H.R. 434 Authorizes New "Carousel" Tactic for Trade Pressure
House Agriculture Committee Chairman Larry Combest (R-TX) and Ranking Member Charlie Stenholm (D-TX) praised Thursday's passage of H.R. 434, a new trade and investment policy for sub-Sahara Africa, which provides the means for "Carousel Retaliation" provisions from their legislation, H.R. 2991. The "Carousel" provisions will apply to all world wide trade agreements by strengthening America's position when other nations fail to abide by decisions in international trade disputes.
The new American strategy embodied in the Combest-Stenholm "Carousel" provision expands the impact of a WTO-sanctioned retaliation list of foreign products subject to import duties. If the United States issues a retaliation list because a country fails to implement a WTO decision, the legislation would require the U.S. Trade Representative to review the list of goods every six months. The USTR would be required to change the goods that are on the list by changing the whole list or part of the list.
The provisions amend the Trade Act of 1974 regarding monitoring foreign compliance with WTO decisions. The concept changes the static, unchanging list of imported products subject to American trade retaliation. The Carousel provisions vary the trade pressure on different sectors of a foreign nation's economy. The result from affecting more sectors of a foreign economy places more pressure on their governments to implement the WTO decision.
"When one of our trading partners carries on with unfair trade practices, the economic impact of the Carousel provision should bring them around," said Combest. "This new strategy makes the most of our rights under World Trade Organization rules by using an ever-changing list of foreign goods that we are authorized to retaliate against when a nation tries to ignore WTO rulings in our favor."
"As we enhance trade opportunities with Africa and the Caribbean, and work towards China's entry into the WTO, it is critical that we keep our eyes open wide," said Stenholm. "The Carousel provision demonstrates U.S. resolve to maintain a credible WTO enforcement mechanism that brings down unfair barriers to U.S. exports. U.S. farmers, ranchers, and other workers deserve full access to foreign markets, and vigorous enforcement of U.S. trade laws."
There are two exceptions to the required six-month revisions. No revision is required if the USTR finds that a country will implement the WTO decision at about the same time of the six-month review, or if the USTR and the affected American industry agree that it is not necessary to revise the retaliation list.
When the WTO rulings grant the United States retaliation against foreign imports, the total dollar amount is based on a formula of lost trade. Since the USTR publishes a first list of items for retaliation and then narrows the list down to one-half to one-third of the original list, the rotation of items subject to retaliation would be selected from the original list.