published: Aug 9, 2000. Publicly Released: Aug 9, 2000.

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Pursuant to a congressional request, GAO reviewed the World Trade Organization's (WTO) dispute settlement system, focusing on the: (1) outcome and commercial impact of completed cases involving the United States; and (2) major issues that have emerged in using the system.

GAO noted that: (1) overall, the results of the WTO's dispute settlement process have been positive for the United States; (2) GAO's examination of 42 completed cases involving the United States shows that most led to changes in foreign laws, regulations, and practices that offer commercial benefits to the United States; (3) conversely, none of the changes the United States has made in response to WTO disputes have had major policy or commercial impact to date, though the stakes in several were important; (4) however, a ruling that U.S. tax provisions violated export subsidy rules has potentially high commercial consequences, but the United States has not fully determined how to comply with the ruling; (5) in addition, WTO rulings have upheld major trade principles important to the United States, such as requirements that imported goods must be treated in the same way as domestic goods in applying internal taxes and regulations; (6) four major issues surrounding the dispute settlement system have emerged; (7) these issues are: (a) how the dispute settlement system has affected U.S. sovereignty; (b) to what extent WTO members found to be in violation of rules are complying with WTO rulings; (c) how quickly the system resolves disputes; and (d) how open the WTO's proceedings are; (8) concerns over sovereignty have centered on whether rulings would weaken U.S. protections against unfair trade and on health, safety, and the environment; (9) so far, this possibility has not proved to be the case, but concerns remain; (10) with regard to compliance, members have generally changed their practices to comply with WTO rules, and the rate of compliance with decisions in U.S. cases is 75 percent, slightly better than that under the General Agreement on Tariffs and Trade; (11) further, while many U.S. complaints were resolved quickly, most complaints that went through the WTO panel or appellate process took longer than called for in the timetables set forth in the WTO agreements; (12) although the dispute settlement system has become more open and transparent since it was established in 1995, the public still has limited information about and input into the organization's proceedings; and (13) the United States has met resistance from other WTO members in seeking greater openness in the process.

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