Taming Unilateralism under the Multilateral Trading System: Unfinished Job in the WTO Panel Ruling on United States - Sections 301-310 of the Trade Act of 1974

Abstract

A recent WTO panel in United States - Sections 301-310 of the Trade Act of 1974 ("Section 301") ruled that Section 301 as such is consistent with Article 23 of the WTO Understanding on the Rules and Procedures Governing the Settlement of Disputes ("DSU"). Nevertheless, this panel ruling left many important unresolved issues regarding the WTO consistency of specific US actions under Section 301 procedures. This paper explores these issues. While criticizing the panel ruling, the author demonstrates why specific US actions taken in the Japan-Auto Parts and the EC-Banana disputes were inconsistent with US obligations under the WTO. Then, this paper concludes that the US claim that it had not once breached its WTO obligations in its application of Section 301 in individual cases is not warranted. Most significantly, this paper examines why and under what circumstances the mere threat of trade sanction under Section 301 procedures, i.e., the early and repeated publication of a retaliation list, could constitute a violation of the US most-favored-nation obligation under the GATT 1994. Finally, this paper closes with some policy suggestions that may help Section 301 coexist with the multilateral trading system.