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2020 | OriginalPaper | Chapter

4. Firms, Coalitions, and WTO Disputes: Domestic Private Actors in the WTO

Author : Aydin Baris Yildirim

Published in: Value Chains and WTO Disputes

Publisher: Springer International Publishing

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Abstract

Under what conditions do defendant WTO Members swiftly implement adverse rulings of WTO panels? In this chapter, I bring forth an argument relying on qualitative evidence. I demonstrate that when a dispute touches upon the interests of firms and sectors integrated into value chains and targets import-restricting measures, these private actors are triggered to mobilize and press for compliance. The mobilization of these firms changes the domestic political conditions in favor of timely implementation. I show the plausibility of my argument in a comparative design with four case studies in which the US and Canada acted as defendants in WTO disputes. I control for a number of political factors and also consider legal sources of variation—i.e., the complexity of the form of implementation—that may impact WTO Members’ record of compliance. This chapter thus complements the quantitative evidence presented and supports my theoretical proposition regarding firms’ and sectors’ value chain integration and mobilization over WTO dispute settlement rulings.

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previous chapter Explaining Patterns of WTO Member Behavior at the WTO Dispute Settlement

next chapter Conclusion

I exhausted the ways in which I can take into account the number of veto players and the other variables found in the literature—the statistical analysis brought light into the potential impact of these relevant explanatory factors. Yet, the influence of “complexity” still remains underexplored in my opinion. This is also why I pay special attention to complexity here.

With regard to a form of implementation, a WTO Members’ “choice” implies a degree of freedom but this is barely the case. In order to modify or withdraw WTO-inconsistent measures, WTO Members have to employ legal actions that would correct the illegal measures. It would hardly be possible to correct a statute with an administrative measure, or a legislative act without a legislative amendment. I use the term “choice” here with this caveat. It is also important to note that a legally binding suggestion is exceptionally invoked in disputes involving subsidies because Article 4.7 of the Subsidies and Countervailing Measures (SCM) agreement clearly requests that WTO-illegal measure be “immediately withdrawn.” Yet, even in this case the defendants may need different forms of implementation to withdraw the contested measure, depending on what the challenged measure is.

I examine all the lumber disputes lodged by Canada together—since they were all from the same complainant and were resolved together via one agreement.

The average time, in months, for the US to comply with adverse panel rulings is 21 months—by my own calculations. This means that the US’s compliance in US—Steel Safeguards was significantly faster than usual, while its compliance in response to US—Softwood Lumber disputes was significantly slower.

More specifically, Articles 2.1, 2.2, 3.1, 3.2, 4.1, 4.2, 5.1, 5.2, 7.1 and 9.1 of the Agreement on Safeguards and Articles I:1, XIII and XIX:1 of GATT 1994. See WTO disputes, DS248, DS249, DS251, DS252, DS253, DS254, DS258, DS259.

Appellate Body Report, United States—Definitive Safeguard Measures on Imports of Certain Steel Products, WT/DS248/AB/R, adopted 10 December 2003. The AB report was applicable to the other disputes as well.

PR Newswire, House Ways & Means Committee Formally Requests International Trade Commission to Analyze Impact of Steel Tariffs on Steel Consumers. Accessed March 19, 2003, via: http://www.prnewswire.com/news-releases/house-ways--means-committee-formally-requests-international-trade-commission-to-analyze-impact-of-steel-tariffs-on-steel-consumers-74724457.html.

See The proceedings of the Impact of the Section 201 Safeguard Action on Certain Steel Products. Hearing before the U.S. House of Representatives Committee on Ways and Means Subcommittee on Trade, March 26, 2003.

Elizabeth Becker, “W.T.O. Rules U.S. Tariffs on Steel Are Illegal,” The New York Times. Accessed on November 10, 2003, via: http://www.nytimes.com/2003/11/10/business/worldbusiness/wto-rules-us-tariffs-on-steel-are-illegal.html.

“U.S. Disagrees with the WTO Steel Ruling,” The World Trade Review, 15 December 2003. Accessed on January 9, 2017, via: http://www.worldtradereview.com/news.asp?pType=N&iType=A&iID=72&siD=23&nID=12206.

Tonya Vinas “DDayFor Steel,” Industry Week, December 21, 2004. Accessed on May 12, 2016 via: http://www.industryweek.com/none/d-day-steel. See also Annual Lobbying by CITAC, Center for Responsive Politics. Accessed on December 12, 2016, via: https://www.opensecrets.org/lobby/clientsum.php?id=F12987&year=2001.

The Softwood Lumber Agreement was an executive agreement was lobbied by some 51 senators directly asking him to not renew the Softwood Lumber Agreement of 1996 (Zhang and Laband 2003, p. 408).

For a detailed overview, see Zhang (2007).

Request for consultations, United States—Measures Treating Export Restraints as Subsidies, WT/DS194/1. Request for consultations, United States—Preliminary Determinations with Respect to Certain Softwood Lumber from Canada, WT/DS236/1. Request for consultations, United States—Provisional Anti-Dumping Measure on Imports of Certain Softwood Lumber from Canada, WT/DS247/1. Request for consultations, United States—Final Countervailing Duty Determination with respect to certain Softwood Lumber from Canada, WT/DS257/1. Request for consultations, United States—Final Dumping Determination on Softwood Lumber from Canada, WT/DS264/1. Request for consultations, United States—Investigation of the International Trade Commission in Softwood Lumber from Canada, WT/DS277/1.

See US—Softwood Lumber I (WT/DS194) and US—Softwood Lumber II (WT/DS221).

More specifically, the WTO panel in US—Softwood Lumber III found that the US imposition of provisional AD duties were inconsistent with Articles 1.1 (b), 10, 14, 14 (d), 20.6, 17.3, and 17.4, and 17.1(b) SCM Agreement. The panel in US—Softwood Lumber IV found that the USDOC Final Countervailing Duty Determination was inconsistent with Articles 10, 14, 14(d) and 32.1 SCM Agreement and Article VI:3 of GATT 1994. The Panel in US—Softwood Lumber V found that the USDOC failed to comply with the requirements of Articles 2.4.2 of the Anti-Dumping Agreement by applying “zeroing” methodology. Finally, in US—Softwood Lumber VI, the panel ruled that the US violated Articles 3.5 and 3.7 the Anti-Dumping Agreement and Article 15.5 and 15.7 of the SCM Agreement.

For an extensive list, see Barrie McKenna, “Members of U.S. Lumber Lobby Exposed,” The Globe and Mail, January 12, 2006.

“Canada, U.S. Softwood Talks Break Down,” Canada Broadcasting Corporation, February 26, 2003. Accessed on December 2, 2017 via: http://www.cbc.ca/news/canada/canadaussoftwoodtalksbreakdown1.368117. See also “Lumber Talks Break Down,” The Globe and Mail, February 26, 2003. Accessed on December 2, 2016 via: http://www.theglobeandmail.com/report-on-business/lumber-talks-break-down/article4127106/.

Appellate Body Report, United States—Final Countervailing Duty Determination with respect to certain Softwood Lumber from Canada, WT/DS257/AB/R, adopted 17 February 2004. Appellate Body Report, United States—Final Dumping Determination on Softwood Lumber from Canada, WT/DS264/AB/R, adopted 31 August 2004. Around the same time the panel report on Lumber VI was also adopted, see Panel Report, United States—Investigation of the International Trade Commission in Softwood Lumber from Canada, WT/DS277/R, adopted 26 April, 2004.

Center for Responsive Politics OpenSecrets database. The U.S. Fair Lumber Coalition lobbying spending. Accessed on March 22, 2016, via: https://www.opensecrets.org/lobby/firmsum.php?id=D000049396&year=2005.

See the proceedings of the Economic Impacts of the Canadian Softwood Lumber Dispute on U.S. Industries hearing before the United States Senate Subcommittee on Trade, Tourism, and Economic Development, February 14, 2006.

Ibid.

Note that Canada was also considering retaliatory actions against the US as a result of the disputes regarding the so-called Byrd Amendment that was found to be WTO-illegal. It seems the potential sanctions lists were prepared together to take advantage of the Canada’s victory in both disputes—see Inside US Trade, “U.S. Lumber Producers Prepare Defense of Byrd Law in Canada Suit,” March 4, 2005. Accessed on March 21, 2017, via: https://insidetrade.com/inside-us-trade/us-lumber-producers-prepare-defense-byrd-law-canada-suit.

American Journal of Transportation, August 28, 2005, “Canada Eyeing US Corn in Softwood Lumber Battle.” Accessed on May 21, 2017, via: https://www.ajot.com/news/canada-eyeing-us-corn-in-softwood-lumber-battle. See also, “Canada Weighs Penalizing Long List of U.S. Goods,” New York Times, November 24, 2004. Accessed on January 22, 2017, via: http://query.nytimes.com/gst/fullpage.html?res=9901E7D8173EF937A15752C1A9629C8B63. See Rus (2007) for details on the WTO dispute involving the Byrd Amendment and the sanctions the US faced.

Simon Tuck and Campbell Clark, “Wine Industry Fears It Will Get the Lumber,” August 25, 2005. Accessed on May 21, 2017, via: https://www.theglobeandmail.com/report-on-business/wine-industry-fears-it-will-get-the-lumber/article985300/.

See, among others, statements by American Apparel and Footwear Association and General Mills, delivered for the Technical Corrections to U.S. Trade Laws and Miscellaneous Duty Suspension Bills, U.S. Subcommittee on Trade of the Committee on Ways and Means U.S. House of Representatives, 109th Congress, September 2, 2005.

WT/DS257/16.

“Bush Ties Border Controls to Prosperity,” The Associated Press, March 31, 2006. Accessed on September 13, 2017, via: http://www.nbcnews.com/id/12094377/ns/world_newsamericas/t/bushtiesbordercontrolsprosperity/#.V1VaKZF97IU.

“Court Orders U.S. to Repay All $5.3 Billion in Softwood Duties,” The Vancouver Sun, October 15, 2006. Accessed on July 22, 2016, via: http://www.canada.com/vancouversun/news/business/story.html?id=7a3d8697fa6a4efdb1de3ecb2fc5485d.

“Final Lumber Deal Circumvents Opposition of Canadian Producers,” Washington Tariff and Trade Letters 26 (41), October 16, 2006. Accessed on August 11, 2016, via: http://www.wttlonline.com/ht/a/GetDocumentAction/id/21605.

The average time, in months, for Canada to comply with adverse panel rulings is 19 months—by my own calculations. This means that Canada’s compliance in Canada—Pharmaceutical Patents was significantly faster than usual, while its compliance in response to Canada—Dairy Products was significantly slower.

WT/DS103/1. The complainants argued that the Canadian measures were inconsistent with Articles II, X and X1 of the GATT 1994, Articles 3, 4, 8, 9 and 10 of the Agreement on Agriculture, Article 3 of the SCM Agreement, and Articles 1, 2 and 3 of the Import Licensing Agreement.

For the legislative changes Canada attempted throughout the dispute, see USDA (2001) and for Canada’s final implementation, see USTR statement. Accessed on February 22, 2017, via: https://ustr.gov/archive/Document_Library/Press_Releases/2003/May/US_Canada_Reach_Agreement_on_Dairy_Exports_to_UShtml.html.

Grant Hargrave and Joanne Pritchard, “Quebec Dairy Farmers Seek Price Stability,” The Militant 64 (37), October 2, 2000. Accessed on June 15, 2016, via http://www.themilitant.com/2000/6437/643754.shtml.

Stuart Laidlaw, “On the Path to the Farm Factory,” Toronto Star, Sunday April 2, 2000.

Appellate Body Report, Canada—Measures Affecting Dairy Exports, WT/DS113/AB/RW.

“Canada Welcomes WTO Ruling in Dairy Dispute,” Inside U.S. Trade, December 3, 2001. Accessed on May 20, 2016, via: http://insidetrade.com/sites/insidetrade.com/files/documents/pdf3/wto2001_6735.pdf.

Appellate Body Report, Canada—Measures Affecting Dairy Exports, WT/DS113/AB/RW2.

“Dairy Farmers Battling: Fight for Survival for 100 owners,” The Gazette, March 24, 2003. Accessed on June 25, 2016, via: http://www.iatp.org/news/dairy-farmers-battling-fight-for-survival-for-100-owners. For the details of the lobbying activity of Georgian Bay Milk Company, see the in-house lobbying report provided by the Office of the Commissioner of Lobbying of Canada. Accessed on June 20, 2016, via: https://lobbycanada.gc.ca/app/secure/ocl/lrs/do/vwRg?cno=2197&regId=502083&lang=eng.

See also Canadian Dairy Commission annual report, 2004. Accessed on June 10, 2016, via: http://www.cdc-ccl.gc.ca/CDC/userfiles/file/ENG%202003%202004.pdf.

See also Government of Canada, The Patent Act, R.S. c4. Accessed on August 21, 2016, via: http://www.laws-lois.justice.gc.ca/eng/acts/P-4/.

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Title: Firms, Coalitions, and WTO Disputes: Domestic Private Actors in the WTO
Author: Aydin Baris Yildirim
Publisher: Springer International Publishing
Book: Value Chains and WTO Disputes
Print ISBN: 978-3-030-49093-5

Electronic ISBN: 978-3-030-49094-2

Copyright Year: 2020
DOI: https://doi.org/10.1007/978-3-030-49094-2_4