News Release

November 6, 2001

Trade laws jeopardize U.S. relations with the WTO
Cato study highlights incompatibility of trade laws and WTO commitments

The administrative protectionism of the U.S. trade remedy laws has long been defended as a "safety valve" for protectionist pressure that actually serves to strengthen the U.S. commitment to the multilateral trading system. In "Safety Valve or Flash Point? The Worsening Conflict between U.S. Trade Laws and WTO Rules" author Lewis Leibowitz, partner with the law firm of Hogan & Hartson, demonstrates that the "safety valve" defense of trade remedy laws can no longer be sustained. In particular, the increasing number of World Trade Organization rulings against U.S. laws makes clear that those laws are undermining the WTO system.

"It is increasingly obvious," Leibowitz states, "that the U.S. trade laws in their current form and U.S. support for negotiated trade liberalization are not complementary but rather antagonistic and even incompatible." Within the WTO, the United States, more than any other country, is being successfully challenged for failure to abide by the multilateral rules that govern antidumping, countervailing duties, and safeguards. Leibowitz catalogs the increasing tension between the U.S. laws and multilateral rules. Some of the recent cases include:

• Korean Stainless Steel, where the U.S. Commerce Department was found to violate acceptable methods of calculating "net" prices necessary to determine dumping
• Japanese Hot-Rolled Steel, where the WTO Appellate Body ruled against the U.S. International Trade Commission's use of the "captive production" provision
• UK Lead Bar, in which the Appellate Body rejected the Commerce Department's practice of treating subsidies as continuing regardless of intervening privatization
• Lamb and Wheat Gluten, in which the Appellate Body found that the ITC had ignored other possible causes of injury in "safeguard" investigations under section 201

"U.S policymakers now face a choice between defending U.S. trade laws in their current form and defending the U.S. commitment to the WTO," Leibowitz argues. The U.S. cannot maintain its leadership role if it is widely perceived to be flouting WTO rules, and it cannot urge other countries to live up to commitments that it does not honor itself. "It is vitally important that policymakers make the right choice—and make it before the damage done is irreparable," Leibowitz concludes.

"Safety Valve or Flash Point"