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World Trade Organization |
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WT/DS152/R 22 December 1999 |
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(99-5454) |
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Original: English |
[ Edited ]
Report
of the Panel
Section 301(a) applies
to any case in which "the United States Trade Representative determines
under section 304(a)(1) that (A) the rights of the United States under any
trade agreement are being denied" or "(B) an act, policy or practice
of a foreign country – (i) violates, or is inconsistent with, the
provisions of, or otherwise denies benefits to the United States under, any
trade agreement, or (ii) is unjustifiable and burdens or restricts United States
commerce".
1.1
According to Section 304(a)(1),
"On the basis of the investigation
initiated under section 302 and the consultations (and the proceedings, if
applicable) under section 303, the [United States] Trade Representative shall …
determine whether … the rights to which the United States is entitled under any
trade agreement are being denied, or any act, policy, or practice described in
sub-section (a)(1)(B) or (b)(1) of section 301 exists"
1.2
Section 301(a) also provides that if
the USTR determines that one of these situations has occurred, "the Trade
Representative shall take action authorized in [Section 301](c), subject
to the specific direction, if any, of the President regarding any such action …
to enforce such rights or to obtain the elimination of such act, policy, or
practice".
1.3
According to Section 301(a)(2)(A),
action is not required under Section 301(a) if the DSB adopts a report
finding that United States rights under a WTO Agreement have not been denied or
that the act, policy or practice at issue "(I) is not a violation of, or
inconsistent with, the rights of the United States, or (II) does not deny,
nullify, or impair benefits to the United States under any trade
agreement".
1.4
Section 301(a)(2)(B)(i) also provides
that the USTR is not required to take action if "the Trade Representative
finds that the foreign country is taking satisfactory measures to grant the
rights of the United States under a trade agreement". The commitment of a
WTO Member to implement DSB recommendations favourable to the United States
within the period foreseen in Article 21 of the DSB has, for example, been
determined by the USTR to be a "satisfactory
measure" justifying a termination of the investigation without taking any
action under Section 301.
1.5
According to Section 301(a)(2)(B)(ii)
and (iii), the USTR is not required to take action if the foreign country
agrees to "eliminate or phase out the act, policy or practice" at
issue or if it agrees to "an imminent solution to the burden or
restriction on United States commerce", or "provide to the United States
compensatory trade benefits that are satisfactory to the Trade
Representative", when "it is impossible for the foreign country to
achieve the results described in clause (i) or (ii)".
1.6
Further, according to Section 301(a)(2)(B)(iv)
and (v), the USTR is not required to take action when she finds that:
"(iv) in
extraordinary cases, where the taking of action ... would have an adverse
impact on the United States economy substantially out of proportion to the
benefits of such action, taking into account the impact of not taking such
action on the credibility of the provisions of this chapter"; or
"(v) the
taking of action under this subsection would cause serious harm to the national
security of the United States".
1.7
Section 301(a)(3) provides:
"(3) Any
action taken under paragraph (1) to eliminate an act, policy, or practice shall
be devised so as to affect goods or services of the foreign country in an
amount that is equivalent in value to the burden or restriction being imposed
by that country on United States commerce".
1.8
Section 301(b) applies to an act,
policy or practice which, while not denying rights or benefits of the United
States under a trade agreement, is nevertheless "unreasonable or
discriminatory and burdens or restricts United States commerce".
1.9
Section 301(d)(3)(B) provides examples
of unreasonable acts, among them the denial of opportunities for the
establishment of an enterprise, failure to protect intellectual property
rights, export targeting, toleration of anti-competitive practices by private
firms and denial of worker rights.
"Discriminatory" acts, policies and practices are defined in
Section 301(d)(5) as including those that deny "national or
most-favoured-nation treatment to United States goods, services, or
investment". If the USTR
determines that an act, policy or practice is actionable under
Section 301(b) and determines that "action by the United States is
appropriate" the USTR shall
take retaliatory action "subject to the specific direction, if any, of the
President regarding such action".
1.10
Section 301(c) authorizes the USTR to
"suspend, withdraw, or prevent the application of, benefits of trade
agreement concessions", or "impose duties or other import restrictions
on the goods of, and … fees or restrictions on the services of, such foreign
country for such time as the Trade Representative determines
appropriate". If the act, policy
or practice of the foreign country fails to meet the eligibility criteria for
duty-free treatment under the United States' Generalised System of Preferences,
the Caribbean Basin Economic Recovery Act or the Andean Trade Preference Act,
the USTR is also authorized to withdraw, limit or suspend such treatment. In addition, the USTR may enter into binding
agreements with the country in question.
1.11
Sections 301-310 of the Trade Act of
1974 provide a means by which U.S. citizens may petition the United States
government to investigate and act against potential violations of international
trade agreements. These provisions also authorize the USTR to initiate such
investigations at her own initiative.
The USTR is a cabinet level official serving at the pleasure of the
President, and her office is located within the Executive Office of the
President. The USTR operates under the
direction of the President and advises and assists the President in various
Presidential functions.
1.12
According to Section 302,
investigations may be initiated either upon citizen petition or at the initiative
of the USTR. After a petition is filed,
the USTR decides within 45 days whether or not to initiate an
investigation. If the investigation is initiated, the USTR must, according to
Section 303, request consultations with the country concerned, normally on
the date of initiation but in any case not later than 90 days thereafter.
1.13
Section 303(a)(2) provides that, if
the investigation involves a trade agreement and a mutually acceptable
resolution is not reached "before the earlier of A) the close of the
consultation period, if any, specified in the trade agreement, or B) the 150th
day after the day on which consultation commenced", the USTR must request
proceedings under the formal dispute settlement procedures of the trade
agreement.
1.14
Section 304(a) provides that on or
before the earlier of "(i) the date that is 30 days after the date on
which the dispute settlement procedure is concluded, or (ii) the date that is
18 months after the date on which the investigation is initiated",
"[o]n the basis of the investigation initiated under section 302 and the
consultations (and the proceedings, if applicable) under section 303, the Trade
Representative shall … determine whether" US rights are being denied. If
the determination is affirmative, USTR shall at the same time determine what
action it will take under section 301.
1.15
If the DSB adopts rulings favourable to the
United States on a measure investigated under Section 301, and the WTO
Member concerned agrees to implement that ruling within the reasonable period
foreseen in Article 21 of the DSU, the USTR can determine that the rights
of the United States are being denied but that "satisfactory
measures" are being taken that justify the termination of the
Section 301 investigation.
1.16
Section 306(a) requires the USTR to
"monitor" the implementation of measures undertaken by, or agreements
entered into with, a foreign government to provide a satisfactory resolution of
a matter subject to dispute settlement to enforce the rights of the United
States under a trade agreement.
"(1)
IN GENERAL.—If, on the basis of
the monitoring carried out under subsection (a), the Trade Representative
considers that a foreign country is not satisfactorily implementing a measure
or agreement referred to in subsection (a), the Trade Representative shall
determine what further action the Trade Representative shall take under
section 301(a). For purposes of
section 301, any such determination shall be treated as a determination made
under section 304(a)(1).
(2)
WTO DISPUTE SETTLEMENT RECOMMENDATIONS.—If
the measure or agreement referred to in subsection (a) concerns the
implementation of a recommendation made pursuant to dispute settlement
proceedings under the World Trade Organization, and the Trade Representative considers
that the foreign country has failed to implement it, the Trade Representative
shall make the determination in paragraph (1) no later than 30 days after the
expiration of the reasonable period of time provided for such implementation
under paragraph 21 of the Understanding on Rules and Procedures Governing the
Settlement of Disputes …".
1.18
Section 305(a)(1) provides that,
"Except as provided in paragraph (2), the Trade Representative shall
implement the action the Trade Representative determines under section
304(a)(1)(B), subject to the specific direction, if any, of the President
regarding such action" "by no later than … 30 days after the date on
which such determination is made".
1.19
According to Section 305(a)(2)(A),
however, "the [USTR] may delay, by not more than 180 days, the
implementation" of any action under Section 301 in response to a request
by the petitioner or the industry that would benefit from the Section 301 action or if the
USTR determines "that substantial progress is being made, or that a delay
is necessary or desirable to obtain United States rights or satisfactory
solution with respect to the acts, policies, or practices that are the subject
of the action".[1]
……………………………………………..
2.1
In the light of the statutory and
non-statutory elements of Sections 301-310, in particular the US undertakings
articulated in the Statement of Administrative Action approved by the US
Congress at the time it implemented the Uruguay Round agreements and confirmed
and amplified in the statements by the US to this Panel, we conclude that those
aspects of Sections 301-310 of the US Trade Act brought before us in this
dispute are not inconsistent with US obligations under the WTO. More specifically we conclude that
(a)
Section 304 (a)(2)(A) of the US Trade Act
of 1974, is not inconsistent with Article 23.2(a) of the DSU;
(b)
Section 306 (b) of the US Trade Act of
1974, irrespective of whether we accept the US or the EC approach in respect of
Articles 21.5 and 22 of the DSU, is not inconsistent with either
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Article 23.2(a) of the DSU; or
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Article 23.2(c) of the DSU;
(c)
Section 305 (a) of the US Trade Act of
1974, is not inconsistent with Article 23.2(c) of the DSU;
(d)
Section 306 (b) of the US Trade Act of 1974
is not inconsistent with Articles I, II, III, VIII and XI of GATT 1994, as they
have been referred to by the EC.
Significantly,
all these conclusions are based in full or in part on the US Administration's
undertakings mentioned above. It thus
follows that should they be repudiated or in any other way removed by the US
Administration or another branch of the US Government, the findings of
conformity contained in these conclusions would no longer be warranted.