
Trade disputes
Mô tả tài liệu
One member government believes that another member government is violating an agreement or a commitment made to the WTO
Tóm tắt nội dung
Fulbright Economics Teaching Program
2006-2007
Trade: Institutions and impact
Ari Kokko 1
Lecture 7
Trade disputes
WTO dispute settlement procedures
Sanctions
Examples
Ari Kokko
What’s a trade dispute in WTO?
One member government believes that
another member government is violating
an agreement or a commitment made to
the WTO
– “Unfair” antidumping levies
– Non-tariff barriers
– Administrative practices
Note: initial antidumping determination purely
national process
Fulbright Economics Teaching Program
2006-2007
Trade: Institutions and impact
Ari Kokko 2
Lecture 7
Ari Kokko
The WTO dispute settlement process
Emphasis on consultations and
voluntary settlement of disputes
Detailed schedules for formal dispute
settlement process
– complaint to Dispute Settlement Body
– expert panel
– report and proposed resolution
– process for appeals
Ari Kokko
The panel process
Complaint and consultation
– 60 days for bilateral discussions
Establishment of panel
– must be done within 45 days
Final panel report to parties
– max 6 months after establishment of panel,
includes conclusions and recommendations
Final panel report to all DSB members
– 3 weeks after parties have received it
Report automatically adopted after 60 days if
there is no consensus against it
Fulbright Economics Teaching Program
2006-2007
Trade: Institutions and impact
Ari Kokko 3
Lecture 7
Ari Kokko
Appeals
The panel’s ruling can be appealed by
either party
Appeals examined by three person
group from permanent 7-member
Appellate Body
– Appellate Body report in 60-90 days
New report accepted or rejected by
DSB within 30 days
– rejection requires consensus
Ari Kokko
After adoption of panel report
Country at fault must reform its policy
according to recommendations
– statement of intent within 30 days
– compliance required within “reasonable” period of
time
Alternative is to negotiate payment of
mutually acceptable compensation
– 20 days for negotiations
Trade sanctions can be authorized by DSB if
compensation is not agreed upon
Fulbright Economics Teaching Program
2006-2007
Trade: Institutions and impact
Ari Kokko 4
Lecture 7
Ari Kokko
Sanctions
Retaliatory action – suspension of
concession and obligations – should
primarily be in same sector
– some possibilities to retaliate in areas of
other WTO agreements
Level of retaliation to match injury
– arbitration by original panel
How effective is retaliation?
– How can small countries “hurt” the US?
Ari Kokko
WTO disputes 1995-2004 (Dec)
324 cases reported to DSB
103 panel reports
64 appellate body decisions
only 5 cases where retaliation has been
authorized
Fulbright Economics Teaching Program
2006-2007
Trade: Institutions and impact
Ari Kokko 5
Lecture 7
Ari Kokko
Retaliation authorized in 5 cases
Foreign sales corporations
– EU complaint about tax benefits to exports.
Level of retaliation: USD 4,043 million.
Implemented from March 2004.
US Antidumping Act of 1916
– EU request to adopt similar system with
“triple damages”.
Airplane subsidies
– Canadian complaint about Brazilian
subsidies. Level of retaliation: CAD 344
million. Not yet implemented
Ari Kokko
Retaliation authorized in 4 cases
Bananas
– Latin American countries and US complaint
about EU banana import regime. Value of
retaliation: USD 393 million. Withdrawn
after agreement.
Hormones
– US and Canadian complaint about EU ban
of imports of hormone treated meat
products. Level of retaliation: USD 125
million. In force, but calls for removal after
EU rules revision in late 2003.
Fulbright Economics Teaching Program
2006-2007
Trade: Institutions and impact
Ari Kokko 6
Lecture 7
Ari Kokko
The Banana case
The establishment of the Single Market
1992 required unified banana policy
– widely different national policies
Distinct interest groups
– protection of EU producers
– support to former colonies
– support to EU distributors
– consumer interest for cheap bananas
Heavy lobbying of EU decision makers
– effective alliance in favor of protection
Ari Kokko
EU:s 1993 banana policy
Tariff free quotas for ACP bananas
– based on “best” year before 1991
More restrictive tariff quotas for dollar
bananas
Quota licensing system for dollar
bananas included shares reserved for
ACP banana importers
Fulbright Economics Teaching Program
2006-2007
Trade: Institutions and impact
Ari Kokko 7
Lecture 7
Ari Kokko
WTO dispute settlement
Ecuador, Guatemala, Honduras,
Mexico, and Panama file complaint with
WTO in 1996
– joined by US, to defend interests of US
banana companies
Support for complaint from WTO panel
and Appellate Body
– but EU unwilling to change until sanctions
were imposed
Any similarities with Catfish case?
Ari Kokko
GM: next big case?
Genetically Modified (GM) food products
EU unwilling to allow imports of GM foods
– health / safety: GM food may affect human genes
– discussion about labeling and tracing GM
US strongly opposed to import restrictions
Unwillingness to take problem to WTO
– US would probably win case, but lose publicity war
– standing of WTO may weaken if it makes
unpopular decisions