WTO Decisions and Their Effect in U.S. Law

WTO Decisions and Their Effect in U.S. Law
Jeanne J. Grimmett
Legislative Attorney
American Law Division
Summary
Congress has comprehensively dealt with the legal effect of World Trade
Organization (WTO) agreements and dispute settlement results in the United States in
the Uruguay Round Agreements Act (URAA), P.L. 103-465, which provides that
domestic law prevails over conflicting provisions of WTO agreements and prohibits
private remedies based on alleged violations of these agreements. As a result, WTO
agreements and adopted WTO rulings in conflict with federal law do not have domestic
legal effect unless and until Congress or the executive branch, as the case may be, takes
action to modify or remove the statute, regulation, or regulatory action at issue.
Violative state laws may be withdrawn by the state or, in rare circumstances, invalidated
through legal action by the federal government. The URAA also contains requirements
for agency compliance actions taken under existing statutory authorities. S. 364
(Rockefeller) would amend the URAA to require that Congress expressly approve any
regulatory modification or final rule proposed to implement an adverse WTO ruling and
would rescind certain regulatory actions that have already entered into effect. Both S.
364 and H.R. 708 (English) would establish a congressional advisory commission to
review WTO decisions in light of enumerated statutory criteria. H.R. 2714 (Barrett)
would require the President to delay or reverse implementation of adverse WTO
decisions on the use of “zeroing” in antidumping proceedings until the United States has
negotiated certain WTO clarifications regarding the practice. H.R. 6530 (Rangel)
provides that the Commerce Department’s 2006 regulatory modification involving
“zeroing” issued in response to an adverse WTO decision would terminate as of March
1, 2009 (and the prior departmental practice would then apply), unless and until the
department issued a revised methodology under procedures laid out in the bill. This
report will be updated.
Uruguay Round Agreements Act: Statutory Requirements
for Implementing WTO Decisions
Congress approved and implemented the current World Trade Organization (WTO)
agreements in the 1994 Uruguay Round Agreements Act (URAA), P.L. 103-465, 19
U.S.C. §§ 3501 et seq. The legal effect of these agreements and WTO dispute settlement
results in the United States are comprehensively dealt with in the statute, which addresses

the relationship of WTO agreements to federal and state law and prohibits private
remedies based on alleged violations of WTO agreements.¹ The statute also requires the
United States Trade Representative (USTR) to keep Congress informed of disputes
challenging U.S. laws once a dispute panel is established, any U.S. appeal is filed, and a
panel or Appellate Body report is circulated to WTO Members.² In addition, the URAA
places requirements on regulatory action taken to implement WTO decisions, including
provisions specific to new agency determinations in trade remedy proceedings.
Section 102 of the URAA: Domestic Legal Effect of
WTO Decisions
Section 102 of the URAA and its legislative history establish that domestic law
supersedes any inconsistent provisions of the agreements approved and implemented in
the statute and that congressional or administrative action, as the case may be, is required
to implement adverse decisions in WTO dispute settlement proceedings.
Federal Law. Section 102(a)(1), 19 U.S.C. § 3512(a)(1), provides that “[n]o
provision of any of the Uruguay Round Agreements, nor the application of any such
provision to any person or circumstance, that is inconsistent with any law of the United
States shall have effect.” The URAA further provides, at § 102(a)(2), 19 U.S.C. §
3512(a)(2), that nothing in the statute “shall be construed ... to amend or modify any law
of the United States ... or ... to limit any authority conferred under any law of the United
States ... unless specifically provided for in this act.” The Statement of Administrative
Action (SAA) that accompanied the WTO agreements when they were submitted to
Congress in 1994 explains that “[i]f there is a conflict between U.S. law and any of the
Uruguay Round agreements, section 102(a) of the implementing bill makes clear that U.S.
law will take precedence.”³ Moreover, § 102 is further intended to clarify that all changes
to U.S. law “known to be necessary or appropriate” to implement the WTO agreements
are incorporated in the URAA and that statutory changes needed “to remedy an
unforeseen conflict” between U.S. law and WTO agreements “can be enacted in

¹ This report contains a shortened version of a discussion contained in CRS Report RL32014,
WTO Dispute Settlement: Status of U.S. Compliance in Pending Cases, by Jeanne J. Grimmett.
For background discussions of the domestic legal effect of international agreements, see CRS
Report RL32528, International Law and Agreements: Their Effect Upon U.S. Law, by Michael
John Garcia; Ronald A. Brand, Direct Effect of International Economic Law in the United States
and the European Union, 17 Nw. J. Int’l L. & Bus. 556 (1996-97); and John H. Jackson, Status
of Treaties in Domestic Legal Systems: A Policy Analysis, 86 Am. J. Int’l L. 310 (1992). For
general background on treaties and international agreements, see Congressional Research
Service, Treaties and Other International Agreements: The Role of the United States Senate; A
Study Prepared for the Senate Committee on Foreign Relations (January 2001) (S.Prt. 106-71).
² Uruguay Round Agreements Act (URAA), § 123(d)-(f), 19 U.S.C. § 3533(d)-(f).
³ URAA Statement of Administrative Action, H.Doc. 103-316 at 659 (1994)[hereinafter Uruguay
Round SAA]. The SAA, which was expressly approved in the URAA, is “regarded as an
authoritative expression by the United States concerning the interpretation and application of the
Uruguay Round Agreements and ... [the URAA] in any judicial proceeding in which a question
arises concerning such interpretation or application.” URAA, § 102(d), 19 U.S.C. § 3512(d).

subsequent legislation.”⁴ This approach, which Congress has taken in addressing
potential conflicts between domestic law and prior GATT and free trade agreements, is
considered to be “consistent with the Congressional view that necessary changes in
Federal statutes should be specifically enacted, not preempted by international
agreem ent s .”⁵
The implementation of WTO dispute settlement results is similarly treated. URAA
legislative history states that “[s]ince the Uruguay Round agreements as approved by the
Congress, or any subsequent amendments to those agreements, are non-self-executing,
any dispute settlement findings that a U.S. statute is inconsistent with an agreement also
cannot be implemented except by legislation approved by the Congress unless consistent
implementation is permissible under the terms of the statute.”⁶
State Law. Where state law is at issue in a WTO dispute, the URAA provides for
federal-state cooperation in the WTO proceeding, requires the USTR to work with the
state to “develop a mutually agreeable response” to an adverse WTO ruling, and allows
the United States alone to bring domestic legal challenges to the state law. The act’s
general preclusion of private remedies (discussed below) further centralizes the response⁷
to adverse WTO decisions involving state law in the federal government. Section 102(b)
provides that “[n]o State law, or the application of a such a State law, may be declared
invalid as to any person or circumstance on the ground that the provision or its application
is inconsistent with any of the Uruguay Round Agreements, except in an action brought⁸
by the United States for the purposes of declaring such law or application invalid.”
According to legislative history, the provision “makes clear that the Uruguay Round
agreements do not automatically preempt State laws that do not conform to their
provisions, even if a WTO dispute settlement panel or the Appellate Body were to
determine that a particular State measure was inconsistent with one or more of the
Uruguay Round agreements.”⁹ The statute also contains restrictions on any such U.S.
legal action, including that the report of the WTO dispute settlement panel or the

⁴ H.Rept. 103-826(I), at 25; see also S.Rept. 103-412, at 13.
⁵ H.Rept. 103-826(I), at 25; see also S.Rept. 103-412, at 13.
⁶ H.Rept. 103-826(I), at 25; see also S.Rept. 103-412, at 13, and the Uruguay Round SAA, supra
note 3, at 1032-33. The SAA states: “Reports issued by panels or the Appellate Body under the
DSU have no binding effect under the law of the United States and do not represent an expression
of U.S. foreign or trade policy. They are no different in this respect than those issued by GATT
panels since 1947. If a report recommends that the United States change federal law to bring it
into conformity with a Uruguay Round agreement, it is for the Congress to decide whether any
such change will be made.”
⁷ For further discussion, see Uruguay Round SAA, supra note 3, at 676.
⁸ URAA, § 102(b)(2)(A), 19 U.S.C. § 3512(b)(2)(A). The term “State law” is defined to include
“any law of a political subdivision of a State, as well as any State law that regulates or taxes the
business of insurance.” URAA, § 102(b)(3), 19 U.S.C. § 3512(b)(3). The term is intended to
encompass “any provision of a state constitution, regulation, practice or other state measure.”
Uruguay Round SAA, supra note 3, at 674.
⁹ S.Rept. 103-412, at 15; see also H.Rept. 103-826(I), at 25, and Uruguay Round SAA, supra note

3, at 670.

Appellate Body may not be considered binding on the court or otherwise accorded
deference.¹⁰ Any such suit by the United States is expected to be a rarity.¹¹
Preclusion of Private Remedies. Private remedies are prohibited under §
102(c)(1) of the URAA, 19 U.S.C. § 3512(c)(1), which provides that “[n]o person other
than the United States ... shall have a cause of action or defense under any of the Uruguay
Round Agreements or by virtue of congressional approval of such an agreements” or
“may challenge, in any action brought under any provision of law, any action or inaction
by any department, agency, or other instrumentality of the United States, any State, or any
political subdivision of a State, on the ground that such action or inaction is inconsistent
with such agreement.” Congress has additionally stated in § 102(c)(2) of the URAA, 19
U.S.C. § 3512(c)(2), that it intends, through the prohibition on private remedies, “to
occupy the field with respect to any cause of action or defense under or in connection with
any of the Uruguay Round Agreements, including by precluding any person other than the
United States from bringing any action against any State or political subdivision thereof
or raising any defense to the application of State law under or in connection with any of
the Uruguay Round Agreements — (A) on the basis of a judgment obtained by the United
States in an action brought under any such agreement; or (B) on any other basis.”
The House Ways and Means Committee report on the URAA discusses on the
rationale and implications of § 102(c) as follows:
For example, a private party cannot bring an action to require, preclude, or modify
government exercise of discretionary or general “public interest” authorities under the
other provisions of law. These prohibitions are based on the premise that it is the
responsibility of the Federal Government, and not private citizens, to ensure that
Federal or State laws are consistent with U.S. obligations under international¹²
agreements such as the Uruguay Round agreements.
The SAA notes, however, that § 102(c) “does not preclude any agency of government
from considering, or entertaining argument on, whether its action or proposed action is
consistent with the Uruguay Round agreements, although any change in agency action
would have to be authorized by domestic law.”¹³

¹⁰ URAA, § 102(b)(2)(A), 19 U.S.C. § 3512(b)(2)(A).
¹¹ Uruguay Round SAA, supra note 3, at 674; H.Rept. 103-826(I), at 26; S.Rept. 103-412, at 15.
The SAA states, inter alia, that the Attorney General “will be particularly careful in considering
recourse to this authority where the state measure involved is aimed at the protection of human,
animal, or plant health or of the environment or the state measure is a state tax of a type that has
been held to be consistent with the requirements of the U.S. Constitution. In such a case, the
Attorney General would entertain use of this statutory authority only if consultations between the
President and the Governor of the State concerned failed to yield an appropriate alternative.”
Uruguay Round SAA, supra note 3, at 674.
¹² H.Rept. 103-826(I), at 26.
¹³ Uruguay Round SAA, supra note 3, at 676.

While federal courts have not viewed § 102(c) as preventing them from considering
U.S. WTO obligations in challenges to agency actions implicating WTO agreements,¹⁴
they have nonetheless held that WTO decisions are not binding on the United States or
the judiciary.¹⁵
Domestic Administrative Implementation of WTO Decisions
Section 123(g) of the URAA: WTO Cases Involving Regulatory Action.
Section 123(g) of the URAA, 19 U.S.C. § 3533(g), provides that in any case in which a
report of a WTO panel or the Appellate Body finds that an administrative regulation or
practice is inconsistent with a WTO agreement, the regulation or practice may not be
“amended, rescinded or otherwise modified in implementation of such report unless and
until” the USTR and relevant agencies consult with Congress, seek private sector advice,
and publish the proposed change in the Federal Register with a request for public
comment, and the final rule or other modification is published in the Federal Register.
Section 123(g) mandates a 60-day consultation period with Congress and provides that
the Senate Finance and House Ways and Means Committees may vote to indicate their
agreement or disagreement with the proposed action during this period.¹⁶ Section 123(g)
does not apply to regulations or practices of the U.S. International Trade Commission.
Section 129 of the URAA: WTO Cases Involving Trade Remedy
Proceedings. Section 129 of the URAA, 19 U.S.C. § 3538, sets forth authorities and
procedures to be used by the United States Trade Representative, the U.S. International
Trade Commission (ITC) and the Department of Commerce (DOC) in implementing
adverse WTO panel and Appellate Body (AB) reports involving agency determinations
in U.S. safeguards, antidumping, and countervailing duty proceedings. In antidumping
and countervailing duty investigations, DOC determines the existence and level of
dumping or subsidization, as the case may be, whereas the ITC determines whether the
dumped or subsidized imports cause material injury to domestic industry. The ITC is also
charged with conducting investigations under U.S. safeguards law to determine whether
or not increased imports are a substantial cause of serious injury to a domestic industry.

¹⁴ E.g., SNR Roulements v. United States, 341 F.Supp.2d 1334, 1341 (Ct. Int’l Trade 2004);
Timken v. United States, 240 F.Supp. 2d 1228, 1238 (Ct. Int’l Trade 2002); Gov’t of Uzbekistan
v. United States, 2001 WL 1012780, at *3 (Ct. Int’l Trade August 30, 2001).
¹⁵ Corus Staal BV v. Dep’t of Commerce, 395 F.3d 1343, 1348-49 (Fed. Cir. 2005). See also
Corus Staal BV v. United States, 502 F.3d 1370, 1375 (Fed. Cir. 2007), and Koyo Seiko Co. v.
United States, 442 F.Supp.2d 1360, 1363 (Ct. Int’l Trade 2006). For an overview of federal cases
discussing the domestic effect of WTO decisions, see Robin Miller, Effect of World Trade
Organization (WTO) Decisions Upon United States, 17 A.L.R.Fed.2d 1 (2007).
¹⁶ The provision first came into play in 1996 when the United States took regulatory action to
comply with the adverse WTO decision in United States — Standards for Reformulated and
Conventional Gasoline, WT/DS2, WT/DS4. See World Trade Organization (WTO) Decision
on Gasoline Rule (Reformulated and Conventional Gasoline), 61 Fed. Reg. 33703 (June 28,
1996). The U.S. Court of Appeals for the D.C. Circuit upheld the final issued by EPA to resolve
the dispute, finding, inter alia, that the agency was not statutorily precluded from considering
factors other than air quality in issuing rules under the antidumping provision of the Clean Air
Act and could thus consider the effect of the proposed rule on U.S. treaty obligations. George
E. Warren Corp. v. U.S. Environmental Protection Agency, 159 F.3d 616 (D.C.Cir. 1998).

In the event of an adverse WTO decision regarding an above-described
determination, § 129 requires that, upon USTR request, the agency first determine if it
may take action to comply with the WTO decision under existing law, and if so,
authorizes the USTR to request the agency involved to issue a determination that would
render the agency’s action “not inconsistent with the findings” of the WTO panel or
Appellate Body. The statute also requires consultation with Congress at various stages
of the implementation process. Where an antidumping or countervailing duty order is no
longer supported by an ITC affirmative injury determination, the USTR may direct that
the underlying antidumping or countervailing duty order be revoked in whole or in part.¹⁷
Where a new DOC determination is issued, the USTR may direct DOC to implement it
in whole or in part. Implemented § 129 determinations are reviewable in the U.S. Court
of International Trade or before binational panels established under Chapter Nineteen of
the North American Free Trade Agreement (NAFTA).¹⁸
110^th Congress Legislation. S. 364 (Rockefeller) would amend § 123(g) of the
URAA to require that any regulatory modification or final rule proposed to implement an
adverse WTO decision be approved through joint resolution enacted into public law using
an expedited legislative procedure; require the USTR, after any adverse dispute finding,
to work within the WTO to seek clarification of U.S. WTO obligations under the
agreement at issue and under certain circumstances prohibit the executive branch from
modifying an administrative measure in order to comply with the adverse WTO decision;
and rescind certain administrative compliance actions already in effect. In addition, S 364
and H.R. 708 (English) would establish a Congressional Advisory Commission on WTO
Dispute Settlement to review WTO decisions in light of enumerated statutory criteria.
H.R. 2714 (Barrett) would require the President to delay or reverse the implementation
of adverse WTO decisions regarding the use of “zeroing” — a practice used in
antidumping proceedings in which non-dumped sales are disregarded in determining
dumping margins — until the United States has negotiated clarifications in the WTO that
the practice is permitted in all phases of such proceedings. H.R. 6530 (Rangel) provides
that the regulatory modification involving “zeroing” issued by the Commerce Department
in 2006 in response to an adverse WTO decision would expire March 1, 2009 (and the
prior departmental practice would thenceforth apply), unless and until the department
issued a revised methodology pursuant to procedures laid out in the bill. No action has
yet been taken on any of these bills.

¹⁷ In a suit brought by Canada and Canadian producers as part of the longstanding and now
settled softwood lumber dispute between the United States and Canada, the U.S. Court of
International Trade ruled in July 2006 that § 129 only allows the USTR to order the revocation
of an AD or CVD order in response to a new negative ITC material injury determination and,
thus, where a new ITC determination does not legally undermine an existing order, no further
administrative action is permitted. Tembec, Inc. v. United States, 441 F.Supp.2d 1302 (Ct. Int’l
Trade 2006).
¹⁸ 19 U.S.C. § 1516a(a)(2)(B)(vii),(g)(1)(B); see also Uruguay Round SAA, supra note 3, at
1026-27. NAFTA Chapter Nineteen arbitral panels are available to review final domestic agency
determinations in antidumping and countervailing duty proceedings involving imports from
NAFTA countries in lieu of judicial review in the country in which the determinations are made.