All World Trade Organization (WTO) member countries, especially the United States, benefit from the fair and effective enforcement of WTO rules.

The WTO dispute settlement system serves the shared interest of WTO member countries in establishing and enforcing the rule of law in world trade.

• No country has a stronger interest in ensuring the rule of law in trade than the world’s largest trading nation — the United States.
• The rule of law fosters certainty, predictability and stability in the world trading system. The presence of these features allows the United States to secure the benefits of trade expansion — more rapid rates of eco-nomic growth and job creation.
• American workers, farmers and businesses can expect that a WTO panel of impartial experts will enforce U.S. rights and ensure that our trading partners abide by WTO rules and keep their markets open to American products..

The dispute settlement system protects the United States from unfair trade practices.

• The U.S. government uses the WTO agreement to eliminate barriers to the export of U.S. goods. The agreement places a cap on the amount of most duties, prohibits discrimination against imports, and requires trans-parent and honest customs procedures.
• The U.S. government effectively uses the WTO dispute settlement process to enforce these rules and to advocate on behalf of U.S. exporters who are unfairly denied access to foreign markets. As of July 2004, the United States has filed 71 complaints against other WTO members. The United States has prevailed in 44 of the 47 cases concluded by this date, either by winning a WTO panel ruling or through an out-of-court agreement.
• An effective WTO dispute settlement system provides a credible deter-rent that makes it more likely that U.S. trading partners will honor their WTO trade commitments and not resort to unfair trade practices.
• The cumulative effect of the WTO dispute settlement rules has been to level the playing field for American companies and workers across a broad range of sectors in the U.S. economy.

The rule-based WTO system can help foster democratic values more consistent with our own.

• WTO member countries are obligated to follow the rule of law in commerce, which requires them to adopt more transparent, less arbitrary laws at home.
• The WTO system offers a way to peacefully settle disputes in a more consen-sual, cooperative and quasi-judicial setting — characteristics that are the hallmark of all democracies.

WTO decisions do not imperil American sovereignty. The U.S. federal government alone makes U.S. law and policy, including U.S. trade law and policy.

• Congress and the president make U.S. law. The WTO cannot change U.S. laws, either today or in the future.
• Decisions by WTO panels and the appellate body cannot override U.S. federal, state or local laws. WTO panels may only make recommendations. Congress and the president decide whether or not to implement a panel rec-ommendation. They can (1) revise U.S. law, (2) keep U.S. law unchanged and compensate a WTO member country harmed by that law through reductions in tariffs or other trade barriers, or (3) do nothing (and accept the risk that the other country may retaliate by raising tariffs or other barriers to U.S. exports).
• The WTO has no enforcement authority. It cannot impose fines, levy sanc-tions, modify tariff rates or change the laws of any country. The only sanction for a violation of WTO rules is that affected WTO member countries may, in some cases, impose retaliatory measures on the trade of the country that violates the rules.
• The WTO agreement permits the United States to regulate and even stop trade to protect U.S. national security, public health and safety, natural resources, and human rights.
• WTO member countries, including the United States, implement panel deci-sions not because of the coercive power of the WTO, but because they think their people will benefit from rules that promote mutual economic gains through trade liberalization.

Negotiating trade agreements that create jobs, foster growth and give consumers more choices at better prices is a wise exercise of U.S. sovereignty.

The World Trade Organization (WTO) dispute settlement system protects the United States from unfair trade practices.

• The U.S. government uses the WTO agreement to eliminate barriers to the export of U.S. goods. The agreement places a cap on the amount of most duties, prohibits discrimination against imports, and requires transparent and honest customs procedures. The cumulative effect of these rules is a level playing field for American workers.
• The U.S. government effectively uses the WTO dispute settlement proce-dures to enforce these rules and to advocate on behalf of U.S. exporters who are unfairly denied access to foreign markets. As of July 2004, the United States had filed 71 complaints against other countries. The United States had prevailed in 44 of the 47 cases concluded to date, either by winning a WTO panel ruling or through an out-of-court agreement.Firms that participate in a global economy grow faster and pay more than those that do not.

The dispute settlement system has leveled the playing field for American workers, farmers and businesses across the U.S. economy. For example:

• Semiconductors (China): In July 2004, the United States and China agreed to settle the first U.S.-WTO call against China when China elimi-nated discriminatory taxation of U.S. integrated circuits (semiconduc-tors). China is the world’s fastest growing semiconductor market, worth about $2 billion to American manufacturers and workers.
• Telecommunications (Mexico): A WTO dispute panel ruled that the Mexican government-run telephone monopoly cannot charge more for calls into Mexico. U.S. industry estimates this ruling has saved the United States more than $1 billion in excess payments since 2000 and should save several hundred million a year in the future.
• Hogs (Mexico): After Mexico unfairly imposed dumping duties on hogs, the United States successfully raised the matter at the WTO. Mexico subsequently rescinded its dumping duties in May 2003.
• Dairy (Canada): The WTO found in January 2003 that Canada was unfairly subsidizing dairy exports. Following this ruling, Canada pledged not to export subsidized dairy products to the United States and to curtail such exports to other countries.
• Apples (Japan): In December 2003, the United States won a significant WTO decision against Japan’s import restrictions on U.S. apples based on health and safety standards that had no scientific basis. The U.S. government is following up with Japan and the WTO to ensure full compliance with this decision.
• Intellectual property and patents (Argentina): Following WTO rulings issued in its favor, the United States negotiated an agreement with Argentina in April 2002 that requires that country to conform its intellectual property system to WTO requirements.
• Autos (India): The United States prevailed in a WTO dispute in December 2001 over India’s restrictions on imports of U.S. auto parts.
• Apparel (Egypt): In response to a successful U.S. challenge at the WTO to Egypt’s high duties on apparel products, Egypt cut its tariffs in January 2004.

The WTO dispute settlement system helps ensure American workers, farmers and businesses have opportunities to prosper in the worldwide economy.

Exports are an important source of U.S. economic growth and job creation.No country has a greater stake in the rule of law in trade than the world’s largest trading nation — the United States.

• The rule of law promotes certainty, predictability and stability in the trading system.
• The presence of these features allows the United States to benefit from trade expansion through more rapid rates of economic growth and job creation.

The United States has much more to gain by getting other countries to comply than it has to lose by implementing adverse World Trade Organization (WTO) decisions.

• The WTO protects the United States from the unfair trade practices of other countries. The United States has prevailed in 94 percent of the concluded cases in which it filed the complaint from 1995 to the present. Since 1995, the United States has won more than 55 percent of the cases where it has appeared as a complainant or respondent.

The rule of law in trade is undermined when the United States does not comply with WTO rules.

• WTO decisions cannot change the laws of a WTO member. Each country, including the United States, must implement WTO decisions.
• U.S. efforts to get other WTO members to follow WTO rules will be undermined if the United States fails to comply.

The United States has a respectable record of compli-ance, but there are a handful of high-profile problem cases.

• The U.S. record of compliance is very good when compliance can be achieved via administrative means; however, problems arise when legisla-tive fixes are necessary.
• Congress has failed to meet the deadline for compliance in a number of ongoing disputes, including in the controversial Foreign Sales Corporation and Byrd Amendment cases.
• Congress’ inability to enact laws needed to comply with WTO decisions can have harmful consequences for job creation and growth. For instance, prior to the U.S. Congress’ passage of legislation dealing with the Foreign Sales Corporation case, the United States lost jobs due to escalating European Union sanctions.

Congress needs to pass laws that bring the United States into compliance with its WTO obligations.