The Limits of Economic Power: Section 301 and the World Trade Organization Dispute Settlement System

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TABLE OF CONTENTS

I. INTRODUCTION II. SECTION 301 AND ITS LIMITS

A. Section 301 Deconstructed

B. The United States and the Lure of Unilateralism

C. A Taxonomy of Section 301 Cases (1985-1996)

1. Ensuring Compliance with

International Trade Law:

Section 301/International

Violation Cases

2. Section 301/Unreasonable Cases

3. Section 301 and the Japan Problem III. THE WTO DISPUTE SETTLEMENT SYSTEM: ITS PROMISES AND ITS LIMITS

A. Completion of the Uruguay Round:

Establishment of the WTO and the Adoption

of the Dispute Settlement Understanding (DSU) 242

B. How the DSU Addresses and Fails

to Address Section 301 Concerns

1. The Dispute Settlement System of the WTO

2. The United States as a Plaintiff in the

WTO: Pursuing Its Section 301

Concerns

a. Section 301/International Violations

and Cases and the WTO Dispute

Settlement System

b. Section 301 /Unreasonable Cases

and the GATT Non-Violation Theory.

3. United States as a Defending Country in

a DSU Proceeding

C. International Organizations and Dispute

Settlement

1. The Creation of an Adjudicative

Dispute Settlement System

2. The Consequences of a More

Adjudicative Dispute Settlement System

a. Jurisdiction.

b. Development of GATT Law:

The Creation of Precedent

Enforcement/Compliance

3. Consequences of the Adjudicative

System for the United States IV. CONCLUSION

I. INTRODUCTION

Since the end of World War II, the United States has sought trade liberalization by alternatively pursuing multilateralism and unilateralism. When following the multilateral path, the United States used its economic power to help create a body of law governing international trade and an organization to oversee that law, the General Agreement on Tariffs and Trade (GATT).(1) While leading the multilateral system, the United States worked on expanding and clarifying international trade rules and ensuring compliance by GATT countries with those rules. The United States worked toward expanding the law by serving as the driving force behind a series of rounds of GATT negotiations aimed at significantly lowering worldwide tariffs and dismantling some of the non-tariff barriers to trade.(2) At the same time, the United States sought to ensure compliance with international trade law by actively using the GATT dispute settlement system.(3)

The U.S. turn towards unilateralism began when the country experienced a slippage in its position as the dominant economic power. During this period, the United States came to believe that not all of its trading partners were as committed to multilateral trade liberalization as it was. The legislative tool developed for self-help was Section 301 of the Trade Act of 1974, a statute designed to force open other country's markets. The leverage for opening these markets was the threat of depriving trading partners access to the U.S. market.(4) Aggressive unilateralism under Section 301 forced open some markets and pushed the world trading system into the most recent set of multilateral negotiations, the Uruguay Round. By the end of the Uruguay Round, the United States managed to obtain its major goals of increasing market access through the expansion of GATT law and establishing a more adjudicative dispute settlement system governed by the World Trade Organization Dispute Settlement Understanding (DSU).(5)

The Uruguay Round and its results appear to mark the convergence of the U.S. multilateral and unilateral paths to trade liberalization. …