Question

BACKGROUND AND FACTS

The European Communities requested a WTO panel to

decide whether U.S. Sections 301-310 [the Act] violated

GATT dispute settlement procedures. The Act permits the

USTR to investigate possible violations of GATT or other

international trade agreements, to negotiate a settlement

of the dispute, and to request a WTO dispute settlement

panel if necessary. The Act also permits the USTR to

impose retaliatory tariffs or other trade sanctions either

unilaterally or if authorized by theWTODispute Settlement

Body. The EC argued that the Act violated WTO rules.

REPORT OF THE PANEL

The European Communities argues that [WTO rules]

prohibit unilateralism in the...dispute settlement

procedures. Members must await the adoption of a

panel or Appellate Body report by the Dispute Settlement

Body, or the rendering of an arbitration

decision...before determining whether rights or benefits

accruing to them under aWTO agreement are being

denied. * * *

The European Communities...took the position in

the Uruguay Round that a strengthened dispute settlement

system must include an explicit ban on any

government taking unilateral action to redress what

that government judges to be the trade wrongs of

others.

The United States argues that nothing in Sections

301-310 requires the U.S. government to act in violation the USTR to undertake WTO dispute settlement

proceedings when a WTO agreement is involved, and

provides that the USTR will rely on the results of those

proceedings when determining whether U.S. agreement

rights have been denied. Likewise, [the Act]

explicitly indicates that the USTR need not take action

when the DSB has adopted a report finding no denial of

U.S. WTO rights.

Under well-established GATT and WTO jurisprudence

and practice which the European Communities

appears to accept, a law may be found inconsistent

with a Member's WTO obligations only if it precludes a

Member from acting consistently with those obligations.

The European Communities must therefore

demonstrate that Sections 301-310 do not permit the

United States government to take action consistent

with U.S. WTO obligations—that this legislation in fact

mandates WTO-inconsistent action. The European

Communities has failed to meet this burden. Its

analysis of the language of Sections 301-310 ignores

pertinent statutory language and relies on constructions

not permitted under U.S. law. Sections 301-310 of

the Trade Act of 1974 are fully consistent with U.S.

WTO rights and obligations. * * *

If a law does not make it compulsory for authorities

to act so as to violate their international obligations,

that law may not be said to command such action. This

can be illustrated through a simple example. A law

which provides, "the Trade Representative shall take a

walk in the park on Tuesdays, unless she chooses not

to" does not oblige the USTR to walk in the park on

Tuesdays. She has complete discretion not to take a

walk in the park on Tuesdays; the law in no way obliges

or commands her to do so. This remains true despite

the use of the word "shall" in that law.

Decision. Sections 301-310 of the U.S. Trade Act of

1974 were found to be valid under the GATT 1994

agreements. The panel clarified that the United States

may impose retaliatory trade sanctions against other

WTO members only where the United States strictly followed

WTO dispute settlement rules and when authorized

by the Dispute Settlement Body.

Comment. Upon entering the WTO, the United States

had filed a binding "Statement of Administrative Action,"

in which it committed to abide by all WTO dispute

settlement procedures and to not act unilaterally. That

was noted by the panel in its report and was a factor

in the panel's decision.

Case Questions

1. What does the panel mean by "unilateralism"?

2. If a trade dispute arises, what is the proper procedure under WTO rules for settling that dispute?

Answer 1

1. If an action is supported or agreeable to one party without concern other party in business dealings it is called as unilateralism. the parties who joined in this group have offerred many benefits than those parties who do not enters into this group. In international trade, some times the contracts appears between two nations called as Bilateral contracts, where as the contracts appears between a specific group, which may more than two are called as unilateralism.

2. when nations enter into international trade with other nations through WTO or any other international constitutional agency, those nations were obliged to follow the regulations and laws of the agency. If nations enter into contract by following WTO guideliness. When a nation thinks that the other nation is voilating the rules and regulations related to a trade, the same will be carried to WTO- there is a trade dispute settlement body established to resolve those. The bodeis involve in this are:

• they establish a dispute settlement understandings
• collect information by the technical experts
• next prepare the rules of conduct or prepared rules for resolving the issue
• established a working procedure to appeleate tribunal

the Dispute settlement body works to act on the disputes among the member nations of WTO. There as an appeleate tribunal body which consists of 7 members and act on those appeals and issues.