Critical of shortcomings of the World Trade Organization (WTO) dispute settlement process, House Agriculture Committee Chairman Larry Combest (R-TX) and Ranking Member Charlie Stenholm (D-TX) on Friday introduced H.R. 2991, "The Carousel Retaliation Act" that strengthens America's position when other nations fail to abide by decisions in international trade disputes.
The new American strategy embodied in the Combest-Stenholm legislation 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 USTR 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.
H.R. 2991 amends the Trade Act of 1974 regarding monitoring foreign compliance with WTO decisions. Instead of a static, unchanging list of imported products subject to American trade retaliation, the more varied the trade pressure is to different sectors of a foreign nation's economy, more of their citizens are affected, and the more pressure they will place on their governments to implement the WTO decision.
"Nations that have agreed to abide by the dispute settlement process, but then ignore an unfavorable trade ruling will feel the 'what comes around, goes around' economic impact of Carousel Retaliation," said Combest. "When the WTO rules that a nation has carried on unfair trade practices against United States producers in agriculture and other industries, the Carousel Retaliation Act will strengthen our hand."
"Our farmers and ranchers deserve and demand our best efforts to enforce the WTO rules that govern agricultural trade," said Stenholm. "This bill will encourage compliance with agreed-upon rules of trade, while ensuring that the countries that choose to ignore WTO rules will not escape the consequences of that choice."
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 select from the original list. No additional work would be required by the USTR.