Thursday, February 02, 2006

Brazil and Canada Triumph: U.S. Repeals Anti-Dumping Laws and Scraps Cotton Subsidies

The U.S. Congress last night brought the U.S. in compliance with two WTO decisions. First, it essentially scrapped the U.S. program of subsidies for cotton farmers. The proximate cause of this decision was Brazil's victory last year in the WTO finding that such subsidies violated WTO obligations. The other proximate cause, of course, is the renewed emphasis in Congress on reining in domestic spending.

Second, the U.S. Congress repealed the much-hated Byrd Amendment, which transferred dumping duties on foreign companies to their domestic competitors. Canada in particular has been grousing about this particular law.

As a policy matter, the removal of the Byrd Amendment is a good thing and the removal of subsidies for cotton is a even better. As a legal matter, of course, it demonstrates that yes, the U.S. does sometimes comply with international tribunal decisions, as long as there is political will to do so.


Blogger Aaron Ostrovsky said...

Political will? Hmmmm...seems more about the money. Granted, the U.S. may have deep enough pockets to afford an "efficient breach" - as Prof. Trachtman recently discussed in his IELP blog (which is excellent by the way) - and so this move may be seen as genuine political respect for the WTO. But the view that these actions by the U.S. are merely (or wholly) political seems too short-sighted and maybe a tad old school (after all, this is an international LAW blog, at least you can pretend IL exists).

But I would argue if we look at the WTO agreements as contracts between States, the motivation to not breach (i.e. follow the decision of a contracted-for dispute settlement tribunal) is all about money, not about respecting the tribunal (just as it would be for two private civil parties).

2/02/2006 2:07 PM  
Blogger Julian Ku said...

This is a good point, and gives me an excuse to clarify my post. Getting Congress to comply with WTO rulings is like pulling teeth, but it does happen. I do think the "law" has some independent effect on Congress' decision, but it would be a mistake to consider it the only cause of Congress' action.

I think your concept of the WTO as a contract makes a lot of sense, but I don't see why the same analogy wouldn't apply to all international organizations, all of which were also created by contract.

2/02/2006 3:18 PM  
Blogger Aaron Ostrovsky said...

I think the WTO is different because of the strong stick it can use for derrogation - countermeasures. As Mavroidis has pointed out, countermeasure remedies are the "institutional guarantee that a contract will always be observed."

Other international organizations, like the UN, must rely on less effective tools like military power (usually a bluff), shame (not effective if the state doesn't care - i.e. N.Korea), and trade sanctions (which have been shown to be harder on the populace than the leadership).

So, yes, the contract analogy (which is certainly not mine originally) is apropos for many IOs, the WTO example goes the whole distance because the implications for breach can be severe.

As an aside, the WTO is interesting also because it does not provide for retroactive relief (i.e. damages) whereas other international agreements, and indeed customary international law, does usually call for reparations in some form for breaches of the law of nations.

2/02/2006 8:27 PM  
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