GAO

United States General Accounting Office

Briefing Report to the Chairman, 

Committee on Ways and Means, House of 

Representatives

June 2000 WORLD TRADE 

ORGANIZATION 

U.S. Experience to 

Date in Dispute 

Settlement System

GAO/NSIAD/OGC-00-196BR

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Contents

Letter 3

Briefing Section Briefing Section I: WTO Members’ Use of Dispute Settlement

System 8

Briefing Section II: WTO Dispute Settlement Cases Involving the 

United States 12

Appendixes Appendix I: Commercial Consequences in 42 WTO Dispute 

Settlement Cases Involving the United States 30

Appendix II: Objectives, Scope, and Methodology 34

Appendix III: GAO Contact and Staff Acknowledgments 36

Tables Table 1: Breakdown of 14 Cases the United States Filed, With

Commercial Benefits 30

Table 2: Breakdown of Nine Cases the United States Filed, With 

Limited Commercial Effects 31

Table 3: Commercial Stakes and Outcome of 11 Cases Resolved 

Without a Ruling, or Where United States Prevailed 32

Table 4: Commercial Effects of Six Cases Where the United States 

Did Not Prevail 33

Abbreviations

DRAM Dynamic Random Access Memory

EPA Environmental Protection Agency

EU European Union

WTO World Trade Organization
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United States General Accounting Office

Washington, D.C. 20548

National Security and

International Affairs Division

B-285559 Letr

June 14, 2000

The Honorable Bill Archer

Chairman, Committee on Ways and Means

House of Representatives

Dear Mr. Chairman:

The World Trade Organization (WTO) provides the institutional framework 

for the multilateral trading system. Established on January 1, 1995, as a 

result of the Uruguay Round of international trade negotiations, the WTO 

administers rules for international trade and provides a forum for 

conducting trade negotiations. For the first time, the 1994 Uruguay Round 

agreements brought agriculture and services under the discipline of 

multilateral trade rules, as well as intellectual property rights and 

trade-related investment. In addition, the Uruguay Round agreements 

established a new dispute settlement system, replacing that under the 

General Agreement on Tariffs and Trade, the predecessor to the WTO.

The WTO dispute settlement system provides a multilateral forum for 

resolving trade disputes among WTO members and operates through four 

major phases: consultation, panel review, appellate body review (when 

parties appeal the panel ruling), and implementation of the ruling. The new 

system has several important features. It discourages stalemate by not 

allowing losing parties to block decisions; sets firm timetables for 

completing litigation of cases; and establishes a standing appellate body, 

which helps make the dispute settlement process more stable and 

predictable. Finally, should a WTO member decide not to fully comply with 

a WTO dispute settlement ruling, the system allows that party to accept 

retaliation or provide compensation as alternatives. While the new dispute 

settlement system facilitates the resolution of specific trade disputes, it 

also serves as a vehicle for upholding trade rules and preserving the rights 

and obligations of WTO members under the WTO agreements. Finally, the 

system clarifies the provisions of specific WTO agreements and provides a 

climate of greater legal certainty in which trade can occur. 

We recently briefed your staff on the WTO’s dispute settlement system, 

focusing on member countries’ use of the system since its founding over

5 years ago. Specifically, we examined (1) how WTO members have used 

the new system, focusing primarily on cases involving the United States 
B-285559

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and (2) the impact of these cases on foreign trade practices and U.S. laws 

and regulations, and their overall commercial effects. This report 

summarizes the contents of our briefing. In addition, per your request, we 

will be issuing a more in depth report in August on the WTO dispute 

settlement system, including an analysis of major issues that have arisen in 

its use. 

Results in Brief WTO member countries have actively used the WTO dispute settlement 

system during its first 5 years, filing 187 complaints as of April 2000.1

 The 

United States and the European Union were the most active participants, 

both as plaintiffs and defendants. In the 42 cases involving the United 

States that had either reached a final WTO decision or were resolved 

without a ruling, we found that the United States has served as plaintiff in 

25 cases and defendant in 17 cases. As a plaintiff, the United States 

prevailed in a final WTO dispute settlement ruling in 13 cases, resolved the 

dispute without a ruling in 10 cases, and did not prevail in 

2 cases. As a defendant, the United States prevailed in 1 case, resolved the 

dispute without a ruling in 10 cases, and lost in 6 cases.

Overall, our analysis shows that the United States has gained more than it 

has lost in the WTO dispute settlement system to date. WTO cases have 

resulted in a substantial number of changes in foreign trade practices, 

while their effect on U.S. laws and regulations has been minimal. In about 

three-quarters of the 25 cases filed by the United States, other WTO 

members agreed to change their practices, in some instances offering 

commercial benefits to the United States. For example, in response to a 

1998 WTO ruling on Japanese distilled liquor taxes, Japan accelerated its 

tariff elimination and reduced discriminatory taxes on competing alcohol 

imports. The year following the resolution of the case, U.S. exports of 

whiskey to Japan, one of the largest U.S. markets for distilled spirits, 

increased by 18 percent, or $10 million. As for the United States, in 5 of the 

17 cases in which it was a defendant, two U.S. laws, two U.S. regulations, 

and one set of U.S. guidelines were changed or subject to change.2

 These 

changes have been relatively minor to date and the majority of them have 

1

The 187 complaints filed as of April 18, 2000, excludes five cases in which there were

co-complainants (more than one country filing a complaint on the same case). 

2

Although guidelines are often general statements that do not impose particular directions, 

sometimes they are specific and binding and essentially equivalent to regulations.
B-285559

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had limited or no commercial consequences for the United States.3 For 

example, in one case challenging increased U.S. duties on Korean 

semiconductor imports, the United States took action to comply with the 

WTO ruling while still maintaining the duties. 

Agency Comments and 

Our Response

We obtained oral comments on a draft of this report from the Assistant U.S. 

Trade Representative for Monitoring and Enforcement in the Office of the 

United States Trade Representative. The Office generally agreed with the 

conclusions in this report and provided us technical and clarifying 

comments, which we incorporated as appropriate.

Briefing Section I provides aggregate data on WTO member countries’ 

participation in the WTO dispute settlement system since its inception in 

1995. Briefing section II provides information and analysis on completed 

WTO dispute settlement cases involving the United States, including 

resulting agreed-to changes in foreign trade practices and U.S. laws and 

regulations and the commercial effects involved. Appendix I provides 

further details on the commercial consequences of the cases involving the 

United States. Appendix II contains a description of our scope and 

methodology. 

We are sending copies of this report to the Honorable Charlene Barshefsky, 

the U.S. Trade Representative; the Honorable William M. Daley, Secretary 

of Commerce; the Honorable Dan Glickman, Secretary of Agriculture; the 

Honorable Lawrence F. Summers, Secretary of the Treasury; and interested 

congressional committees. Copies will also be made available to other 

interested parties on request.

3

In one recent case involving U.S. tax treatment of foreign sales corporations, the WTO 

decided that the tax provisions were prohibited export subsidies. The commercial 

consequences of this decision are potentially high, but the United States has not fully 

determined how it will implement the decision.
B-285559

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If you or your staff have any questions about this report, please contact me 

at (202) 512-4128. An additional GAO contact and staff acknowledgments 

are listed in appendix III.

Sincerely yours,

Susan S. Westin, Associate Director

International Relations and Trade Issues
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Briefing Section I

WTO Members’ Use of Dispute Settlement 

System BrenifgSecotinI

Legend: EU = European Union

Note: The 187 cases filed as of April 18, 2000 excludes five cases in which there were cocomplainants (more than one country filing a complaint on the same case). 

Source: WTO data.

WTO Members’ Share of 187

Complaints Filed, 1995-2000

U.S.

30%

EU

26%

All others

44%
Briefing Section I

WTO Members’ Use of Dispute Settlement 

System

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The United States has filed 56 complaints, or almost a third of the 187 

complaints filed as of April 2000. The European Union (EU) was the next 

most frequent filer, with 49 complaints or 26 percent of the total. Over a 

third of the U.S. and EU cases were against each other.
Briefing Section I

WTO Members’ Use of Dispute Settlement 

System

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Note: Percents do not add up to 100 percent because of rounding. In some cases, multiple complaints 

are initiated against a WTO member about the same “distinct matter.” Thus, WTO members initiated 

187 complaints regarding 150 distinct matters, a number of which are still pending.

Source: WTO data.

WTO Members as Defendants in

150 Distinct Matters, 1995-2000

EU

17%

Argentina

7%

Canada

5%

Korea

5%

All others

28%

U.S.

25%

India

6% Japan

6%
Briefing Section I

WTO Members’ Use of Dispute Settlement 

System

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The United States was the most frequent defendant in WTO dispute 

settlement cases. The 187 complaints filed pertained to 150 distinct 

matters; in some cases, multiple complaints were filed against the same 

defendant. Of these 150 matters, 25 percent, or 38 cases, were filed against 

the United States, a number of which are still pending. The EU was the 

second most frequent defendant, with 26 cases filed against it.
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Briefing Section II

WTO Dispute Settlement Cases Involving the 

United States BerinfgSecotinI

Source : Office of the U.S. Trade Representative.

Outcome of U.S. Cases in the

WTO

13 - U.S. prevailed

10 - resolved without ruling

2 - U .S . did not prevail

U.S. as plaintiff in 25 cases

1 - U .S . prevailed

10 - resolved without ruling

6 - U.S . did not prevail

U.S. as defendant in 17 cases

42 cases com pleted as of March 2000
Briefing Section II

WTO Dispute Settlement Cases Involving the 

United States

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Of the 150 distinct matters WTO members brought to the WTO, 42 cases 

involving the United States were completed as of March 2000. The United 

States was a plaintiff in 25 of these completed cases and a defendant in 17 

cases. Completed cases include those that have gone through WTO 

litigation with a panel or appellate body ruling and cases that were resolved 

without a WTO ruling. 
Briefing Section II

WTO Dispute Settlement Cases Involving the 

United States

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Legend

Ag/SPS = Agriculture, and sanitary and phytosanitary issues (human, animal, and plant health)

IPR = Intellectual property rights (such as patent protection)

TRIMS = Trade-related investment measures (such as countries requiring that foreign firms limit their 

imports to the amount they export). 

Note: Section 301 of the Trade Act of 1974 (19 U.S.C. 2155) addresses foreign unfair trade practices 

affecting U.S. exports of goods or services.

Source: GAO analysis.

Areas in WTO Agreements

Addressed in U.S. Cases

0

1

2

3

4

5

6

7

8

9

10

Ag/SPS

Tax/Subsidies

Antidumping

IPR

Textiles

Section 301

Environment

TRIMS

Other

Number of cases
Briefing Section II

WTO Dispute Settlement Cases Involving the 

United States

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The 42 completed cases involving the United States covered eight general 

areas. One-quarter of the cases involved agriculture and sanitary and 

phytosanitary issues (human, animal, and plant health).
Briefing Section II

WTO Dispute Settlement Cases Involving the 

United States

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Source: GAO analysis.

Agreed-to Changes in Foreign

Practices

• Other WTO members agreed to change their practices in

about three-quarters of 25 cases United States filed against

them.

• The following types of changes in foreign practices were

agreed to:

• Equalization of taxes on foreign and domestic goods

• Removal of import barriers

• Increases in intellectual property protection

• Removal of trade-related investment measures
Briefing Section II

WTO Dispute Settlement Cases Involving the 

United States

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The 25 cases that the United States filed with the WTO resulted in several 

types of changes in foreign laws, regulations, or practices. For example, in 

one case involving a tax on imported liquor, Japan began lowering taxes 

and tariffs on distilled spirits in 1998 after a WTO ruling found that Japan 

had discriminated against imports. In another case, Japan lifted a varietal 

testing requirement for imports of apples, cherries, and other fruits at the 

end of 1999 after a WTO ruling found that the requirement was maintained 

without sufficient scientific evidence. As a result, U.S. exports of these 

fruits recently entered the Japanese market, with shipments in December 

1999 and March 2000.

In a case the United States filed with the WTO challenging inadequate 

intellectual property protection for pharmaceuticals and agricultural 

chemicals, India passed legislation in March 1999 to establish a filing 

system for patent applications on these products and to grant exclusive 

marketing rights to the patent applicant. The WTO ruled that these changes 

were called for under the Uruguay Round agreement on intellectual 

property rights. Pakistan agreed to make similar changes to settle another 

WTO case filed by the United States. In a case involving investment 

measures that may limit or distort trade in the auto sector, Indonesia 

eliminated local content requirements and other trade-restricting measures 

in 1999 after a WTO ruling found Indonesia had discriminated against 

foreign investors.
Briefing Section II

WTO Dispute Settlement Cases Involving the 

United States

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Source: GAO analysis.

Commercial Effects of Foreign

Changes

• The United States challenged other WTO members’

practices in 25 cases:

• 14 cases provided U.S. commercial benefits through

• greater market access

• stronger protection of intellectual property rights
Briefing Section II

WTO Dispute Settlement Cases Involving the 

United States

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Of the 25 cases that the United States filed, 14 resulted in commercial 

benefits to the United States, either through greater market access or 

stronger intellectual property protection. For example, in a case involving 

Korean standards for food imports, Korea made changes in its food code in 

1995 and 1996 after a WTO case was filed. Korea’s standard had previously 

kept out approximately $87 million of U.S. chilled beef exports and $79 

million of U.S. pork exports, according to Department of Agriculture 

estimates. Also, in a case challenging Japan’s inadequate time period for 

protecting copyrights on sound recordings, Japan changed its copyright 

law in 1996 after a WTO ruling. As a result of this change, U.S. sound 

recordings will be protected for a 50-year period, including retroactively. 

The U.S. recording industry estimated that these protections are worth 

about $500 million annually, based on lost sales in 1995.
Briefing Section II

WTO Dispute Settlement Cases Involving the 

United States

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Source: GAO analysis.

In the 11 other cases that the United States filed with the WTO dispute 

settlement body, 9 had limited commercial benefits, either because

(1) other barriers existed; (2) implementation of the WTO ruling was 

incomplete or disputed; or (3) the case was brought mainly to uphold trade 

principles. Regarding cases where other foreign barriers existed, the 

United States challenged Canadian subsidies and import barriers in its

Commercial Effects of Foreign

Changes (cont.)

• In 25 cases U.S. filed (continued):

• 9 cases had limited commercial benefits

• Other barriers existed

• Compliance with ruling incomplete or disputed

• United States brought cases to uphold trade principles

• 2 cases where United States did not prevail

• 1 failed to gain greater market access

• 1 was mitigated by separate agreement
Briefing Section II

WTO Dispute Settlement Cases Involving the 

United States

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dairy market. Among other modifications, Canada changed its tariff-rate 

quota system,1

 which the U.S. dairy industry estimated could increase U.S. 

exports by $45 million. However, the U.S. dairy industry cannot take 

advantage of these changes until the United States and Canada conclude 

separate, ongoing negotiations on fluid milk standards. Currently, neither 

country can export fluid milk to the other (except in retail size containers) 

due to differences in the two countries’ standards. 

Regarding WTO rulings whose implementation is incomplete or disputed, 

in two high-profile cases the EU decided not to fully comply with WTO 

rulings involving imports of bananas and hormone-treated beef. In addition, 

as of early June, Australia had not complied with a 1999 WTO ruling that 

maintained that Australia had provided an improper export subsidy grant 

to a leather manufacturer; the WTO had recommended that the grant be 

repaid. The United States and Australia have been negotiating a compliance 

plan. Also, in a case primarily involving trade principles rather than 

commercial interests, the United States filed a case against Hungary 

involving agricultural export subsidies, although U.S. products do not 

directly compete with the affected Hungarian exports. According to the 

Office of the U.S. Trade Representative, the case was brought to protect the 

integrity of the Uruguay Round Agreement on Agriculture. The Office 

maintained that Hungary was in violation of the agreement’s provisions 

limiting these subsidies.

The United States initiated two WTO cases with high commercial stakes 

that it lost. In the first case, involving alleged trade restrictions in Japan’s 

film and photographic supplies market, the United States failed to gain 

greater access to this market as a result of the loss. In the other case, the 

United States challenged an EU change in customs classification of local 

area network equipment that resulted in higher tariffs for U.S. exports. 

Although the United States lost the case, the effects of the loss were 

mitigated by the WTO’s 1997 Information Technology Agreement, which 

made U.S. exports of this equipment duty free.

1

A tariff-rate quota is the application of a lower tariff rate for a specified quantity of 

imported goods. Imports above this specified quantity face a higher tariff rate.
Briefing Section II

WTO Dispute Settlement Cases Involving the 

United States

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ource: GAO analysis.

Out of the 17 WTO cases in which U.S. practices were challenged, only one 

resulted in a change in U.S. law, and that change was relatively minor. In 

another case, the United States pledged to seek from Congress presidential 

authority to waive certain provisions of a law. However, Congress has yet 

to grant the President this authority.

Agreed-to Changes in U.S.

Laws

• In 5 of the 17 cases where the United States was defendant,

two U.S. laws, two U.S. regulations, and one set of U.S.

guidelines were subject to change. Changes to date have

been minor.

• The two laws included:

• Textile and apparel rule of origin law

• Visa provisions of Helms-Burton Act
Briefing Section II

WTO Dispute Settlement Cases Involving the 

United States

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Regarding the one change in U.S. law, the United States amended a 1996 

rule of origin law for determining the country of origin of U.S. textile and 

apparel imports. The United States made this change in May 2000 in 

response to a WTO case filed by the EU. The amendment changed the 

country of origin of certain fabrics including silk, and of certain goods such 

as scarves, from where the raw fabric was made, to where the product was 

both dyed and printed with two additional finishing operations.2

 The EU 

maintained that the 1996 law’s criteria for determining country of origin 

affected its quota-free access to the United States. This is because raw 

fabric is often produced in countries subject to U.S. quotas, such as China. 

According to Department of Commerce data, the affected EU exports to 

the United States are relatively small. 

In another case, the EU challenged certain aspects of a U.S. law involving 

trade sanctions against Cuba. The United States and the EU reached an 

agreement in 1997 before a WTO dispute settlement panel ever met. Among 

other things, the EU agreed to drop the dispute settlement case in return 

for a U.S. pledge to seek from Congress presidential authority to waive 

title IV of the Helms-Burton Act,3

 which authorizes denial of U.S. visas to 

persons involved in trafficking in confiscated Cuban property when certain 

conditions are met. Congress has yet to grant the President authority to 

waive title IV.

2

22 U.S.C. section 3592(b)(2) was amended by a provision in the Trade and Development Act 

of 2000, Public Law 106-200, section 405.

3

22 U.S.C. section 6091.
Briefing Section II

WTO Dispute Settlement Cases Involving the 

United States

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Source: GAO analysis.

Two U.S. regulations have been subject to change as a result of WTO 

rulings. First, in a case brought by Venezuela and Brazil, the Environmental 

Protection Agency (EPA) changed a regulation implementing the 1990 

Clean Air Act pertaining to the cleanliness of gasoline.4

 EPA modified the 

regulation in 1997 to give foreign suppliers the option of using a baseline 

Agreed-to Changes in U.S.

Regulations and Guidelines

• As defendant in 17 completed cases, the United States

agreed to change a regulation or guideline in 3 cases:

• Environmental Protection Agency gasoline regulation

• Antidumping regulation

• Endangered sea turtle guidelines

4

40 C.F.R. part 80.
Briefing Section II

WTO Dispute Settlement Cases Involving the 

United States

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for gas cleanliness, based on their own performance rather than on an 

EPA-established baseline (this treatment was already afforded to domestic 

suppliers). EPA also put in place a mechanism to adjust the requirements if 

the overall cleanliness of gas imports declines. Brazil and Norway, which 

account for 0.18 percent of U.S. gas supplies, are currently the only 

countries exporting to the United States under this option.

Also, as a result of a case brought by Korea involving dynamic random 

access memory (DRAM) semiconductors, the Department of Commerce in 

1999 changed its standard for lifting an antidumping order5

 to conform to 

WTO antidumping provisions.6

 The United States had imposed duties on 

certain Korean imports of these semiconductors after it determined that 

they were being dumped in the U.S. market. The WTO found that the 

previous U.S. standard placed too high a burden of proof on the party 

contesting the continuation of an antidumping order. After the U.S. 

regulation was changed, Commerce conducted another review of Korean 

DRAM imports, and Commerce still found the likelihood of continued 

dumping and kept the antidumping order in place. At Korea’s request, a 

panel is now examining U.S. compliance with the WTO ruling.

Finally, as a result of a WTO case challenging a U.S. ban on imports of 

shrimp harvested in a manner harmful to endangered sea turtles, in July 

1999 the State Department revised a set of certification guidelines.7

 The 

revision provided more transparency (openness) and due process in 

making decisions to grant countries’ certification to export shrimp to the 

United States. This change was very minor and, throughout the case, U.S. 

restrictions on shrimp imports remained in effect. However, one of the 

plaintiffs—Malaysia—has reserved its right to challenge U.S. compliance 

with the WTO ruling.

5

“Dumping” is generally defined as the sale of an exported product at a price lower than that 

charged for a like product in the “home” market of the exporters or at a price below cost. An 

antidumping order imposes additional duties on imports when dumping is found. 

6

19 C.F.R. sections 351-222.

7

64 Federal Register 36936 (July 8, 1999). According to the Department of State, these 

guidelines implemented section 609 of Public Law 101-162 relating to the protection of sea 

turtles in shrimp trawl fishing operations and are binding for countries that wish to export 

shrimp to the United States.
Briefing Section II

WTO Dispute Settlement Cases Involving the 

United States

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Source: GAO analysis.

Commercial Effects of U.S.

Changes

• WTO members challenged U.S. practices in 17 cases:

• 5 cases United States lost had limited economic consequences

• gas and turtle cases - primarily environmental, not

commercial, concerns

• 2 textile cases - U.S. restraints removed, but limited effect

• DRAM case - U.S. antidumping duty maintained

• 1 case United States lost (tax treatment of U.S. foreign sales

corporations) - has high commercial stakes, but yet to be

implemented

• 11 cases were resolved or U.S. won

• 5 with potentially high commercial stakes

• all had limited or no commercial effect
Briefing Section II

WTO Dispute Settlement Cases Involving the 

United States

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In the 17 cases in which the United States was a defendant, the United 

States lost 6 cases, 5 of which had limited commercial consequences. The 

sixth case, challenging provisions of U.S. tax law regarding foreign sales 

corporations, has potentially very high commercial stakes. The United 

States provides tax exemptions to a wide variety of companies on exported 

products used abroad. In this case, a February 2000 WTO ruling found that 

these tax provisions constituted prohibited export subsidies. The United 

States has not fully determined how it will implement the WTO’s decision. 

Of the 11 WTO cases filed against the United States that were resolved 

without a panel ruling or that the United States won, 5 had potentially high 

commercial stakes. However, the outcomes of all 11 cases had a limited or 

no commercial effect. For example, one of these high-stakes cases involved 

a challenge by Mexico to the initiation of a U.S. antidumping investigation 

on imports of certain fresh tomatoes. The U.S. International Trade 

Commission reported that imports of fresh tomatoes from Mexico were 

$452 million, or almost 36 percent, of the $1.27 billion U.S. market in 1995. 

The Commerce Department and the U.S. International Trade Commission 

made preliminary determinations that the Mexican imports were being sold 

at less than their fair value and were causing material injury to the U.S. 

industry. If the final investigations upheld these findings, the Commerce 

Department could have placed duties on these imports to raise their price 

up to the fair market value. Mexico requested WTO consultations with the 

United States about this issue. Commerce, however, resolved the matter 

with a formal commitment by Mexican growers not to sell their exports 

below a certain price. This agreement was reached to eliminate the 

injurious effects of the dumped imports on the U.S. industry. 

The remaining six cases resulted in some U.S. government action, with 

minimal commercial effect. For example, in a case challenging U.S. duties 

on imports of urea (primarily used as a fertilizer) from the EU, the United 

States removed the duties after it found that U.S. industry was not 

interested in maintaining them.
Briefing Section II

WTO Dispute Settlement Cases Involving the 

United States

Page 28 GAO/NSIAD/OGC-00-196BR World Trade Organization

Source: GAO analysis.

Conclusions

• To date, United States has gained more than it has lost in

the WTO dispute settlement system

• Impact on United States should not be judged by wins and

losses or commercial value alone

• Not enough cases to fully evaluate the system

• Some high-profile cases for United States are in the pipeline
Briefing Section II

WTO Dispute Settlement Cases Involving the 

United States

Page 29 GAO/NSIAD/OGC-00-196BR World Trade Organization

Our analysis shows that the United States has gained more than it has lost 

in the WTO dispute settlement system to date, for several reasons. First, 

the United States has been able to effect changes in several foreign laws, 

regulations, and/or practices that it considered to be restricting trade. 

Further, several of the cases in which the United States prevailed provided 

commercial benefits to U.S. exporters or investors. In addition, WTO 

rulings have upheld several trade principles that are important to the 

United States, such as the patent protection provisions of the Uruguay 

Round agreement on intellectual property rights and provisions in the 

Agreement on Agriculture to eliminate export subsidies.

The dispute settlement system’s impact on the United States should not be 

evaluated solely on the basis of U.S. wins and losses. First, some winning 

cases do not result in the desired outcomes. For example, the EU decided 

not to fully comply with two WTO decisions involving bananas and 

hormone-treated beef and instead face U.S. retaliation. Conversely, some 

losses are only partial, as in the case regarding Korean DRAM 

semiconductors where the U.S. antidumping order being challenged was 

maintained despite an adverse WTO ruling. In addition, some losing cases 

actually uphold WTO principles important to the United States, as in the 

case involving endangered sea turtles, which expressly upheld provisions 

that protect the conservation of natural resources, including sea turtles. 

Moreover, the United States derives systemic benefits from a 

well-functioning multilateral dispute settlement system, even if it does lose 

some cases. 

It is important to note, however, that there have not yet been a sufficient 

number of WTO dispute settlement cases to fully evaluate the system. In 

addition, the outcomes of some important pending WTO cases could be 

problematic for the United States, including several cases that challenge 

various aspects of U.S. trade laws, such as U.S. antidumping laws.
Page 30 GAO/NSIAD/OGC-00-196BR World Trade Organization

Appendix I

Commercial Consequences in 42 WTO Dispute 

Settlement Cases Involving the United States ApendxiI

Cases Filed by the 

United States

In the 25 disputes the United States filed with the World Trade Organization 

(WTO), 14 cases resulted in commercial benefits to the United States, 

either by achieving greater market access or stronger intellectual property 

protection (see table 1). In nine cases, the United States gained limited 

commercial benefits, either because (1) other trade barriers existed; 

(2) implementation of the WTO ruling was incomplete or disputed; or 

(3) the case was mainly brought to uphold trade principles (see table 2). 

Finally, the United States lost two cases with high commercial stakes. 

Table 1: Breakdown of 14 Cases the United States Filed, With Commercial Benefits

Legend

IPR = Intellectual property rights

a

A split-run edition of a magazine is one that is sold outside the home-market and contains advertising 

directed at the foreign market.

b

A tariff-rate quota is the application of a lower tariff rate for a specified quantity of imported goods. 

Imports above this specified quantity face a higher tariff rate.

c

A patent mailbox is a system for filing patent applications.

Source: GAO analysis.

Type of commercial benefit

Defendant Subject of case Greater market access Stronger IPR protection

Korea Shelf-life standards for agricultural products X

Japan Taxes on distilled spirits X

EU Tariffs on grain X

Canada Import ban and tax measures on split-run magazinesa X

Turkey Taxation of foreign films X

Indonesia Trade-distorting investment measures in auto and 

auto-parts market

X

Philippines Tariff-rate quotasb

 on pork and poultry X

Japan Measures affecting imports of fruits X

India Import restrictions on industrial, textile, and agricultural 

products

X

Japan Extension of copyright protection on sound recordings X

Pakistan Implementation of patent “mailbox” provisionc X

Portugal Patent term length X

India Implementation of patent “mailbox” provisionc X

Sweden Civil procedures for IPR enforcement X
Appendix I

Commercial Consequences in 42 WTO 

Dispute Settlement Cases Involving the 

United States

Page 31 GAO/NSIAD/OGC-00-196BR World Trade Organization

Table 2: Breakdown of Nine Cases the United States Filed, With Limited Commercial Effects

a

Argentina replaced its WTO-inconsistent duties and taxes with WTO-consistent duties at their highest 

bound rates, or tariff rate ceiling commitments under WTO. Korea complied with the WTO ruling by 

increasing its taxes on domestic products rather than lowering them significantly on imported goods. 

Canada modified its tariff-rate quota regime on fluid milk, but the U.S. dairy industry cannot take 

advantage of this change until the United States and Canada conclude separate, ongoing negotiations 

on fluid milk standards. Currently, neither country can export fluid milk to the other (except in retail size 

containers) due to differences in the two countries’ standards.

Source: GAO analysis.

The two cases that the United States filed but in which it did not prevail 

were the Japanese film import barriers case in which the United States 

failed to gain greater market access and the EU computer equipment 

customs classification case, whose loss was mitigated by provisions of the 

1997 Information Technology Agreement that made the affected equipment 

duty free.

Cases Filed Against the 

United States

Other WTO members brought 17 cases against the United States. In 11 

cases, the disputes were resolved without a WTO ruling, or the United 

States prevailed. Some of these cases had high commercial stakes, but all 

were resolved with limited or no commercial effect (see table 3). In the six 

Reasons for limited commercial effects

Defendant Subject of case

Other barriers

existeda

Implementation

incomplete or

disputed

U.S. filed case

primarily to

uphold trade

principles

Argentina Specific duties on textiles and 

apparel and taxes on other goods 

X

Korea Taxes on distilled spirits X

Canada Export subsidies and import quotas 

on dairy products

X

EU Banana import regime X

EU Beef hormone ban X

Australia Export subsidies for leather 

producers

X

Mexico Antidumping investigation of

high-fructose corn syrup

X

Hungary Agricultural export subsidies X

Brazil Trade-distorting investment 

measures in auto and auto-parts 

market

X
Appendix I

Commercial Consequences in 42 WTO 

Dispute Settlement Cases Involving the 

United States

Page 32 GAO/NSIAD/OGC-00-196BR World Trade Organization

cases where the United States did not prevail, five cases had limited 

commercial consequences, while one case where the ruling is yet to be 

implemented has potentially high commercial stakes (see table 4).

Table 3: Commercial Stakes and Outcome of 11 Cases Resolved Without a Ruling, or Where United States Prevailed

Legend

USDA = U.S. Department of Agriculture

Source: GAO analysis.

Commercial effect

Defendant Plaintiff Subject of case

Potentially high

commercial stakes

Outcome had limited or

no commercial effect

United States EU Sections 301-310 of U.S. Trade Act 

of 1974 (U.S. prevailed) X X

United States Japan Import duties on automobiles from 

Japan X X

United States Mexico Antidumping investigation on 

tomatoes from Mexico X X

United States EU Helms-Burton Act X X

United States EU 1989 section 301 retaliation on 

tomatoes and other products from 

EU X X

United States EU Antidumping duties on urea from the 

EU X

United States Korea Antidumping duties on color 

televisions from Korea X

United States India Import restraint on wool coats from 

India X

United States EU Rules of origin for textile and apparel 

products from EU X

United States EU USDA ban on imports of EU-origin 

poultry and poultry products X

United States Canada Measures affecting imports of cattle, 

swine, and grain from Canada X
Appendix I

Commercial Consequences in 42 WTO 

Dispute Settlement Cases Involving the 

United States

Page 33 GAO/NSIAD/OGC-00-196BR World Trade Organization

Table 4: Commercial Effects of Six Cases Where the United States Did Not Prevail 

Legend

DRAM = Dynamic Random Access Memory

Source: GAO analysis.

Commercial effects

Defendant Plaintiff Subject of case

Primarily

environmental

rather than

economic

concerns

Removal of

U.S. import

restraints with

limited

commercial

effect

Antidumping

duties

maintained

with no

commercial

effect

Yet to be

implemented,

but potential for

large

commercial

effect

United States Venezuela, Brazil Gasoline imports X

United States India, Malaysia, 

Pakistan, 

Thailand, 

Philippines

Ban on shrimp 

imports to protect 

sea turtles

X

United States Costa Rica Import restraints 

on underwear X

United States India Import restraints 

on wool shirts 

and blouses X

United States Korea Antidumping 

duties on DRAMs 

from Korea X

United States EU Tax treatment of 

U.S. foreign sales 

corporations X
Page 34 GAO/NSIAD/OGC-00-196BR World Trade Organization

Appendix II

Objectives, Scope, and Methodology ApendxiI

The Chairman of the House Ways and Means Committee requested that we 

review the WTO’s dispute settlement system, focusing on WTO member 

countries’ use of the system over the past 5 years. In conducting the work, 

we examined (1) how WTO members have used the new system, focusing 

primarily on cases involving the United States and (2) the impact of these 

cases on foreign trade practices and U.S. laws and regulations, and their 

overall commercial effects. 

To examine how WTO members have used the system over the past 5 years, 

we analyzed aggregate WTO data on member participation. 

To evaluate the impact on U.S. laws and regulations and foreign practices, 

we examined 42 cases involving the United States that the Office of the U.S. 

Trade Representative identified as completed as of March 16, 2000. 

Completed cases included those that had gone through WTO litigation with 

a panel and/or appellate body ruling and cases that were resolved without a 

WTO ruling. To determine the impact of the cases on U.S. laws and 

regulations, and on foreign practices, we identified those cases whose 

outcome resulted in a change in laws, regulations, or guidelines or any 

permanent change in administrative procedures. We reviewed WTO dispute 

settlement documents including requests for consultations, panel and 

appellate body decisions, and other documents recording how the 

resolution of the cases was to be implemented. We also reviewed U.S. 

Federal Register notices where appropriate, as well as pertinent U.S. laws 

and regulations. We interviewed senior officials from the Office of the 

United States Trade Representative, including the Assistant U.S. Trade 

Representative for Monitoring and Enforcement, on the major issues and 

outcomes of all 42 cases. Regarding particular cases, we also met with 

high-level officials from the Departments of Agriculture, Commerce, State, 

and the Treasury, as well as the Environmental Protection Agency. We also 

spoke with industry representatives, interest groups, trade attorneys, and 

academics knowledgeable about WTO cases. To determine the changes in 

foreign practices, we relied on WTO and foreign government documents, as 

well as interviews with high-level U.S. government officials from the 

agencies previously listed. We did not conduct an independent analysis of 

the foreign changes or confirm those changes with the individual foreign 

governments. 

To evaluate the commercial effects of the 42 cases, we examined the 

available evidence for each case concerning the U.S. commercial interests 

involved and the commercial consequences for the United States of the 

case’s resolution. However, we did not formally assess the economic 
Appendix II

Objectives, Scope, and Methodology

Page 35 GAO/NSIAD/OGC-00-196BR World Trade Organization

impact on the United States of each dispute’s outcome. It is difficult and 

resource intensive to distinguish among trade flows and competing factors 

affecting a particular market in order to isolate the economic impact of a 

WTO decision. Therefore, to present indicators of the commercial interests 

involved in the disputes, we gathered information on the market size, the 

level of investment, and the level of trade in the cases. In categorizing cases 

as having potentially high commercial stakes, we examined whether the 

case involved a high share of a particularly large market, large duties or 

sanctions, or wider implications for U.S. trade and trade policy. We also 

examined the trade barriers involved and the extent to which they were or 

might be removed. In cases involving intellectual property protection, we 

evaluated whether such protection had increased as a result of the case. In 

addition, we examined changes in trade flows of particular products after 

the resolution of a case. 

To evaluate the commercial consequences of the cases, we also 

interviewed government officials and industry experts with the Office of 

the U.S. Trade Representative; the Departments of Agriculture, Commerce, 

Energy, State, and the Treasury; as well as officials from the U.S. 

International Trade Commission, the Patent and Trademark Office, and the 

National Marine Fisheries Service. We used trade, market, and other data 

from the Departments of Commerce, Energy, Agriculture, and the Treasury, 

as well as the U.S. International Trade Commission, and the National 

Marine Fisheries Service. When available, we examined government and 

industry group estimates of the economic impact of the cases; however, we 

did not verify their results. 

We conducted our work from March through June 2000 in accordance with 

generally accepted government auditing standards.
Page 36 GAO/NSIAD/OGC-00-196BR World Trade Organization

Appendix III

GAO Contact and Staff Acknowledgments ApendxiI

GAO Contact Elizabeth Sirois, (202) 512-8989

Acknowledgments In addition to the person named above, Nina Pfeiffer, Shirley Brothwell, 

Howard Cott, Kim Frankena, Juan Gobel, Anthony Moran, Mary Moutsos, 

Richard Seldin, Tim Wedding, Katherine Woodward, and Rona Mendelsohn 

made key contributions to this report.

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