World Trade OrganizationIssues in Dispute Settlement Gao ID: NSIAD-00-210 August 9, 2000
Forty-two World Trade Organization (WTO) completed cases involving the United States led to changes in foreign laws, regulations, and practices that offer commercial benefits to the United States. With the exception of a ruling that U.S. tax provisions violated export subsidy rules, which has potentially significant commercial consequences, none of the changes the United States has made in response to disputes have had major policy or commercial impacts so far. The following major issues have emerged in using the system: (1) Sovereignty. The United States has wondered if U.S. protections would weaken against unfair trade and on health, safety, and the environment. So far, there has been no problem. (2) Compliance. WTO members have generally changed their practices to comply with WTO rules. The compliance rate is 75 percent in U.S. cases. (3) Resolution timetable. Although most U.S. complaints were resolved quickly, most cases going through the panel or appellate processes took longer than called for in WTO timetables. (4) Openness. Although the dispute settlement system is more transparent than when it was established in 1995, the public still has limited information about and input into the organization's proceedings. Summaries of the 42 WTO dispute settlement cases and their commercial significance are included in appendixes.
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.