International Trade:

Combating Unfair Foreign Trade Practices

NSIAD-87-100: Published: Mar 17, 1987. Publicly Released: Apr 22, 1987.

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Pursuant to a congressional request, GAO provided information on the dispute settlement process under section 301 of the Trade Act of 1974, focusing on: (1) success in remedying U.S. trade complaints; and (2) experiences of section 301 petitioners. Under the act, the Office of the U.S. Trade Representative (OUSTR) may begin negotiations on its own or in response to a complaint; if the negotiations are unsuccessful, the President may invoke dispute settlement procedures under international trade agreements, such as the General Agreement on Tariffs and Trade (GATT), or take retaliatory action against an unfair foreign trade practice.

GAO found that: (1) section 301 cases generally took a long time to resolve, averaging 45 months for GATT-related cases and 13 months for non-GATT-related cases; (2) the average will ultimately be longer because GAO included a number of unresolved cases in its review; and (3) with one exception, U.S. practice has been to allow the GATT dispute resolution process to conclude before initiating further action. GAO also found that: (1) many petitioners expressed dissatisfaction with the length of the GATT dispute settlement process, and petitioners generally advocated stricter settlement time frames; (2) many petitioners indicated that they would not use the section 301 process again; (3) petitioners also complained about the development of evidence, the political commitment to resolve trade disputes, and the long-range impact of negotiated settlement agreements; (4) relatively few section 301 cases resulted in the elimination of unfair trade practices; and (5) most petitioners felt that the resolution of their case did not remedy the injury they suffered from unfair trade.

Matter for Congressional Consideration

  1. Status: Closed - Implemented

    Comments: The Omnibus Trade and Competitiveness Act of 1988, enacted August 23, 1988, contains provisions which substantively attain the objective of this recommendation.

    Matter: Congress should amend section 301 of the Trade Act of 1974 to require that OUSTR set a date for each section 301 case involving GATT, at which time the United States would be expected to withdraw from the GATT dispute settlement process if it were not completed. The statute should give OUSTR some flexibility in setting the required limit on participation, based on the complexity and sensitivity of each case.

 

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