IV

107TH CONGRESS

1ST SESSION H. RES. 27

Strongly urging the President to file a complaint at the World Trade Organization against oil-producing countries for violating trade rules that prohibit quantitative limitations on the import or export of resources or

products across borders.

IN THE HOUSE OF REPRESENTATIVES

JANUARY 31, 2001

Mr. DEFAZIO submitted the following resolution; which was referred to the

Committee on Ways and Means

RESOLUTION

Strongly urging the President to file a complaint at the

World Trade Organization against oil-producing countries for violating trade rules that prohibit quantitative

limitations on the import or export of resources or products across borders.

Whereas no free market exists in oil production because of

collusion among large oil-producing countries;

Whereas the Organization of the Petroleum Exporting Countries (OPEC) and other oil-producing countries have repeatedly agreed to coordinated cutbacks in production,

thus manipulating world oil markets, resulting in de facto

price fixing;
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Whereas this manipulation led to the highest price per barrel

of oil in nearly a decade, substantial increases in consumer prices for items such as home heating oil and gasoline, and continued price volatility;

Whereas rising oil prices greatly harm consumers, farmers,

small businesses, and manufacturers, increase the likelihood of inflation, increase the cost of conducting interstate and international commerce, and pose a strong

threat to continued economic growth;

Whereas article XI of the General Agreement on Tariffs and

Trade (GATT 1994) prohibits members of the World

Trade Organization (WTO) from setting quantitative restrictions on the import or export of resources or products across their borders; specifically the language reads

‘‘No prohibitions or restrictions other than duties, taxes

or other charges, whether made effective through quotas,

import or export licenses or other measures, shall be instituted or maintained by any contracting party on the

importation of any product of the territory of any other

contracting party or on the exportation or sale for export

of any product destined for the territory of any other

contracting party.’’;

Whereas the precise meaning of this provision was spelled out

in a GATT Panel Report issued in 1988 entitled

‘‘Japan—Trade in Semi-conductors’’, which noted, ‘‘. . .

this wording [in article XI] was comprehensive: it applied

to all measures instituted or maintained by a contracting

party prohibiting or restricting the importation, exportation or sale for export of products other than measures

that take the form of duties, taxes, or other charges . . .

This wording indicated clearly that any measure instituted or maintained by a contracting party which re-
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stricted the exportation or sale for export of products was

covered by this provision, irrespective of the legal status

of the measure.’’;

Whereas oil production restrictions clearly qualify as a

‘‘quantitative restriction’’ based on the original WTO

rules and the 1988 GATT panel report, which certify

that only ‘‘duties, taxes or other charges’’ are allowable,

not pacts among countries to limit production of a product for export;

Whereas article XX of GATT 1994, which sets out a series

of exceptions to article XI, notes that none of the exceptions are valid if they are ‘‘applied in a manner which

would constitute . . . a disguised restriction on international trade’’, a phrase which describes OPEC’s production restrictions;

Whereas of the 11 OPEC countries, 6 are members of the

WTO (Kuwait, Indonesia, Nigeria, Qatar, Venezuela, and

United Arab Emirates), 2 have observer status and have

applied to join the WTO (Saudi Arabia and Algeria), and

only 3 have no relationship with the WTO (Libya, Iran,

and Iraq);

Whereas of the remaining large oil-producing countries, Mexico and Norway are members of the WTO, and Russia

and Oman have applied for membership; and

Whereas given the substantial WTO membership and pending

membership of oil-producing countries, filing a complaint

would likely have an immediate impact on the current

and future behavior of these countries: Now, therefore, be

it

1 Resolved, That the Congress strongly urges the Presi2 dent of the United States to file a complaint in the World
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1 Trade Organization against oil-producing countries for

2 violating their obligations under the rules of that organiza3 tion.

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