U.S. fares poorly at WTO

U.S. efforts to protect domestic industries are challenged more frequently and overturned more often than those of any other country at the World Trade Organization, the General Accounting Office said yesterday.

“This report confirms my concern that the WTO dispute settlement process has gone badly wrong and that changes are needed to bring it back on course,” said Sen. Max Baucus, the Montana Democrat who requested the GAO study.

The WTO’s 146 members set global trade rules and agree to a kind of court system that enforces those rules. Any country or group of countries can challenge another’s trade barriers.

The trade remedies studied in the report, usually duties or import restrictions, are applied after the U.S. government determines that a U.S. industry sector, like steel or lumber, is threatened by imports.

In one recent high-profile case against the United States, the WTO ruled that tariffs to protect domestic steelmakers, implemented by President Bush last spring, are illegal.

The WTO has ruled for or against the United States at about the same ratio as it has for or against other countries, and has “treated its members the same in trade remedy cases,” the GAO said.

But the report said that countries on the offensive are more likely to prevail than countries defending their trade remedies — bad news for the United States, which often is challenged but much less often takes others to task.

The 15-nation European Union is the most frequent complainant. European Union officials maintain that the WTO system works well and the United States needs to comply with unfavorable rulings.

The rulings affected a number of U.S. laws, regulations, practices, and measures, the GAO said in a report that examined the period between 1995 — the WTO’s first year — and the end of 2002.

“The decisions against the United States have had significantly more far-reaching effects than those against other countries,” Mr. Baucus said.

The Bush administration also “has some serious concerns with WTO dispute settlement,” Theodore Kassinger, the Commerce Department’s general counsel, wrote in a letter commenting on the GAO report.

Because the number of cases is increasing and the effect of some decisions is uncertain, the report fails to recognize the potential future impact of some decisions, Mr. Kassinger said.

The U.S. International Trade Commission, the agency that administers many of the trade laws subject to WTO challenges, said that without any changes, more adverse rulings are likely.

“… It appears likely that the United States will be subject to additional adverse rulings, with all the attendant consequences,” ITC Chairman Deanna Tanner Okun and three other ITC commissioners told the GAO.

Story Continues →