World Trade Organization:

U.S. Experience to Date in Dispute Settlement System

NSIAD/OGC-00-196BR: Published: Jun 14, 2000. Publicly Released: Jun 14, 2000.

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Pursuant to a congressional request, GAO provided information on the World Trade Organization's (WTO) dispute settlement system, focusing on: (1) how WTO members have used the new system, primarily on cases involving the United States; and (2) the impact of these cases on foreign trade practices and U.S. laws and regulations, and their overall commercial effects.

GAO noted that: (1) WTO member countries have actively used the WTO dispute settlement system during its first 5 years, filing 187 complaints as of April 2000; (2) the United States and the European Union were the most active participants, both as plaintiffs and defendants; (3) in the 42 cases involving the United States that had either reached a final WTO decision or were resolved without a ruling, GAO found that the United States has served as plaintiff in 25 cases and defendant in 17 cases; (4) as a plaintiff, the United States prevailed in a final WTO dispute settlement ruling in 13 cases, resolved the dispute without a ruling in 10 cases, and did not prevail in 2 cases; (5) as a defendant, the United States prevailed in 1 case, resolved the dispute without a hearing in 10 cases, and lost in 6 cases; (6) overall, GAO's analysis shows that the United States has gained more than it has lost in the WTO dispute system to date; (7) WTO cases have resulted in a substantial number of changes in foreign trade practices, while their effect on U.S. laws and regulations has been minimal; (8) in about three-quarters of the 25 cases filed by the United States, other WTO members agreed to change their practices, in some instances offering commercial benefits to the United States; (9) for example, in response to a 1998 WTO ruling on Japanese distilled liquor taxes, Japan accelerated its tariff elimination and reduced discriminatory taxes on competing alcohol imports; (10) the year following the resolution of the case, U.S. exports of whiskey to Japan, one of the largest U.S. markets for distilled spirits, increased by 18 percent, or $10 million; (11) as for the United States, in 5 of the 17 cases in which it was a defendant, two U.S. laws, two U.S. regulations, and one set of U.S. guidelines were changed or subject to change; (12) these changes have been relatively minor to date and the majority of them have had limited or no commercial consequences for the United States; and (13) for example, in one case challenging increased U.S. duties on Korean semiconductor imports, the United States took action to comply with the WTO ruling while still maintaining the duties.

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