World Trade Organization (WTO) Decisions and Their Effect in U.S. Law

Congressional research reportNov 26, 2012

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World Trade Organization (WTO) Decisions

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RS22154

CRS Report for Congress

Prepared for Members and Committees of Congress

World Trade Organization (WTO) Decisions and Their Effect in U.S. Law

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. The act 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, provisions of WTO agreements and WTO panel and Appellate

Body reports adopted by the WTO Members that are 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 conflicting statute, regulation, or regulatory action. 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laws may be withdrawn by the state or, in rare circumstances, invalidated through legal action by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 agencies to follow where a change in a regulation or

the issuance of a new agency determination in a trade remedy proceeding is needed to comply

with a WTO decision and existing law may be sufficient to carry out the action.

While the URAA prohibits private rights of action based on Uruguay Round agreements,

plaintiffs, in cases brought under other statutes, have argued that the agency actions they are

challenging in court are inconsistent with a WTO agreement or a WTO decision and should

conform with U.S. WTO obligations. Although courts have deemed WTO decisions to be

persuasive, they have also held that they are not binding on the United States, U.S. agencies, or

the judiciary, leaving the issue of whether and how the United States complies in a particular

WTO proceeding to the executive branch.

Legislation introduced in recent Congresses generally reflected congressional concerns that the

WTO Appellate Body had interpreted WTO agreements in an overly broad manner to the

detriment of the United States and that the executive branch had in some cases too readily used

existing statutory authorities to comply with these decisions, particularly where U.S. trade

remedies were involved. Legislation particularly focused on WTO decisions in which the U.S.

use of “zeroing” in antidumping proceedings was successfully challenged.

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World Trade Organization (WTO) Decisions and Their Effect in U.S. Law

Contents

Uruguay Round Agreements Act (URAA) ...................................................................................... 1

Domestic Legal Effect of WTO Decisions Under the URAA ......................................................... 2

Federal Law ............................................................................................................................... 2

State Law ................................................................................................................................... 3

Preclusion of Private Remedies ................................................................................................. 4

Domestic Administrative Implementation of WTO Decisions Under the URAA ........................... 5

Domestic Regulations and Administrative Practices (URAA, §123(g)) ................................... 5

Determinations in Trade Remedy Proceedings (URAA, §129)................................................. 5

Judicial Responses ........................................................................................................................... 7

Recent Legislation ......................................................................................................................... 11

Contacts

Author Contact Information........................................................................................................... 11

Acknowledgments ......................................................................................................................... 11

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World Trade Organization (WTO) Decisions and Their Effect in U.S. Law

Uruguay Round Agreements Act (URAA)

The Uruguay Round of Multilateral Trade Negotiations, initiated in 1986 under the auspices of

the General Agreement on Tariffs and Trade (GATT), concluded in 1994 with the signing of the

Marrakesh Agreement Establishing the World Trade Organization (WTO Agreement). The WTO

Agreement, which entered into force January 1, 1995, requires any country that wishes to be a

WTO Member to accept all of the multilateral trade agreements negotiated during the Round. The

Uruguay Round package of agreements not only carries forward long-standing GATT obligations

(such as according goods of other parties nondiscriminatory treatment, not placing tariffs on

goods that exceed negotiated or “bound” rates, generally refraining from imposing quantitative

restrictions such as quotas and embargoes on imports and exports, and avoiding injurious

subsidies), but also expands on these obligations in new agreements.1

The Uruguay Round package also includes the Understanding on Rules and Procedures

Governing the Settlement of Disputes (Dispute Settlement Understanding or DSU), which applies

to disputes between WTO Members arising under virtually all WTO agreements. Dispute

settlement is administered by the WTO Dispute Settlement Body (DSB), an entity consisting of

all WTO Members. The dispute settlement process consists of consultations, panels and possible

appeals, and adoption by the DSB of the resulting panel and appellate reports. If the defending

Member is found to have violated a WTO obligation, it must implement the decision within an

established “reasonable period of time.” If the Member has not complied within the established

time period, the prevailing Member may seek compensation from the non-complying Member or

obtain authorization from the DSB to impose retaliatory measures, such as increased tariffs on

selected products exported from the non-complying Member’s territory.

Congress approved and implemented the WTO Agreement and the other agreements negotiated in

the Uruguay Round in the Uruguay Round Agreement Act (URAA).2 In enacting the URAA,

Congress comprehensively dealt with the legal effect in the United States of both the Uruguay

Round agreements and WTO decisions adverse to the United States resulting from dispute

settlement proceedings under the new DSU. The URAA addresses the relationship of WTO

agreements to federal and state law and prohibits private remedies based on alleged violations of

WTO agreements. It 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. In addition,

the URAA places requirements on agencies taking domestic regulatory action to implement WTO

decisions, including provisions specific to successfully challenged agency determinations in U.S.

trade remedy proceedings.

Some of the more notable agreements include the Agreement on Agriculture, the Agreement on the Application of

Sanitary and Phytosanitary Measures, the Agreement on Antidumping, the Agreement on Subsidies and Countervailing

Measures, the General Agreement on Trade in Services (GATS), and the Agreement on Trade-Related Aspects of

Intellectual Property Rights (TRIPS).

P.L. 103-465, 19 U.S.C. §§3501 et seq.

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World Trade Organization (WTO) Decisions and Their Effect in U.S. Law

Domestic Legal Effect of WTO Decisions

Under the URAA

As is the case with previous trade agreements, including the North American Free Trade

Agreement (NAFTA) and the GATT Tokyo Round agreements, Congress considers the Uruguay

Round agreements to be non-self-executing; that is, their legal effect in the United States is based

on their implementing legislation (i.e., the Uruguay Round Agreements Act (URAA)).3 To this

end, the URAA approves the agreements and contains provisions “necessary or appropriate” to

implement them, including provisions setting out new and revised authorities as well as any

needed repeals. In addition, Section 102 of the URAA, as well as its legislative history, indicates

that domestic law supersedes any inconsistent provisions of WTO agreements approved and

implemented in the URAA and that WTO decisions involving U.S. laws or regulatory actions that

are successfully challenged in the WTO do not have direct or automatic legal effect in the United

States. Instead, specific congressional or administrative action, as the case may be, is required to

implement these WTO decisions.

Federal Law

Section 102(a)(1) of the URAA states 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.”4 Section 102(a)(2) further

provides 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.”5

The Statement of Administrative Action (SAA) that accompanied the WTO agreements when

submitted to Congress by the President 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.”6 Moreover, Section 102 is intended to clarify that all

changes to U.S. law “known to be necessary or appropriate” to implement the WTO agreements

S.Rept. 103-412, at 13. Note also RESTATEMENT (THIRD ) OF THE FOREIGN RELATIONS LAW OF THE UNITED STATES

§111 comment h (1987). For background discussions on the domestic legal effect of international agreements, see CRS

Report RL32528, International Law and Agreements: Their Effect Upon U.S. Law, by (name redacted); 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 (Jan. 2001)(S.Prt. 106-71).

Uruguay Round Agreements Act (URAA), P.L. 103-465, §102(a)(1), 19 U.S.C. §3512(a)(1).

URAA, §3512(a)(2), 19 U.S.C. §3512(a)(2).

URAA Statement of Administrative Action, H.Doc. 103-316 at 659 (1994) [hereinafter Uruguay Round SAA]. The

Uruguay Round SAA, which was expressly approved in Section 101(a)(2) of the URAA, 19 U.S.C. §3511(a)(2), is to

be 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). The submission of an SAA—that is, “a statement

of any administrative action proposed to implement” the trade agreements being sent to Congress—is a requirement of

the statutory authority under which the Uruguay Round agreements were approved and implemented. See Omnibus

Trade and Competitiveness Act (OTCA), as amended, P.L. 100-418, §1103 (a)(1)(B), 19 U.S.C. §2903(a)(1)(B).

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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 subsequent legislation.”7

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 agreements.”8

The implementation of WTO dispute settlement results is to be 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.”9 In the event a statute permits implementation

consistent with the WTO decision, Congress has specified procedures for agencies to follow in

taking administrative action to comply. These requirements are discussed below.

State Law

Where state law is at issue in a WTO dispute, Section 102(b) of the URAA provides for federalstate 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 URAA’s general preclusion of private

remedies (discussed below) further centralizes the response to adverse WTO decisions involving

state law in the federal government.10

Section 102(b) states 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

brought by the United States for the purposes of declaring such law or application invalid.”11

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.”12 The statute also contains

restrictions on any such U.S. legal action, including that the report of the WTO dispute settlement

H.Rept. 103-826(I), at 25; see also S.Rept. 103-412, at 13.

H.Rept. 103-826(I), at 25; see also S.Rept. 103-412, at 13, and the Uruguay Round SAA, supra note 4, 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.”

For further discussion, see Uruguay Round SAA, supra note 4, at 676.

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 4, at 674.

S.Rept. 103-412, at 15; see also H.Rept. 103-826(I), at 25, and Uruguay Round SAA, supra note 4, at 670.

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panel or the Appellate Body may not be considered binding on the court or otherwise accorded

deference.13 Any such suit by the United States is expected to be a rarity.14

Preclusion of Private Remedies

Private remedies are prohibited under Section 102(c)(1) of the URAA, 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 agreement” 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.”15 Congress has additionally stated in the statute 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.16

The House Ways and Means Committee report on the URAA explains that because of this

provision a private party, for example, “cannot bring an action to require, preclude, or modify

government exercise of discretionary or general ‘public interest’ authorities under the other

provisions of law.”17 The joint Senate committee report on the act adds that this provision would

preclude any action by a private party against a state “under or in connection with any Uruguay

Round agreement, including … [one] based on Congress’ authority under the Commerce Clause

of the U.S. Constitution.”18 Overall, the House Ways and Means Committee report states, the

prohibitions on private rights of action “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 international agreements such as the Uruguay Round agreements.”19

The SAA notes, however, that Section 102(c) “does not preclude any agency of government from

considering, or entertaining argument on, whether its action or proposed action is consistent with

URAA, §102(b)(2)(A), 19 U.S.C. §3512(b)(2)(A).

Uruguay Round SAA, supra note 5, 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 4, at 674.

URAA, §102(c)(1), 19 U.S.C. §3512(c)(1).

URAA, §102(c)(2), 19 U.S.C. §3512(c)(2).

H.Rept. 103-826(I), at 26.

S.Rept. 103-412, at 16.

H.Rept. 103-825(I), at 26.

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the Uruguay Round agreements, although any change in agency action would have to be

authorized by domestic law.”20

Domestic Administrative Implementation

of WTO Decisions Under the URAA

The Uruguay Round Agreements Act sets out procedures that agencies must follow in

implementing WTO decisions that are adverse to the United States when existing statutes may

allow them to do so. Section 123 of the URAA addresses regulatory modifications in general,

while Section 129 addresses the issuing of new determinations in certain domestic trade remedy

proceedings. In some cases, implementation of a WTO decision may involve the exercise of

authorities under both provisions.

Domestic Regulations and Administrative Practices

(URAA, §123(g))

Section 123(g) of the URAA 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; 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

the Senate Finance and House Ways and Means Committees may vote to indicate their agreement

or disagreement with the proposed action during this period.22 Section 123(g) does not apply to

regulations or practices of the U.S. International Trade Commission.

Determinations in Trade Remedy Proceedings (URAA, §129)

Section 129 of the URAA sets forth authorities and procedures to be used by the United States

Trade Representative, the U.S. International Trade Commission (USITC), and the Department of

Commerce (Commerce Department, or DOC) in implementing adverse WTO panel and Appellate

Body (AB) reports involving agency determinations in U.S. safeguards, antidumping, and

countervailing duty proceedings.23 The conduct of these proceedings is subject to rights and

Uruguay Round SAA, supra note 5, at 676.

URAA, §123(g), 19 U.S.C. §3533(g).

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 rule 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).

URAA, §129, 19 U.S.C. §3538.

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obligations in, respectively, the WTO Agreement on Safeguards, the Agreement on Antidumping,

and the Agreement on Subsidies and Countervailing Measures.

In safeguards proceedings (as authorized in Title II of the Trade Act of 1974)24 the USITC

conducts an investigation to determine whether or not increased imports of a particular product

are a substantial cause of serious injury (or threat of serious injury) to a domestic industry

producing a product that is like, or directly competitive with, the imported good. The proceedings

may be initiated on the basis of a domestic industry petition, executive or legislative branch

request, or its own motion. If injury is found, the President may temporarily restrict imports or

take other measures to remedy the harm to U.S. firms.

Antidumping and countervailing duty investigations, which are authorized in Title VII of the

Tariff Act of 1930,25 may be initiated by petition or on the motion of the Department of

Commerce, and involve determinations by both the Commerce Department and the USITC. DOC

determines whether the product under investigation is dumped, that is, sold in the United States at

less than fair value, or subsidized by a foreign government. The USITC determines whether the

dumped or subsidized imports cause material injury or threat of material injury to a domestic

industry. If dumping and injury are found, antidumping duties will be imposed on imports of the

product under investigation in the amount of the dumping margin. If subsidization and injury are

found, countervailing duties will be imposed on the imported good in the amount of the net

subsidy conferred.

In the event of an adverse WTO decision involving one of the above-described DOC or USITC

determinations, Section 129 requires that, upon USTR request, the affected agency must first

determine if it may take action to comply with the WTO decision under existing law. If it finds

that it may do so, the USTR may request the agency involved to issue a determination—referred

to by the Commerce Department as a “Section 129 Determination” and the USITC as a “Section

129 Consistency Determination”—that would render the agency’s action “not inconsistent with

the findings” of the WTO panel or Appellate Body.26 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 affirmative

injury determination—that is, where the USITC no longer finds material injury or threat from the

dumped or subsidized imports—the USTR may direct DOC to revoke the order in whole or in

part. Where a new DOC determination is issued, the USTR may direct DOC to implement the

new determination in whole or in part. Depending on the new DOC finding, DOC may raise or

lower the amount of duties to be collected on the subject imports under the order or, where

dumping or subsidization is no longer found or is found to occur at a statutory de minimis level,

DOC may revoke the order.

Section 129 determinations have prospective application, that is, they apply to unliquidated goods

(i.e., goods for which final duties have not been assessed) that enter the United States for

consumption on or after specified dates. These are as follows: (1) where a USITC material injury

19 U.S.C. §§2251 et seq.

19 U.S.C. §§1671 et seq.

Sections 129 Determinations issued by the Department of Commerce are available electronically at

http://ia.ita.doc.gov/download/section129/full-129-index.html. Section 129 Determinations issued by the U.S.

International Trade Commission may be searched under the term “Section 129 Consistency Determinations” at the

USITC’s website, http://www.usitc.gov.

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determination no longer supports an antidumping or countervailing duty order, the date that the

USTR directs the Commerce Department to revoke the order, and (2) where a new DOC dumping

or subsidy determination is made, the date on which the USTR directs the Commerce Department

to implement the determination.27

Section 129 determinations that are implemented 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).28 As noted in the Uruguay Round Statement of Administrative

Action, “Section 129 determinations that are not implemented will not be subject to judicial or

binational panel review, because such determinations will not have any effect under domestic

law.”29

Judicial Responses

Although private rights of action based on Uruguay Round agreements are precluded under

Section 102(c) of the URAA, WTO panel findings have at times been brought to the attention of

URAA, §129(c)(1), 19 U.S.C. §3538(c)(1). See also Corus Staal BV v. United States, 593 F.Supp.2d 1373, 1378-80

(Ct. Int’l Trade 2008); Corus Staal BV v. United States, 515 F.Supp.2d 1337, 1346-47 (Ct. Int’l Trade 2007).

Regarding prospective application, the SAA states as follows: “Consistent with the principle that GATT panel

recommendations apply only prospectively, section 129(c)(1) provides that where determinations by the ITC or

Commerce are implemented under subsections (a) or (b), such determinations have prospective effect only.… Thus,

relief available under subsection 129(c)(1) is distinguishable from relief available in an action brought before a court or

a NAFTA binational panel, where, depending on the circumstances of the case, retroactive relief may be available.

Under 129(c)(1), if implementation of a WTO report should result in the revocation of an antidumping or

countervailing duty order, entries made prior to the date of the Trade Representative’s direction would remain subject

to potential duty liability.” Uruguay Round SAA, supra note 4, at 1026. See also Andaman Seafood Co. v. United

States, 675 F.Supp.2d 1363, 1369-73 (Ct. Int’l Trade 2010); Corus Staal BV v. United States, 593 F.Supp.2d 1373,

1378-80 (Ct. Int’l Trade 2008); Corus Staal BV v. United States, 515 F.Supp.2d 1337, 1346-47 (Ct. Int’l Trade 2007).

Regarding the scope of binational panels convened under North American Free Trade Agreement (NAFTA), see infra

note 24.

The extent to which the implementation dates in Section 129(c)(1) permit the United States to comply with adverse

decisions in WTO dispute settlement proceedings was at issue in Canada’s unsuccessful WTO challenge of the

provision in 2001. Panel Report, United States—Section 129(c)(1) of the Uruguay Round Agreements Act,

WT/DS221/R (July 15, 2002). Canada did not appeal, and the panel report was adopted by the WTO Dispute

Settlement Body in August 2002.

Tariff Act of 1930, as amended, §§516A(a)(2)(B)(vii), 516A(g)(1)(B); 19 U.S.C. §§1516a(a)(2)(B)(vii),

1516a(g)(1)(B). For further discussion of the relationship of a Section 129 determination to pending litigation in U.S.

courts over the final antidumping or countervailing duty determination that is the subject of the Section 129

determination, see Uruguay Round SAA, supra note 4, at 1027.

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. A NAFTA panel stands in the place of a U.S. court and is to apply the standard

of review and “general legal principles” that a U.S. court would apply in reviewing the antidumping or countervailing

duty determination before it. NAFTA arts. 1904.2, 1904.3, 1911 (definition of “standard of review”), annex 1911. In

contrast to the URAA authorities and requirements for implementation of WTO decisions, where a NAFTA panel

makes a decision remanding a determination to the Department of Commerce or the USITC, federal law directs

the agency involved to “take action not inconsistent with the decision….” Tariff Act of 1930, as amended,

§516A(g)(7)(A), 19 U.S.C. §1516a(g)(7)(A). A NAFTA panel decision may be appealed to a NAFTA Extraordinary

Challenge Committee (ECC) on grounds set out in the agreement. NAFTA, art. 1904.13. A U.S. court is not bound by a

final binational panel or ECC decision, but “may take into consideration” any such decision in deciding the case before

it. Tariff Act of 1930, as amended, §516A(b)(3), 19 U.S.C. §1516a(b)(3).

Uruguay Round SAA, supra note 5, at 1026.

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federal courts, most often in challenges to agency determinations in antidumping and

countervailing duty proceedings brought under judicial review provisions contained in Section

516A of the Tariff Act of 1930.30 Section 129 determinations issued by the USITC and the

Commerce Department to comply with WTO decisions are also reviewable under this statute.

These cases are heard in the U.S. Court of International Trade (USCIT), which has exclusive

jurisdiction over civil actions brought under Section 516A.31 The USCIT’s decisions may be

appealed to the U.S. Court of Appeals for the Federal Circuit, whose decisions are reviewable by

the U.S. Supreme Court.

Federal courts must hold a final agency determination in an antidumping or countervailing duty

proceeding or a Section 129 Determination unlawful if it is found to be “unsupported by

substantial evidence on the record, or otherwise not in accordance with law.”32 To determine

whether an agency determination is in accordance with law, the court employs the two-step

analysis for review of agency implementation of a statutory provision set out by the U.S.

Supreme Court in Chevron, U.S.A., Inc. v. Natural Resources Defense Council.33 First, the court,

using tools of statutory construction, determines whether Congress has clearly spoken to the issue

at hand. Second, if the underlying statute is silent or ambiguous, the court decides whether the

agency’s construction of the statute is permissible and will defer to an agency’s interpretation of a

statute provided it is reasonable. It has also been argued that, in considering whether an agency

construction is reasonable, the court should apply the canon of construction articulated by the

Supreme Court in 1804 in Murray v. Schooner Charming Betsy.34 This canon guides that where a

statute does not require a specific interpretation (that is, it permits more than one interpretation),

it should be interpreted consistently with U.S. international obligations35—in this context, a

provision of a WTO agreement either by itself or as interpreted in one or more WTO decisions.36

When read with Chevron, the Charming Betsy argument would come into play only where a

statute is unclear as to the matter at hand; where the statute is unambiguous, the statutory

language prevails and the question of international obligation would no longer be pertinent.

Because the underlying cause of action in domestic legal challenges to the agency actions

described above is based in the Tariff Act and not on a provision of a WTO agreement, courts

19 U.S.C. §1516a.

28 U.S.C. §1581(c) (enacted in Customs Courts Act of 1980, P.L. 96-417, §201).

Tariff Act of 1930, §516A(b)(1)(B)(i), 19 U.S.C. §1516a(b)(1)(B)(i).

467 U.S. 837 (1984). See United States v. Eurodif S.A., 129 S.Ct. 878, 886-87 (2009); United States v. Mead Corp.,

533 U.S. 218, 226-27 (2001); and, e.g., Wheatland Tube Co. v. United States, 495 F.3d 1355 (Fed. Cir. 2007); Pesquera

Mares Australes Ltda. v. United States, 266 F.3d 1372, 1379-82 (Fed. Cir. 2001); Koyo Seiko Co. v. United States, 36

F.3d 1565, 1570 (Fed. Cir. 1994); U.S. Steel Corp. v. United States, 637 F.Supp.2d 1199 (Ct. Int’l Trade 2009), appeal

docketed, No. 2009-1572 (Fed. Cir. Sept. 16, 2009); Corus Staal BV v. United States, 593 F.Supp.2d 1373, 1381-82

(Ct. Int’l Trade 2008);Windmill Int’l PTE v. United States, 193 F.Supp.2d 1303, 1305-306 (Ct. Int’l Trade 2002);

Cultivos Miramonte S.A. v. United States, 980 F.Supp. 1268, 1271-72 (Ct. Int’l Trade 1997). For further discussion of

the Chevron standard, see CRS Report R41260, The Jurisprudence of Justice John Paul Stevens: The Chevron

Doctrine, by (name redacted).

6 U.S. (2 Cranch) 64, 118 (1804).

The Charming Betsy canon stems from the following Supreme Court language: “It has also been observed, that an act

of congress ought never to be construed to violate the law of nations, if any other possible construction remains, and

consequently, can never be construed to violate neutral rights, or to affect neutral commerce, further than is warranted

by the law of nations as understood in this country.” Murray v. Schooner Charming Betsy, 6 U.S. (2 Cranch) 64, 118

(1804).

See, e.g, Corus Staal BV v. United States, 395 F.3d 1343, 1347 (Fed. Cir. 2005); Timken Co. v. United States, 354

F.3d 1334 (Fed. Cir. 2004); Corus Staal, 593 F.Supp.2d at 1383-84.

Congressional Research Service

World Trade Organization (WTO) Decisions and Their Effect in U.S. Law

have not viewed Section 102(c) of the URAA as preventing them from hearing a WTO-based

argument in these challenges.37 When faced with such arguments, some federal courts have

deemed WTO decisions to be “persuasive”38 or a source of useful reasoning to inform a court’s

decision,39 but have stated that WTO decisions are not binding on the United States, U.S.

agencies, or the judiciary.40 More commonly, however, federal courts have made clear that, given

the statutory scheme established in the URAA for implementing adverse WTO decisions,

questions as to whether the United States should comply with an adverse WTO decision and what

the extent of U.S. compliance should be are matters falling within the province of the executive

branch.41 As a result, in ruling on whether an agency action is reasonable, courts have declined to

base their decision making on a WTO decision adverse to the United States where the executive

branch has not taken the necessary domestic action to comply.42

The issue of the interaction of Chevron and Charming Betsy appears to have arisen most

frequently in court cases challenging Commerce Department antidumping determinations in

which dumping margins were calculated with the use of “zeroing,” a practice under which the

department considers only sales below fair market value—generally the price in the exporting

country—and assigns a zero value to sales at or above this price. The U.S. practice, which is

alleged to improperly create or inflate dumping margins, has been successfully challenged in

numerous WTO dispute settlement proceedings as violative of the WTO Antidumping

Agreement.43 At the same time, U.S. courts, using the Chevron standard of review, have regularly

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).

Koyo Seiko Co. v. United States, 442 F.Supp.2d 1360, 1363 (Ct. Intl Trade 2006), citing, inter alia, NSK Ltd. v.

United States, 358 F.Supp.2d 1276, 1288 (Ct. Int’l Trade 2005). Note also that in Cummings Inc. v. United States, the

Court of Appeals for the Federal Circuit held that a classification opinion of the World Customs Organization “is not

binding and is entitled, at most, to ‘respectful consideration’” by a U.S. court. 454 F.3d 1361, 1366 (Fed. Cir. 2006).

Hyundai Electronics Co. v. United States, 53 F.Supp.2d 1334, 1343 (Ct. Int’l Trade 1999); see also, e.g., Allegheny

Ludlum Corp. v. United States, 367 F.3d 1339, 1348 (Fed. Cir. 2004).

Corus Staal, 395 F.3d at 1348-49. 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 discussions of federal cases

addressing the domestic effect of WTO decisions, see, e.g., Robin Miller, Effect of World Trade Organization (WTO)

Decisions Upon United States, 17 A.L.R.FED.2D 1 (2007) and Patrick C. Reed, Relationship of WTO Obligations to

U.S. International Trade Law: Internationalist Vision Meets Domestic Reality, 38 GEO. J. INT’L L. 209 (2006). See also

Mary Jane Alves, Reflections on the Current State of Play: Have U.S. Courts Finally Decided to Stop Using

International Agreements and Reports of International Trade Panels in Adjudicating International Trade Cases? 17

TUL. J. INT’L & COMP. L. 299 (2009). Jeffry L. Dunoff, Less Than Zero: The Effects of Giving Domestic Effect to WTO

Law, 6 LOY. U. CHI. INT’L L. REV. 279 (2008); John D. Greenwald, After Corus Staal – Is There Any Role, and Should

There Be – for WTO Jurisprudence in the Review of U.S. Trade Measures by U.S. Courts? 39 GEO. J. INT’L L. 199

(2007).

Corus Staal, 395 F.3d at 1347; Corus Staal, 593 F.Supp.2d at 1383-85. Note also Koyo Seiko Co. v. United States,

442 F.Supp. 1360, 1363 (Ct. Int’l Trade 2006), where the court refused to permit the plaintiff to amend its complaint to

challenge the Commerce Department’s “zeroing” methodology on the ground that the WTO had since adopted an

Appellate Body decision faulting the U.S. practice, stating that such an amendment would be futile “given that it is not

controlling precedent and is immaterial to the court’s examination of the administrative decisions issued by the

Department.” See also Interactive Media Entertainment & Gamin Assn v. Gonzales, 2008 WL 5586713 (D.N.J.

2008)(court rejected plaintiff’s WTO-related claims, among others, in denying motion to preliminarily enjoin

enforcement of the Unlawful Internet Gambling Enforcement Act of 2006).

E.g., Corus Staal, 395 F.3d at 1349; Andaman Seafood, 675 F.Supp.2d at 1373-74; SNR Roulements, 341 F.Supp.2d

at 1343-44.

For further discussion of these cases, see CRS Report RL32014, WTO Dispute Settlement: Status of U.S. Compliance

in Pending Cases, by (name redacted).

Congressional Research Service

World Trade Organization (WTO) Decisions and Their Effect in U.S. Law

held that, although the U.S. antidumping statute does not unambiguously require zeroing, the

Commerce Department’s interpretation of the statute as allowing the practice is a permissible

one.44 To respond to these adverse WTO decisions, the Commerce Department used Section

123(g) authority to prospectively abandon the practice in original antidumping investigations in

early 200745 and has recently proposed modifications in the use of zeroing in subsequent phases

of U.S. antidumping proceedings.46 In addition, where a specific antidumping order has been

challenged in a WTO proceeding, the Commerce Department has utilized Section 129(c)

authority to issue a new antidumping determination in which the dumping margin was calculated

without the use of zeroing and, as a result, has either amended or, in some cases, revoked the

antidumping order involved.

E.g., Corus Staal BV v. United States, 502 F.3d 1370, 1372 (Fed. Cir. 2007); Timken Co. v. United States, 354 F.3d

1334, 1343 (Fed. Cir. 2004). Notwithstanding that U.S. courts have routinely upheld the use of zeroing as a matter of

U.S. law, a NAFTA binational panel, with two dissenting panelists, issued a decision in April 2010 in which it

remanded an antidumping determination to the Department of Commerce (DOC), directing it to recalculate the

dumping margin involved without employing the practice. NAFTA Panel Determination, Stainless Steel Strips and Coil

from Mexico, USA-MEX-2007-1904-1 (April 14, 2010) [hereinafter Stainless Steel from Mexico], at

http://registry.nafta-sec-alena.org/cmdocuments/edce701c-9720-424b-b232-1fd714d318ba.pdf. The NAFTA panel

found that a “plain reading” of the U.S. antidumping statute—that is, the statutory definition of “dumping margin” and

a related term in 19 U.S.C. Section 1677(35)—did not permit DOC to ignore non-dumped sales. Citing the Charming

Betsy canon, the panel further found that even if an interpretation is permissible under Chevron, it may be contrary to

law for Chevron purposes if it conflicts with a U.S. international obligation, here the requirements of the WTO

Antidumping Agreement. The panel further found that the provisions of the Uruguay Round Agreements Act

addressing implementation of WTO obligations—namely, Section 102(a), setting out the relationship of U.S. law and

WTO obligations, as well as Sections 123(g) and 129—did not preclude the panel from in effect directing

implementation of a U.S. WTO obligation itself. Finally, the panel found that prior federal appellate court decisions

upholding the use of zeroing, which the DOC argued were binding on the panel, did not preclude a remand. The panel

found that there were two competing lines of U.S. cases on the issue of the relevance of WTO jurisprudence to judicial

review, one permitting courts to consider WTO jurisprudence in interpreting statutes and the other signaling a

“retrenchment” from this approach. Considering the issue to be “not presently reconciled” at the federal level, the panel

found that it was permitted it to look to international jurisprudence for guidance. Moreover, it found that it was not

bound by the federal appellate courts’ reasoning as to zeroing in the cases cited by the DOC on the ground that these

cases were distinguishable from the case at hand. The department issued a remand determination without zeroing in

August 2010, but filed the remand under protest, vigorously disagreeing with the panel’s decision. Remand

Determination Pursuant to NAFTA Panel: Stainless Steel Sheet in Coils from Mexico, USA-MEX-2001-19071[hereinafter Remand Determination], at http://insidetrade.com//index.php?option=com_iwpfile&

amp;file=sep2010/wto2010_2643.pdf. The NAFTA panel has not yet issued its report on the new determination.

If the United States is ultimately displeased with the results of a NAFTA binational panel proceeding, it may seek

review of the panel decision before a NAFTA Extraordinary Challenge Committee. The United States may claim, for

example, that the panel has “manifestly exceeded its power, authority or jurisdiction, for example by failing to apply

the appropriate standard of review” and must allege as well that the cited action “has materially affected the panel’s

decision and threatens the integrity of the binational panel review process.” NAFTA art. 1904.13(a)(3), (b). The

Commerce Department in fact cited these concerns in its remand determination. Remand Determination, supra, at 3. In

a court case challenging a different DOC antidumping determination, the U.S. Court of International Trade recently

declined to consider the NAFTA panel decision in Stainless Steel from Mexico, an action permitted under 19 U.S.C.

Section 1516a(b)(3), stating that “any ‘consideration’ of the panel decision could not overcome the precedent binding

on this court, under which Commerce has statutory authority to apply the zeroing methodology ….” NSK Ltd. v.

United States, No. 10-00288, slip op. at 7-8 (Ct. Int’l Trade October 15, 2010), at http://www.cit.uscourts.gov/slip_op/

Slip_op10/10-117.pdf.

Antidumping Proceedings: Calculation of the Weighted-Average Dumping Margin During an Antidumping

Investigation; Final Modification, 71 Fed. Reg. 77722 (December 27, 2006).

Antidumping Proceedings: Calculation of the Weighted Average Dumping Margin and Assessment Rate in Certain

Antidumping Duty Proceedings, 75 Fed. Reg. 81533 (December 28, 2010).

Congressional Research Service

World Trade Organization (WTO) Decisions and Their Effect in U.S. Law

Recent Legislation

Legislation introduced in recent Congresses generally reflected congressional concerns that the

WTO Appellate Body had interpreted WTO agreements in an overly broad manner to the

detriment of the United States and that the executive branch had in some cases too readily used

existing statutory authorities to comply with these decisions, particularly where U.S. trade

remedies were involved. Legislation focused particularly on the various WTO disputes in which

the U.S. use of zeroing in antidumping proceedings was successfully challenged and the U.S.

response to one of the first WTO decisions on this issue, discussed earlier in this report.47

Author Contact Information

(name redacted)

Legislative Attorney

[redacted]@crs.loc.gov, 7-....

(name redacted)

Legislative Attorney

[redacted]@crs.loc.gov, 7-....

(name redacted)

Legislative Attorney

[redacted]@crs.loc.gov, 7-....

Acknowledgments

This report was originally prepared by (name redacted).

Just one bill involving zeroing was introduced in the 111th Congress: H.R. 496 (Rangel) provided that the regulatory

modification involving zeroing implemented by the Commerce Department in 2007 in response to the adverse WTO

decision faulting the U.S. practice would expire March 1, 2009, and the prior departmental practice would thenceforth

apply, unless and until the department issues a revised methodology pursuant to procedures laid out in the bill. The

following bills were introduced in the 110th Congress: S. 364 (Rockefeller), which would have amended Section 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; required 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; rescinded certain administrative compliance actions

already in effect; and established a Congressional Advisory Commission on WTO Dispute Settlement to review WTO

decisions in light of enumerated statutory criteria; H.R. 708 (English), which, like S. 364, would also have established a

Congressional Advisory Commission on WTO Dispute Settlement; H.R. 2714 (Barrett), which would have required the

President to delay or reverse the implementation of adverse WTO decisions regarding the use of zeroing until the

United States had negotiated clarifications in the WTO that the practice is permitted in all phases of antidumping

proceedings; and H.R. 6530 (Rangel), which contained the zeroing-related provision reintroduced in H.R. 496, 111th

Congress. No action was taken on any of these bills.

Congressional Research Service

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