World Trade Organization:

U.S. Experience in Dispute Settlement System: The First Five Years

T-NSIAD/OGC-00-202: Published: Jun 20, 2000. Publicly Released: Jun 20, 2000.

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Benjamin F. Nelson
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Pursuant to a congressional request, GAO discussed the World Trade Organization's (WTO) dispute settlement system, focusing on: (1) how WTO members have used the new dispute settlement system; 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 dispute settlement system during its first 5 years, filing about 200 complaints; (2) the United States and the European Union have been 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, the United States served as a plaintiff in 25 cases and a 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 in 17 cases, the United States prevailed in one case, resolved the dispute without a ruling in 10, 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 settlement 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 most instances providing commercial benefits to the United States; (9) for example, in a dispute involving barriers to U.S. exports of pork and poultry in the Philippine market, the United States challenged how the Philippines administered its tariff rate quota system for these products; (10) following consultations, the Philippines agreed to modify its system in 1998; (11) U.S. poultry exports to the Philippines subsequently increased by about $16 million in 1999 and pork exports increased by about $1 million that year; (12) 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; (13) these changes have been relatively minor to date, and the majority of them have had limited or no commercial consequences for the United States; (14) 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; (15) however, the commercial effects of one recently completed case involving tax exemptions for U.S. foreign sales corporations are potentially high, but the United States has not fully determined how it will implement the WTO ruling; and (16) there are several ongoing WTO cases whose outcomes could be problematic for the United States.

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