To initiate, or file, a  dispute, a WTO member requests consultations with the defending  member. In the United States, the Department of  Commerce and the International Trade Commission (ITC) investigate  whether the United States should impose antidumping or countervailing  duties to offset unfair foreign trade practices. Trade Remedy Cases Increased Over Time, but Few Measures Were Challenged

From 1995 through 2002, WTO members brought 198 formal dispute  settlement cases against other members. U.S. agency officials said that it was not surprising that the United States  had been a defendant more often than a complainant in WTO disputes since  (1) the United States has the world’s biggest economy and most desirable  market and (2) U.S. laws and procedures are more detailed and transparent  than those of other members that are large users of trade remedies. Measures Were Challenged Most

Although members notified the WTO that they imposed 1,405 trade remedy  measures from 1995 through 2002, only a small percentage of these  measures were challenged in the dispute settlement system. The WTO also rejected roughly the same proportion of U.S. and non-U.S.  domestic determinations. Measures

The 25 WTO trade remedy rulings completed from 1995 through 2002 did  not result in many changes to WTO members’ laws, regulations, or  practices. U.S. Officials Are Concerned about the Potential Impact of WTO Rulings on U.S. Ability to Impose Trade Remedy Measures

While U.S. officials told us that WTO trade remedy rulings had not yet  significantly impaired the U.S.’s fundamental right and ability to use its  trade remedies, they are concerned about the rulings’ potential to do so in  the future. Expert Views and U.S. Agency Positions on Standard of Review and Other Trade Remedy Issues

How the WTO has interpreted and applied the standard of review in trade  remedy cases and how it has resolved important trade remedy issues are  highly controversial issues in the United States. In addition, a majority of the experts who responded  concluded that WTO decisions generally have not added to obligations or  diminished rights of WTO members and that it was appropriate for the  WTO to interpret vague and ambiguous provisions in WTO agreements,  sometimes referred to as “gap filling.” However, a significant minority of  experts strongly disagreed with this view about WTO members’ obligations  and rights and considered gap filling to be inconsistent with several  provisions of the Dispute Settlement Understanding. ITC officials indicated that they do not  agree that the WTO has properly applied standard of review in trade  remedy cases. Agency Comments and Our Evaluation

We requested comments on a draft of this report from the Secretary of  Commerce, the Chairman of the U.S. International Trade Commission, and  the U.S. Trade Representative (USTR). As a result of this  increased emphasis, we modified the sections of this report that present  U.S. agency views on the potential future ramifications of WTO decisions  on the U.S.’s ability to impose trade remedies. Specifically, in this report we (1) identified the major trends in  WTO dispute settlement activity concerning trade remedies; (2) analyzed  the outcome of WTO rulings in completed trade remedy cases; (3) assessed  the major impacts of these rulings on WTO members’ laws, regulations, and  practices and on their ability to impose trade remedies; (4) identified the  standards of review for trade remedy cases and Appellate Body guidance  on how they should be applied; and (5) summarized legal experts’ views  and U.S. agencies’ positions on standard of review and other trade remedy  issues. The safeguard measure took the form of minimum specific duties  on these imports.
Why GAO Did This Study

World Trade Organization (WTO) members rely on trade remedies in the form of duties or other import restrictions to protect their industries from injury due to unfair foreign trade practices or unexpected import surges. There is congressional concern that the WTO, created in 1995 to administer trade rules, is interfering with this ability. There is also congressional concern that the WTO is not treating the United States fairly in resolving trade remedy disputes. A congressional requester asked GAO to identify trends in WTO trade remedy disputes since 1995, including the outcomes of these disputes and how they affected members' ability to impose trade remedies. The requester also asked GAO to discuss the standards of review that the WTO applies when ruling on trade remedy disputes and to present U.S. agencies' and legal experts' views on the WTO's application of these standards and related trade remedy issues. In their comments on a draft of this report, the Department of Commerce and the U.S. International Trade Commission stated that the report needed to put more emphasis on U.S. agencies' concerns about the potential adverse impact of WTO rulings on the U.S.'s use of trade remedies. The U.S. Trade Representative provided only technical comments on the report. GAO modified the report as appropriate.

What GAO Found

About a third of the cases filed in the WTO dispute settlement system from 1995 through 2002 challenged members' trade remedies, with the ratio of such cases increasing over time. Although a relatively small proportion of WTO members' trade remedy measures were challenged in the WTO, the United States faced substantially more challenges than other WTO members. The WTO generally rejected members' decisions to impose trade remedies in the 25 trade remedy disputes resolved from 1995 through 2002. However, GAO found that the WTO ruled for and against the U.S. and other members in roughly the same ratios. Overall, WTO rulings resulted in few changes to members' laws, regulations, and practices but had a relatively greater impact on those of the United States. While U.S. agencies stated that WTO rulings have not yet significantly impaired their ability to impose trade remedies, they had concerns about the potential future adverse impact of WTO rulings. Of the legal experts GAO consulted, a majority concluded that the WTO has properly applied standards of review and correctly ruled on major trade remedy issues. However, a significant minority strongly disagreed with these conclusions. U.S. agencies also said that the WTO has not always properly applied the standards and has, in some cases, imposed obligations on members that are not found in WTO agreements. Nonetheless, the experts almost unanimously agreed that the WTO was not treating the United States any differently than other members.