How is the U.S. doing in WTO litigation?

The U.S. has been doing pretty well in the WTO's dispute resolution system (measuring success by simple win-loss counts). 

The U.S. Trade Representative maintains a more or less up-to-date scorecard: Snapshot of WTO Cases Involving the United States (update July 31, 2007). 

Here's a pie-chart summarizing the USTR's score-keeping.  The chart shows cases in which decisions have been reached, or the parties have come to an agreement that short-circuited the ongoing settlement process (resolved).  There are many cases still in the pipeline.  Blue cases were resolved through negotiation, green cases were won by the U.S. on USTR-identified core issues, and red cases are those the U.S. lost.

   

On balance, the U.S. seems to be doing fairly well.  In the overwhelming number of cases in which we are complaining we have won on the core issues, or have obtained a resolution through negotiation.  We're not doing so well when we're the defendent.  We've lost about half on the core issues, and won or negotiated solutions to about half.  This is a crude measure of success and failure; it doesn't address the relative importance of the different cases, or the nature of the negotiated solutions. 

On the other hand, Brandon Wu, at Public Citizen's "Eyes on Trade," thinks the U.S. is a big loser in WTO dispute settlement outcomes: We are the "world's biggest loser" (August 27):

Manufacturing News today (sorry, not linkable) says that the U.S. is the "world's biggest loser - by far" in terms of the WTO dispute resolution system.

The World Trade Organization has ruled against the United States in 40 of 47 cases... That number is "astounding," according to Robert Lighthizer, a partner in charge the international trade group at the law firm of Skadden Arps Slate Meagher & Flom. The United States "has suffered disproportionately from the problems with the WTO dispute settlement system, having been named as a defendant in far more cases than any other WTO members."

(Note that Public Citizen's dispute database shows that the United States has lost 43 of 50 cases. Since Manufacturing News doesn't elaborate further on its statistics, we're not sure where the discrepancy arises.)

Wu goes on to discuss concerns over the potential U.S. loss of sovereignty in the WTO's dispute settlement system.

The difference in the USTR and the "Manufacturing News-Public Citizen" (MNPC) counts of cases is interesting.  Certainly decisions address multiple points in cases, and it can be a judgement call whether or not there was a win or loss.  The USTR may have some bias towards identifying U.S. "wins."  However, the MNPC count is far below the USTR count of cases resolved.  The MNPC count appears to be restricted to cases in which the U.S. was the defendent, and excludes consideration of the cases that were resolved through negotiation.   There remains a big difference in calling the wins and losses for cases in which the U.S. was the responding party that are actually resolved by the WTO.

The MNPC post notes that the U.S. has been names as a defendent in far more cases than other countries.  A quick check of the WTO website (Disputes by Country) confirms that.  The U.S. has been named as respondent in 98 cases.  Next highest is the E.U. with 58.  However, the U.S. has also been initiated complaints more frequently than other countries, with 88 cases compared to the E.U.'s 76.  These relatively large numbers of cases for the U.S. and E.U. reflect their importance, and the breadth of their interests, as trading powers.

Burce Wilson finds that U.S. and E.U. compliance with WTO decisions has really been pretty good: Compliance by WTO Members with Adverse WTO Dispute Settlement Rulings: The Record to Date (J Int Economic Law, June 2007.  10: 397-403).  Here's the abstract, broken up into paragraphs:

The generally positive record of Members in complying with adverse rulings by panels, the Appellate Body or both has been an important factor in the success of the WTO dispute settlement system to date.

In approximately 90 percent of the adopted reports, one or more violations of WTO obligations have been found by panels and/or the Appellate Body. In virtually all of these cases the WTO Member found to be in violation has indicated its intention to bring itself into compliance and the record indicates that in most cases has already done so.

It is noticeable, if not unsurprising, that compliance has been more rapid where the WTO violations can be corrected through administrative action as opposed to legislative action.

A closer review of the compliance record of the United States and the European Communities, which together have been the object of approximately half of all adverse WTO rulings, shows that these Members have generally succeeded in bringing themselves into compliance with such rulings, although both Members have experienced some residual compliance difficulties in a small number of cases.

As a final note, the overall positive record of Members in complying with adverse WTO rulings is reflected in, and confirmed by, the low number of cases where Members have sought and received authorization to impose retaliatory measures.

Here's a brief introduction to the WTO dispute settlement process: Understanding the WTO: Settling Disputes.  A Uniqure Contribution.   The WTO offers an interactive on-line course on its dispute settment system: Dispute Settlement System Training Module.

Comments

[M3 DS]

The WTO has a trade dispute mechanism to which aggrieved parties can take their complaints for settlement. If the EU deems the US package to be illegal state aid, the Commission will activate the mechanism in an attempt to win compensation.