On paper, American laws are theoretically "protected" from harmonization by the exemption clause 19 USC 3512 (a)(1) in the GATT Trade Agreement, and the FDA and pharmaceutically dominated CRN and NNFA are quick to point this out, but when they do they're being very deceptive.
On paper this clause protects our laws from harmonization to international standards, but the article below by Jeanne Grimmett clearly indicates that the WTO Dispute Settlement Body has ruled against the United States several times. Although these rulings in and of themselves can't force changes to our laws, they can threaten trade sanctions, and faced with this threat, Congress has harmonized our laws. So the FDA is playing a game of semantics when they claim our laws are protected against harmonization. This article clearly proves that the statute cited by the FDA and by vitamin trade associations as allegedly protecting our laws, is in fact a "paper tiger." CRN clearly knows this which is why they're announcing it.
http://www.congress.gov/brbk/html/ebtra56.html (site is off limits to the public, can only be viewed by members of Congress)
by Jeanne J. Grimmett
Issue
Disputes arising under WTO agreements may be resolved under the rules and procedures of the WTO Dispute Settlement Understanding (DSU), one of the agreements concluded during the GATT Uruguay Round of Multilateral Trade Negotiations. The DSU strengthened GATT provisions and practice by making it easier to establish panels, creating clear deadlines, placing various pressures on Members to comply with adopted panel reports, and making the system applicable to disputes under virtually all WTO agreements. The United States has had considerable success in its complaints against foreign import barriers, while generally receiving adverse panel reports in cases in which U.S. measures were challenged; it has also settled cases in both categories through consultations. The operation of the DSU has been under review by WTO Members pursuant to a Uruguay Round Ministerial Declaration.
Background
The Uruguay Round Understanding on Rules and Procedures Governing the Settlement of Disputes continues past GATT dispute practice, but also contains several features aimed at strengthening the prior system. A Dispute Settlement Body (DSB), consisting of representatives of all WTO Members, administers all dispute proceedings. A proceeding must begin with consultations; if the dispute is not resolved during this period, the complaining party may request a panel. After the panel completes its work and the DSB adopts the panel's report and, if appealed, any subsequent appellate report, the losing party must comply with its WTO obligations within a reasonable period of time or face the possibility of granting compensation to the prevailing party or being the object of retaliation by the latter.
Disputing parties may also reach a mutually satisfactory solution in a given case. A dispute proceeding should ordinarily take no more than 15 months from the date the panel is established to the date a compliance period is determined; a DSU guideline for actual compliance is a maximum 15 months from the date the panel or appellate report is adopted, though this time frame may vary in individual cases. A panel may be convened to determine if a party has in fact complied with its WTO obligations.
Although the DSB ordinarily operates by consensus -- i.e., without formal objection of any Member present -- the DSU, in one of its most significant reforms, uses a reverse consensus rule at fundamental stages of the process. Thus, unless it decides by consensus not to do so, the DSB is to establish dispute panels; adopt panel and appellate reports; and, where implementation of a panel report is not forthcoming and if requested by the prevailing party in a dispute, authorize that party to impose a retaliatory measure. Given that panel reports are to be adopted automatically, WTO Members now have a right to appeal a panel report on issues of law and legal interpretation; a standing Appellate Body carries out this WTO function. The DSU also prohibits certain unilateral actions by WTO Members in disputes involving WTO agreements. Unless an individual WTO agreement provides otherwise, the DSU applies to disputes involving regional and local government measures covered by WTO agreements, and Members are obligated to ensure compliance at this level.
The WTO Secretariat lists 193 complaints (involving 151 distinct matters) as having been filed from January 1, 1995 (the date the DSU entered into force), through May 23, 2000. Of these, some 94 have involved the United States: 54 as a complaining party, and 40 as defendant. The United States has generally been successful in the cases that it has brought, prevailing in 13 of 16 cases in which panel and, in some cases, Appellate Body reports were issued; where it was a defendant, the United States, as of June 7, 2000, received adverse panel reports in 9 of 10 cases where panel or appellate reports were issued. Aspects of some panel reports in each category have been modified on appeal. The United States has appealed the adverse panel reports issued in March and May 2000 regarding the Antidumping Act of 1916 (separate complaints by the European Communities (EC) and Japan). The deadline for appeal has not yet expired for one recent adverse panel report in which the United States was the complaining party (Korean procurement practices).
U.S. measures that have been challenged in the above-mentioned proceedings include Clean Air Act regulations on conventional and reformulated gasoline; import restrictions on imports of underwear; transitional safeguards on imported wool products; an import prohibition on shrimp and shrimp products; antidumping duties on DRAM semiconductors; tax treatment for foreign sales corporations (FSCs); countervailing duties on steel from the United Kingdom (involving privatization methodology); Section 301 of the Trade Act of 1974; and, as indicated above, the Antidumping Act of 1916 (creating a private right of action for dumping). The panel report on Section 301 found that portions of the statute violated the DSU but that the United States implemented the law in a WTO-consistent manner; the panel report was adopted in January 2000.
As of June 7, 2000, there appear to be 3 active panels involving cases brought by the United States and 7 involving the United States as a defendant. Cases in the latter category involve challenges to ? 110(5) of the Copyright Act, regarding non-payment of royalty fees (complaint by the EC); withholding of customs liquidation on EC imports prior to authorization to retaliate by the DSB; Section 201 import surge safeguards on EC wheat gluten; Section 201 import surge safeguards on lamb from Australia and New Zealand; and antidumping orders covering stainless steel imports from Korea and hot-rolled steel products from Japan. The authority of a panel examining a Massachusetts law restricting state procurement from firms doing business in Burma (a statute that is currently before the U.S. Supreme Court) lapsed in February 2000. As of May 23, 2000, the WTO Secretariat listed 37 cases involving the United States that are in consultations: 23 in which the United States is a plaintiff, and 14 in which it is a defendant.
The United States obtained authorization from the DSU in 1999 to impose retaliatory measures in two cases in which it had won WTO rulings in its favor. In a longstanding dispute over the EC's banana import regime, the United States imposed increased tariffs on certain EC goods for the EC's failure to comply with earlier panel and Appellate Body reports. Along with its substantive issues, the dispute involved a disagreement over how and when it was to be determined whether a party had in fact complied with its WTO obligations. The United States also imposed increased tariffs on EC goods for non-compliance with WTO panel and appellate reports holding the EC's import prohibition on meat and meat products from cattle treated with growth hormones to be violative of the WTO Agreement on the Application of Sanitary and Phytosanitary Measures.
WTO Members have been studying the operation of the DSU under an Uruguay Round Ministerial Declaration calling for the completion of such a review within 4 years after the WTO Agreement entered into force. The United States has proposed that the DSU provide shorter deadlines, as well as increased transparency and public access to the dispute process. As a result of the banana and beef hormone disputes, the review has also involved clarification of DSU rules on determining compliance with panel reports. The United States has also proposed that WTO Members be able to modify the items on which they impose retaliatory tariffs, an approach referred to as "carouselling." Final disposition of the review is pending.
A carousel provision has since been enacted into law in ? 407 of the Trade and Development Act of 2000, P.L. 106-200, which directs the United States Trade Representative (USTR), in cases where the United States has imposed retaliatory duties on imported products for a country's failure to comply with a WTO panel or Appellate Body report, periodically to revise the list of products subject to the increased duties; revision is not required if the USTR determines that implementation is imminent or the USTR and the petitioner agree that revision is unnecessary. The USTR began implementation of the provision in late May 2000 with regard to existing retaliation in the EC banana and beef hormone cases (65 Fed. Reg. 34786). The EC has since challenged the provision in the WTO as violative of the Dispute Settlement Understanding; the case is currently in consultations.
The Office of the United States Trade Representative represents the United States in WTO disputes. Federal law requires the USTR to publish a Federal Register notice whenever it requests the establishment of a WTO dispute panel or a panel request is made by another WTO Member involving the United States (19 U.S.C. ? 3537(b)). Other statutes governing the conduct of WTO disputes by the USTR include 19 U.S.C. ? 3512(b)(1)(C) (federal-state cooperation when a state law is challenged); 19 U.S.C. ? 3533 (review of WTO panel roster, consultations with Congress and others during disputes); 19 U.S.C. ? 3537 (access to the dispute settlement process); 19 U.S.C. ? 3538 (U.S. administrative action following panel reports) and Section 301 of the Trade Act of 1974, 19 U.S.C. ?? 2411 et seq. (requires the USTR to invoke the WTO dispute process if a Section 301 trade complaint involves provisions of a WTO agreement; also requires the USTR to monitor WTO dispute settlement results).
Legislation
The following 106th Congress bills address various aspects of WTO dispute settlement proceedings:
H.R. 2612 (Rep. Traficant) would, among other things, establish a WTO Review Commission to review WTO dispute settlement cases adverse to the United States to determine if the WTO has exceeded its authority;
S. 1073 (Sen. Ashcroft) would amend ? 306 of the Trade Act of 1974 to provide for enhanced U.S. government consultation with industry during the implementation of a WTO panel or Appellate Body report in favor of the United States;
S.Con.Res. 55 (Sen. Baucus) sets forth U.S. negotiating objectives for the next round of WTO multilateral trade negotiations, including shortened DSU time frames and increased transparency, citizen access and responsiveness to submissions from nongovernmental organizations.
Resources
CRS Report RS20088(pdf). Dispute Settlement in the World Trade Organization: An Overview.
CRS Report RS20130, The U.S.-European Union Banana Dispute.
CRS Report RS20142, The European Union's Ban on Hormone-Treated Meat.
Hudec, "The New WTO Dispute Settlement Procedure: An Overview of the First Three Years," 8 Minn. J. Global Trade 1 (1999).
Yerxa & Marantis, "Assessing the New WTO Dispute System: A U.S. Perspective," 32 Int'l Law. 795 (1998).
Tiefer, "Free Trade Agreements and the New Federalism," 7 Minn. J. Global Trade 45 (1998).
WTO site for dispute settlement issues
USTR press releases and fact sheets on WTO disputes