DS: United States — Section 306 of the Trade Act 1974 and Amendments thereto

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Summary of the dispute to date

The summary below was up-to-date at

Consultations

Complaint by the European Communities.

On 5 June 2000, the EC requested consultations with the US concerning Section 306 of the Trade Act of 1974, as last amended by Section 407 of the Trade and Development Act of 2000 (Public Law 106-200). The EC considered that Section 306, as amended, provides for a mandatory and unilateral revision of the list of products subject to suspension of GATT 1994 concessions or other Section 301(a) action 120 days after the application of the first suspension and then every 180 days thereafter, in order to affect imports from Members which have been determined by the United States not to have implemented recommendations made pursuant to a WTO dispute settlement proceeding. In particular, the EC alleged that:

• Section 306, as amended, is in breach of the DSU since it mandates unilateral action without any prior multilateral control;
   
• The measure mandates suspension of or threats to suspend concessions or other obligations other than those on which authorisation was granted by the DSB. As a practical result, all US concessions bound in its Schedule of commitments under the GATT 1994 can, according to the EC, be unilaterally modified at will;
   
• The measure is in breach of the obligation of equivalence, in that it creates a structural imbalance between the cumulative level of the suspension of concessions and the level of nullification and impairment as determined under relevant DSU procedures; and
   
• The measure creates a chilling effect on the market-place, thus affecting the security and predictability of the multilateral trading system.

Hence, the EC considered that Section 306 of the Trade Act of 1974, as amended by Section 407 of the Trade and Development Act of 2000, is inconsistent with, in particular, the following WTO provisions: Articles 3.2, 21.5, 22 and 23 of the DSU; Article XVI:4 of the WTO Agreement; and Articles I, II and XI of the GATT 1994.