The World Trade Organization disclosed yesterday it had rejected a European attack on one of the core provisions of U.S. trade law, saying that it doesn't violate the rules of global commerce.
The European Union had argued that parts of Section 301, which gives the United States the power to retaliate against countries deemed to be trading unfairly, clashed with WTO rules that severely limit unilateral trade sanctions against WTO members. Section 301 is unpopular with many U.S. trading partners, who say that it has been used to bully them.
In a decision released yesterday, a three-member disputes panel at the WTO's headquarters in Geneva concluded that provisions cited by the Europeans "are not inconsistent with U.S. obligations under the WTO." Europe can now appeal to a higher WTO panel.
Anger over the WTO's powers to rule on countries' laws helped bring demonstrators to the agency's giant meeting in Seattle three weeks ago. In this case, it upheld a U.S. law. The United States has won 12 of 14 completed cases it has brought to the WTO against other countries. The United States has lost panel decisions on seven of eight cases brought against it by trading partners.
Section 301, which dates to 1974, was initially used on the United States' own authority against trading partners. With the creation of the WTO in 1995, the United States rewrote the provision, in essence agreeing in most cases not to use it for retaliation against other WTO members, now numbering 134, unless a WTO disputes panel had authorized that action.
Still, the measure remains controversial abroad, where governments say its very existence can be used to threaten them outside the WTO. "There are a lot of enemies of 301," said Greg Mastel of the New America Foundation. "The Europeans want to prove that Section 301 is dead."
The latest dispute arose during a fight between the United States and Europe over the banana trade.
The Europeans challenged certain timetables in Section 301's fine print, saying that they might require U.S. action against a country before the WTO had had time to reach a final decision. But the WTO panel said that, as administered, 301 is in line.
Europe yesterday portrayed the decision in a positive light. "We are very satisfied with the panel's conclusions in this case," an EU spokesman told the Reuters news agency. "What the panel has done is clarified the limits within which [the United States] can use the 301 legislation. Unilateralism is out. WTO rules and procedures have to be followed."