The 1994 Uruguay Round agreements created the WTO dispute settlement system. The new system replaced the one under the General Agreement on Tariffs and Trade (GATT), the predecessor to the WTO. The Uruguay Round created a stronger dispute settlement system that, unlike the system under the GATT, discourages stalemates by not allowing parties to block decisions. In addition, the new system established a standing Appellate Body, with the aim of making decisions more stable and predictable. The WTO dispute settlement system operates in four major phases: consultation, panel review, Appellate Body review (when a party appeals the panel ruling), and implementation of the ruling. To initiate, or file, a dispute, a WTO member requests consultations with the defending member. If the parties do not settle the case during consultations, the complainant may then request that a panel be established. Nonpermanent, three-person panels issue formal decisions, or reports, for cases that are appealed; three members of a permanent, seven-member Appellate Body— comprised of individuals with recognized standing in the field of law and international trade—review panel findings. The Dispute Settlement Body, which is comprised of representatives of all WTO members, approves all final reports, and only a consensus of the members can block decisions. Thus, no individual member can block a decision. When a WTO member challenges a trade remedy measure, the panels and the Appellate Body apply standards of review, outlined in certain WTO agreements, to evaluate members’ factual and legal determinations supporting these measures. In the United States, the Department of Commerce and the International Trade Commission (ITC) investigate whether the United States should impose antidumping or countervailing duties to offset unfair foreign trade practices. The ITC also investigates whether the conditions exist for the United States to invoke safeguards in response to import surges. From 1995 through 2002, WTO members brought 198 formal dispute settlement cases against other members. One-third (64 cases) involved members’ trade remedies, and the ratio of trade remedy cases filed, versus all other types, generally increased over the time period. Among WTO members, the United States has been by far the most frequent defendant in trade remedy cases but relatively less active in filing complaints. Overall, however, WTO members have challenged a relatively small share of the trade measures that their fellow members imposed, although the proportion of U.S. trade measures challenged was larger. Overall, about one-third (64) of all WTO cases involved members’ trade remedies. From 1995 to 2000, an increasing proportion of the cases filed pertained to trade remedy measures and laws, as shown in figure 1. In 2001 and 2002, there was somewhat of a shift in this trend. In comparing WTO members’ participation in the trade remedy cases, the United States by far has been the most frequent defendant but less active as a complainant. As shown in figure 2, the United States was a defendant in 30 (47 percent) of the 64 trade remedy cases, a majority of which were filed since January 2000. The next most frequent defendants were Argentina, which defended 6 cases, and the EU, a defendant in 5 cases. On the other hand, the United States was less active than other WTO members in filing trade remedy cases. As figure 2 also shows, the EU was the most frequent complainant in the 64 trade remedy cases, filing 16 complaints. Six WTO members each filed more complaints than the United States. U.S. agency officials said that it was not surprising that the United States had been a defendant more often than a complainant in WTO disputes since (1) the United States has the world’s biggest economy and most desirable market and (2) U.S. laws and procedures are more detailed and transparent than those of other members that are large users of trade remedies. These officials also pointed to the easy availability in the United States of trade lawyers, who could assist in bringing trade remedy actions, as another factor. Although members notified the WTO that they imposed 1,405 trade remedy measures from 1995 through 2002, only a small percentage of these measures were challenged in the dispute settlement system. Specifically, WTO members challenged only 63 (4 percent) of the 1,405 measures, but nearly one-half of these challenges involved U.S. trade measures. Over the same period, as shown in figure 3, the United States imposed the most trade remedy measures (239) and had the biggest number and share (29, or 12 percent) of its measures challenged by other WTO members. On the other hand, India, the next biggest user of trade remedy measures, had none of its 226 measures challenged. WTO members challenged 4 (2 percent) of the EU’s 182 trade remedy measures and 7 (6 percent) of Argentina’s 127 trade remedy measures. While the 25 WTO trade remedy rulings completed from 1995 through 2002 generally rejected domestic agency determinations supporting trade measures, the rulings upheld a vast majority of the trade remedy laws that were challenged. The WTO rejected at least half of the domestic agency determinations in most of the 21 cases dealing with such determinations. The WTO also rejected roughly the same proportion of U.S. and non-U.S. domestic determinations. The 21 rulings addressed issues ranging from whether domestic agencies adequately justified imposing a trade remedy measure to whether WTO members followed proper procedures in initiating the disputes. Regarding WTO rulings on members’ laws, only U.S. laws were challenged during the period. The WTO upheld more than three- quarters of the U.S. laws challenged in 9 cases involving 13 challenges. The WTO made findings on a total of 175 domestic agency determinations in 21 of the 25 trade remedy cases completed through 2002. As shown in figure 4, in 17 of the 21 cases the panels rejected 50 percent or more of the domestic agency’s determinations—rejecting all determinations in 5 cases. In all 21 cases, the WTO found at least one aspect of a measure to be inconsistent with WTO requirements. When comparing rulings among WTO members on domestic determinations, the United States and other WTO members fared similarly. Overall, as shown in figure 5, the WTO rejected almost the same proportion of the U.S.’s and other WTO members’ domestic determinations—57 percent and 56 percent, respectively. Although to date WTO members have challenged only U.S. laws, the WTO upheld a large majority of these laws. As shown in table 1, in the 13 instances (in 9 cases), in which WTO members directly challenged U.S. laws, the WTO upheld U.S. laws in 11 challenges and rejected U.S. laws in 2 challenges. Addressing why only U.S. trade remedy laws were challenged, a U.S. agency official said that U.S. laws tend to be more vulnerable because they are more detailed than those of other members, and their language is not the same as the language in the WTO agreements. In contrast, according to the official, some WTO members essentially take the language in the relevant WTO agreement and make it their law. The 25 WTO trade remedy rulings completed from 1995 through 2002 did not result in many changes to WTO members’ laws, regulations, or practices. However, the rulings more often resulted in the onetime revision to, or removal of, trade remedy measures. The rulings affected a number of U.S. laws, regulations, practices, and measures; but for other WTO members, no laws or regulations were affected, and only one practice was subject to change. Furthermore, fewer foreign trade measures were subject to removal or revision. Nonetheless, U.S. officials told us that the rulings to date had not significantly impaired their ability to impose trade remedies. However, they told us they were concerned about the potential for rulings to have a greater adverse impact in the future. In addition, U.S. agencies said that, with few exceptions, the rulings did not question U.S. methodologies for determining whether to impose remedies but have required them to provide fuller explanations and justifications for their decisions. WTO rulings resulted in a small number of changes to members’ laws, regulations, and practices, with all but one of those changes involving U.S. trade remedies. In the 14 completed trade remedy cases in which the United States was the defendant, two U.S. laws, one regulation, and three practices were changed or are subject to change, as shown in table 2. In the 11 cases involving other WTO members, only one practice was subject to change. Specifically, the two U.S. laws subject to change are a section of the Antidumping Act of 1916 and a section of the Tariff Act of 1930 involving calculation of the “all others” rate. In the 1916 Antidumping Act case, the WTO found the U.S. law to be in violation of GATT 1994 and the WTO Antidumping Agreement because it authorized imposing fines, imprisonment, and recovery of damages in response to the dumping of products in the U.S. market—remedies that are not provided for in those agreements. Both the U.S. Senate and the House of Representatives have introduced legislation to repeal the 1916 Act. The proposed change to the Tariff Act of 1930 involves making calculation of the “all others” rate consistent with the WTO Antidumping Agreement. The WTO granted the United States until the end of December 2003 to comply, but so far Congress has not addressed this change. The one change to a U.S. regulation stemmed from a case involving U.S. antidumping duties imposed on imports of Korean dynamic random access memory semiconductors (DRAMS).