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Richard McCormack's Manufacturing & Technology News often has good stuff.
In
this week's edition, an article entitled "U.S. Is World's Biggest Loser
-- By Far -- In WTO Disputes" shows, well, exactly what the title
says. The U.S. loses most cases, and other countries achieve
through litigation that which they could not achieve through
negotiation.
I am posting a full shameful reprint here -
you must hit "read more". And consider why, exactly, we are in
the WTO. We are the world's biggest consumer, we have trade laws
passed by Congress, and we could merely condition imports on other
countries playing nice. Would that really be so bad?
U.S. Is World's Biggest Loser -- By Far -- In WTO Disputes
Manufacturing & Technology News, August 27, 2007 Vol. 14, No. 15
The United States is losing the vast majority of trade cases brought
against it by other nations in the World Trade Organization, even
though the United States ran a trade deficit last year in goods
totaling $838 billion, the highest of any country in the history of the
world.
No matter. The World Trade Organization has ruled against the United
States in 40 of 47 cases. The United States has lost an additional 30
of 33 WTO cases brought against it in the trade remedies area. That
number is "astounding," according to Robert Lighthizer, a partner in
charge the international trade group at the law firm of Skadden Arps
Slate Meagher & Flom. The United States "has suffered
disproportionately from the problems with the WTO dispute settlement
system, having been named as a defendant in far more cases than any
other WTO members."
Some of the cases lost by the United States required major changes of
U.S. laws and administrative rules."Rogue WTO panel and Appellate Body
decisions have consistently exceeded their mandate by inventing new
legal obligations that were never agreed to by the United States,"
Lighthizer told an Aug. 2 hearing of the House Ways and Means
Committee's trade subcommittee. "As a result of this judicial activism,
our trading partners have been able to achieve through litigation what
they could never achieve through negotiation," he said. "The consequent
loss of sovereignty for the United States in its ability to enact and
enforce laws for the benefit of the American people has been
staggering. The WTO has increasingly seen fit to sit in judgment of
sovereign acts running the gamut from U.S. tax policy to environmental
measures to public morals."
In the trade remedies area -- in which the U.S. government proposes
duties provided to industries materially hurt by unfairly dumped
imports -- the U.S. has lost almost every one of the cases brought
against it. "Our negotiators in the Uruguay Round established specific
rules in this area and made clear that WTO dispute settlement panels
should defer to national authorities like the U.S. Department of
Commerce and the U.S. International Trade Commission where possible,"
Lighthizer said. "However, the WTO has ignored this mandate and has
instead engaged in an all-out assault on trade remedy measures." The
United States has been shut down on the Commerce Department's use of
"zeroing" to calculate a company's dumping margin. The Bush
administration has called that ruling "devoid of legal merit." The WTO
has ruled against the United States in its use of the Byrd Amendment to
distribute duties to companies impacted by dumping.
"I am not alone in this stark assessment of the WTO dispute settlement
system," said Lighthizer, former deputy USTR with the rank of
Ambassador during the Reagan administration. "Even ardent supporters of
the WTO and legal experts hostile to the trade remedy laws have
expressed amazement at the level to which WTO panels and the Appellate
Body are creating new WTO obligations out of whole cloth. The threat
that this poses to the trade remedy laws and, in fact, the entire world
trading system, is immeasurable."
The U.S. federal government has not helped U.S. industry much in its
fight against illegal trade, either. It has not applied CVD laws to
non-market economies, despite the fact that such countries provide vast
subsidies to their industries. It has not enforced the so-called "421
Safeguard" against China, even though four cases have been decided in
favor of U.S. industry, only to have the Bush administration refuse to
grant remedies.
The Import Administration at the Commerce Department has seen its
budget cut by appropriators in Congress.The agency, which pursues trade
remedies for adversely impacted U.S. industries, had a budget in 2007
of $60 million, down from $68 million in 2004, a decline of 12 percent.
"Similarly, the number of employees at IA fell from 388 in fiscal year
2005 to only 319 in 2007, a decline of 17.8 percent," said Lighthizer.
"In my view, cutting funding for trade enforcement is exactly the wrong
policy at a time when we are facing increasing challenges from unfair
trade."
Foreign countries with big trade surpluses with the United States are
intent on making U.S. trade laws obsolete through their negotiations in
the latest Doha Round of talks, Lighthizer argued. U.S. trade remedy
laws "are subject to continuing assault...by countries that have been
most active in the Doha round in trying to gut rules against unfair
trade." These countries -- the most frequent violators of fair trade
rules -- "have engaged in an all-out effort to weaken international
disciplines on dumping and subsidies -- and by extension, to require
weakening changes to U.S. laws," he charged. "Given the pressure on the
administration to bow to such demands, clear guidance from Congress
will be critical if weakening of U.S. trade laws is to be avoided."
The U.S. Congress has a unique opportunity to address many of these
issues. A variety of bills aimed at helping ameliorate the current
crisis in U.S. manufacturing are now under consideration. Congress
should pass laws to apply countervailing duties on non-market
economies. It should send a clear message to the WTO on its "baseless
decisions on zeroing," said Lighthizer, who represents heavy
manufacturing, agricultural and high tech companies in antidumping and
countervailing duty cases. "This will add impetus for a negotiated
solution in the Doha talks and will prevent irreparable injury in terms
of the application of our trade laws."
It should also pass legislation addressing foreign currency
manipulation. "I would respectfully suggest that the school of thought
advocating more 'dialogue' and talk on this issue has lost its
credibility," he told the panel. "At the pace these discussions are
going, we will not see meaningful change while it can still make a
difference. To paraphrase the economic quip, in the long run we -- or
at least all our manufacturers -- will all be dead."
Currency manipulation should be treated as an illegal subsidy for
purposes of U.S. countervailing duty laws. "It undermines the very
foundation of free trade," said Lighthizer.
Congress should consider proposals to reform the World Trade
Organization and limit its judicial activism. It should create an
expert body to advise it on WTO dispute settlement decisions that
adversely impact the United States. Congress should allow private
parties to participate in WTO dispute settlement proceedings. These
individuals would bring "special knowledge to a case and be in a
position to assist in the U.S. government's litigation efforts," said
Lighthizer. "In this regard, foreign governments already frequently
make use of private (often U.S.) lawyers in prosecuting WTO actions,
and there is no reason the United States should not similarly bring all
supportive resources to bear in this increasingly vital litigation."
Congressional approval should also be required on any proposed
administrative action taken to comply with an adverse WTO decision
against the United States. "In a number of instances, the
administration has expressed strong disagreement with adverse WTO
dispute settlement decisions, and yet felt the necessity to take
administrative steps to comply with such judgments," said Lighthizer.
"Given the importance of these decisions to the U.S. economy and U.S.
citizens -- and the obvious sovereignty concerns at stake -- Congress
should have a direct say in whether there will be a change in U.S. law
or practice to comply with the rulings of foreign bureaucrats."
Congress should address the issue of foreign governments' rebates of
value-added taxes to their producers and collection of the same taxes
on imports from the United States. This is currently impacting the U.S.
trade balance by $130 billion a year. "There is no economic
justification for this practice: it is simply a gift to foreign
producers," said Lighthizer. "The time has come to demand that our
trading partners agree to a fairer system. Again, there are a number of
good proposals. One approach would be to demand that this problem be
rectified in negotiations by a set period (e.g. one to two years),
after which period the United States would begin to treat foreign
rebates of VAT taxes as a countervailable subsidy. (Just as rebates of
incomes taxes are now treated.) The point again is that action is
urgently needed.
"I truly believe that the economic future and opportunity for our
children and grandchildren are at stake, not to mention the strength
and capabilities of our entire economy," Lighthizer concluded.
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