CHAPTER TWO. Resorting to International Institutions to Resolve Trade Imbalances? U.S. Protectionism via GATT/WTO Dispute Initiation

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1 CHAPTER TWO Resorting to International Institutions to Resolve Trade Imbalances? U.S. Protectionism via GATT/WTO Dispute Initiation I. Introduction Do trade imbalances matter at all? In international economics theory, countries that trade with one another either run trade surpluses or trade deficits, and it is natural that current account balances are not zero as long as they trade. The notion of many economists that trade deficits are merely a macroeconomic phenomena in numerical data are factual in that countries that attract inflows of capital can naturally run trade deficits and would not necessarily negatively influence the economic stability of a country (Cooper, 2007; Cooper, 2008; Bohara and Kaempfer, 1991). 1 Nonetheless, this notion based on pure economic theory leaves us with an inadequate explanation for the rise of U.S. trade policy formation, protectionism, and the escalation of numerous currency debates in response to the increasing U.S. trade deficit in the global economy. This chapter is an investigation into the linkages between U.S. trade imbalance accumulation and U.S. protectionism, which is highlighted by U.S. government decisions to initiate a trade dispute in an international organization (the WTO) by filing a case as a complaint. By using a quantitative regression model coupled with qualitative methodology via archival research and on-site interviews of public officials and policy makers, this research suggests and argues that trade imbalances do matter politically, and even economically. Addressing global imbalances reemerged as a policy agenda following the Global Financial Crisis of While the issue of global imbalances remained in the spotlight, there were divided opinions among economists, political scientists, and policy makers around the world regarding the significance and relevance of imbalances to foreign economic policy decision-making. Previous works in the field of 1 Cooper (2008) has argued that the U.S. current account deficit and the corresponding surpluses elsewhere, although conventionally described as imbalances, do not necessarily signal economic disequilibria in a globalized world economy, and they may well remain large for years to come. In the context of understanding tariffs as a foreign economic policy tool for protectionist measures, Bohara and Kaempfer (1991) have suggested that the tariff rate is endogenous in the political system, and argue that trade balance do not cause changes in the tariff, a variable which is taken as a proxy for protectionist pressures in the U.S. Congress. Both arguments refrain from highlighting trade imbalances as a significant variable for examination in the field of economics. 1

2 international economics and macroeconomics have mainly focused on empirical assessments of a relationships between trade balance and the real exchange rate both for developed and developing countries, particularly for the U.S. and its trading partners (Chiu, Lee, and Sun, 2010; Cline 2010). 2 Going back to pure economic logic, countries having different income per capita may exhibit differences in their export supply and import demand ability. The geographic structure of trade between the U.S. and its trading partners in different countries across various continents is likely to be affected by geographic distance, trade restriction measures, political and economic relationships, and so forth. The geographic structure of trade is reflected in the directions of U.S. foreign economic policy; for example, the U.S. has sought to expand open markets abroad via free trade, but in the presence of protectionism against East Asian countries, which are main exporters of manufactured goods to the U.S. and which mostly peg their currency to the US dollar. (Chiu et al, 2010). With the U.S. and Europe as the main advocates of rebalancing global imbalances, export-led economies are said to have caused a significant amount of the imbalances. Emerging economies of East Asia, including China and South Korea in particular, have been forced to take the blame for the imbalance in the global economy, due to the presumed negative effects of their large current account surpluses, accumulation of huge foreign reserves since the Asian Financial Crisis for self-provision of liquidity, and adamant policies in maintaining low exchange rates of local currency to render export products cheap. 3 2 (Chiu 2010) finds a negative relationship between the real exchange rate and the bilateral trade balance, suggesting that dollar depreciation will improve the U.S. bilateral trade balance in the long run by deploying the fully modified ordinary least squares (FMOLS) approach, a panel data model for 97 countries that trade with the United States. The authors provide policy implications that the huge U.S. trade imbalance (trade deficits) can be eliminated by way of dollar devaluation (and also RMB appreciation) in the long run. Cline (2010) also adds with a statistical test results that for China, a rise of 1 percent in the real effective exchange rate causes a reduction in the current account surplus by 0.30 percent of GDP (Cline 2008) to 0.45 percent of GDP. At 2010 scale, a 10 percent real effective appreciation would reduce China s current account surplus by about $170 billion to $250 billion. For the United States, the corresponding improvement in the current account balance would range from a low estimate of $22 billion (US Real Effective Exchange Rate basis without satellite currency effects) to a high of $63 billion (equation 2 bilateral basis plus high end of the range of satellite currency effects). Thus, the author argues that decisions on China s exchange rate policy do matter for the objective of reducing international imbalances, rather than being irrelevant because of supposed structural peculiarities that cause the exchange rate to have no impact on either China s global trade or its bilateral trade with the United States. 3 Remarks by Governor Ben S. Bernanke, The Global Saving Glut and the U.S. Current Account Deficit, in a speech delivered at the Sandridge Lecture, Virginia Association of Economists, Richmond, Virginia. Governor Bernanke presented similar remarks with updated data at the Homer Jones Lecture, St. Louis, Missouri, on April 14, 2005, and also in a following speech, Global Imbalances: Recent Developments and Prospects, delivered at the Bundesbank Lecture, Berlin, Germany, September 11, In both of the speeches, he stressed that the current account surpluses of many emerging-market economies, and a worldwide decline in long-term real interest rates can be explained in part by the emergence of a global saving glut, driven by the 2

3 Indeed, increasing interdependence and rapid growth in the Asian region are providing new opportunities for economic development in several Asian economies, but high savings and weaker domestic demand have resulted in large and persistent current account surpluses. Without a doubt, a huge portion of global imbalances in recent decades may be attributed to Asia (mainly countries in Northeast Asia that have accumulated considerable amounts of foreign exchange reserves China, Japan, and South Korea). At the core of global imbalances are bilateral trade imbalances, particularly those generated between the U.S. and East Asian countries. 4 Although Asia is portrayed as the villain for the accumulation of imbalances, Asia does has a stake in rebalancing the global economy due to two main factors. First, a huge accumulation of trade imbalances in favor of one country is not sustainable in that it continuously creates political frictions and intensifies economic relations among trading partners consequentially, it is highly likely to encounter an upsurge in protectionist measures and economic pressures from the country in trade deficit in return. Second, for East Asia, limiting protectionism is a necessary precondition for export-led growth, which largely depends on the U.S. and Europe as principal markets in the global supply chain for final goods. As Asia continues to grow, the demands of the U.S. and the EU as external markets may not suffice to absorb the supply from Asia. At this stage, however, either rebalancing the real effective exchange rate or increasing internal demands and boosting domestic economy appears to be a possible and necessary option for Asian countries. In discussing the political actors involved in the dynamics of trade and protectionism, the following actors in the U.S. government and broader political arena will be considered: the United States Trade Representative (USTR), the U.S. Congress, and interest groups/firms and lobbyists (I assume that the transformation of many emerging-market economies - notably, rapidly growing East Asian economies and oil-producing countries - from net borrowers to large net lenders on international capital markets. These countries are assessed to have increased reserves through the expedient of issuing debt to their citizens, thereby mobilizing domestic saving, and then using the proceeds to buy U.S. Treasury securities and other assets, and it is emphasized that an Asian "savings glut" helped create the subprime mortgage crisis in the U.S. with an influx of easy money. 4 According to the Asia Development Institute (2008), a major portion (59.8 percent) of U.S. trade deficits are traced to China, Japan, Mexico, and Canada (2007 present), and deficits with China which started to accumulate since 1985, account for the largest U.S. bilateral trade imbalance. U.S. trade deficits deriving from trade with countries other than member countries of NAFTA are mainly two major Northeast Asian states, China and Japan. Overall, six Asian economies China, Japan, Singapore, Hong Kong (SAR, China), Malaysia, and Taiwan have had current account surpluses that equaled some 60% of the U.S. current account deficit of $810 billion (2006 present). 3

4 influence of American voters are reflected in the U.S. Congress). 5 From the international organization side, the Panel for WTO dispute settlement and the WTO Appellate Body will be considered. In this chapter, I center on the impact of decision-making process of the U.S. (complainant member) and respective inner dynamics of the three Northeast Asian states (China, Japan, South Korea as respondent members). For the purpose of a closer examination of reciprocation between the complainant (country) and the respondent (country), I set aside third-party participants in the WTO dispute settlement process and mainly focus on the two counterparts. 6 Ultimately, the principle query investigation in this chapter is regarding the linkage between U.S. trade imbalances accumulation (X = independent variable) and U.S protectionist economic policy making by the USTR and the U.S Congress (Y = dependent variable). 7 To what extent do U.S. trade deficits with its trading partners affect its decisions to launch a protectionist trade policy in international institutional settings? Most importantly, in the U.S., what are the root mechanisms and roles of government related actors and interest groups, which culminate in filing a case for dispute in the WTO? Furthermore, what are the responses from mainly targeted states (for instance, Northeast Asian nations) in the array of continued policy attacks in the WTO by the U.S. are they acquiescing, reciprocal, or even retaliatory? The notable strength of this research is that it provides both an aggregate analysis of the effect of U.S. trade imbalances on U.S. foreign economic policy regarding its trading partners on the global scale, and also on the regional scale in the case of East Asian countries. To the best of my knowledge, while the current IPE literature has an understanding of how nations with appreciated exchange rates are more 5 In explaining for the inner dynamics of policy decision making in each of the Northeast Asian countries, the following entities will be considered: from the Government of the PRC - the Ministry of Commerce; from the Government of Japan the National Diet, METI, MOFA, and MOF; from the Government of Korea, the National Assembly, MOFAT (Trade Negotiation Bureau). While some of these dynamics will be included in the remainder of this chapter, full explanations will be dealt with in further detail in three separate subsequent chapters. 6 The complication in the dispute settlement process deriving from third-party participation will be dealt with in a separate chapter. 7 (Pevehouse 2011) The authors note that while the Obama Administration thus far has declined to pursue aggressive unilateral trade policies or direct exchange rate measures, the USTR has filed two new cases against China at a timing coincided closely with both Congressional hearings on China s exchange rate policies and the passing of a bill in the House Ways and Means committee permitting the U.S to impose countervailing duties (CVT) on countries that engage in currency manipulation. While the authors query focuses on finding the linkage between exchange rate policy (rather than trade imbalances) and GATT/WTO dispute initiation, they provide the backgrounds of U.S. policy making processes to assert that U.S protectionist economic policy is reflected and/or ultimately leads to WTO dispute initiation as a policy choice. They also provide sufficient reasons for using WTO dispute initiation as a proxy for protectionism, which is also adapted for investigation and model construction in the third section of this chapter. 4

5 likely to pursue protectionist measures in the WTO, there is a research gap in identifying the impact of trade imbalance accumulation on protectionist measures in the WTO and on the imposition of political power via pressuring trading partners to reevaluate (mostly appreciate) their currencies. For deriving general conclusions for implications in the study of IPE, both variables are the exercise of U.S. foreign economic policy that may well be measured within the scope of global data analysis and deserve scholarly attention. Moreover, the current IPE literature using quantitative methodology lacks research that appends analysis of country-specific cases in detail as an application of the research results derived from the quantitative investigation. Detailed explications based on the general quantitative results will lead to specific implications on a highlighted region such as the steadily growing East Asia, which continues to trade with the U.S. in significant volumes. 8 Notwithstanding the core contributions of this research to the general field of IPE and the regional study of East Asian political economy, the weakness of this research is that for the purpose of focusing on measuring the U.S. power to deflect (Cohen, 2006), the variable on the left-hand-side (U.S. protectionism) is restricted to only the actions of the one player that is, the quantitative data analysis in this research is to only measure the unilateral measures taken by the U.S, when, in actuality, protectionist measures on trade may be exercised by both side of the trading partnership, and also intra-regionally among China, Japan, and South Korea. 9 A pertinent example for critique would be Japan and South 8 Quantitative analysis is pivotal in explaining the impact of trade imbalances in terms of figures, but it fails to deliver a full picture in the absence of the qualitative portion, in which the analysis fills in the minuscule details for what the regression results cannot adequately explain. These are important sources of data analysis that derive from personal government official interviews and policy evaluations, seminars, etc. It is a reflection of how the puzzle is solved in the actual world and not in the world of regressions. As will be portrayed in this chapter, both the quantitative and the qualitative portions of the research bring in contributions to the IPE literature in simple terms, the cross-country research brings in the best contribution to the previous work on trade imbalances. Despite the numerous discussions on U.S.-China trade disputes and economic conflict ensuing China s entry to the WTO, much of the issues on trade imbalances have been largely politicized in the policy spectrum but not thoroughly assessed in regional, comparative fashion with other U.S. trade conflicts with Japan and Korea, with the consideration of time lags. Also, abundant literature is available on the U.S. economic conflicts of the 1970s and the Japanese engagement in WTO trade disputes (Pyle, 1987; (Lincoln 1990); (Iida 2006); and Pekkanen, 2008), but an updated comparative assessment in comparison with the current U.S.-China trade imbalances and WTO dispute settlement, and participation behavior in international institutions is timely and necessary. The Korean case has received relatively little attention with a strong focus on U.S.-Korea trade imbalances per se, due to the relatively small amount of imbalances that have occurred in U.S.-Korea trade in comparison to those that have occurred in U.S.-Japan and U.S-China trade. The common factors that lie in the U.S.-China, U.S.- Japan, and U.S.-Korea trade conflicts are: trade imbalances accumulation, domestic mobilization of industrial interests, U.S. congressional and presidential politics, bilateral economic pressures (trade aspects and currency appreciation), and finally, U.S. bureaucratic decisions for WTO dispute initiation. 9 Cohen,

6 Korea s notorious protection for agricultural sectors of their economies, and would require further investigations on the reciprocal policy choices taken by East Asian trading partners in response to U.S protectionism. Through unraveling the linkages between the two variables, the findings in this chapter will demonstrate that contrary to the mainstream view of economists that trade imbalance itself as an independent variable is not a central issue at stake in terms of U.S foreign economic policy making, the dynamics of trade imbalances do influence U.S. policy making towards the direction of U.S. protectionism. Questioning the relevance between the accumulation of trade imbalances and trade disputes initiation would be a task of examining bilateral economic relations, U.S. congressional politics, USTR decision-making processes, and the dispute settlement process in the WTO from the point of dispute initiation by the U.S. The chapter proceeds as follows: in the first section, I provide a brief history of trade dispute settlement in international institutions and the mechanisms of WTO dispute settlement. The status of the U.S current account balance, and the roles of the United States Trade Representative (USTR) and the U.S. Congress in filing a dispute in the WTO and the mechanisms of the WTO dispute settlement process are laid out in detail. In the second section, I define the puzzle and lay out the linkages and pathways of unraveling the U.S. trade deficit challenge and rigorous participation in the WTO. In the third section, I add elaborations on each of the trade relationships (U.S.-China, U.S.-Japan, and U.S.-Korea trade imbalances) and conflicts in a comparative analysis. The fourth section on methodology includes the hypothesis, explanation of the data used, and the construction of the model. In the fifth section, results from the data analysis are presented with interpretation. The final section delivers conclusions regarding the effects of U.S protectionist policy making that are reflected in the dispute settlement processes in international institutional settings, and on the implications of these policy choices on the global level and regional levels, concentrating on the three main Northeast Asian countries The explanations on the linkage between U.S.-Northeast Asian trade imbalance and protectionism will focus on two things: first, whether the U.S.-China, U.S.-Japan, and U.S-Korea trade deficits have resulted in U.S. protectionism (the utilization of 6

7 II. Why and how the U.S. to resorts to International Institutions to Resolve Trade Imbalances The Puzzle In unraveling the U.S. trade deficit challenge in global trade and particularly in Northeast Asian trade, the main question is: Why does the United States sue its trading partners in the WTO? In other words, What compels the U.S. to resort to international institutions to resolve trade imbalances, and why? The main hypothesis proposed here is that the accumulation of trade deficits with a trading partner drives political initiatives at the local level and also at the federal level in the U.S. Congressional political structure, which also pressures the USTR to select cases for chances of winning in the WTO dispute settlement system. Competitive and/or Alternative Hypotheses An important point on competing arguments can be raised for further elaboration of the theory. Painting a big picture in a variety of ranges in solving the research puzzle involves considering additional multiple answers and approaches to the question. There are several hypotheses that could be considered. Why does the United States sue its trading partners in the WTO, if not for trade imbalances? There are other plausible answers to this issue that can be found by placating the interest groups and paying attention to the hand-waving politics to form alternative hypotheses. If we perceive certain behaviors in the U.S. foreign economic policy as threatening a trading partner with an adjudication signal, the reason could be of the following: one, for economic objectives, the United States Trade Representative may be suing in the WTO because different industrial policies imposed on domestic and foreign firms, and unfair, incompatible trade practices by trading partners occur; two, certain characteristics of manufacturing or industries by sector that impose competitive disadvantage on the U.S. could be perceived as a damaging threat to the U.S. economy; three, if we consider political reasons, it may perhaps be due to strategic WTO disputes and/or pressures for reevaluation of local currency) with regard to the three Northeast Asian economies of study; second, whether the responses from the three states have been reciprocating (retaliatory) or acquiescing (yielding) to U.S actions? Given the significance of U.S.-Northeast Asian bilateral trade imbalances and the resurfacing of the issue as an important policy agenda for the U.S, one of the goals in following chapters would be to revisit the past cases of U.S.-Japan and U.S.-Korea trade imbalances and frictions since the 1980s to the present, in addition to the current U.S.-China trade imbalances debate. The purpose of the revisionary process-tracing is to comparatively capture the pathways of how bilateral trade deficits between the U.S and export-led economies of East Asia can culminate into trade or currency wars. 7

8 alliances to reassure that the U.S. is in control in the bilateral relationship, particularly if the U.S. is a partner to some of these countries of interest (be it for military or economic); and four, due to policy agenda, presidential and congressional politics. Ironically, in spelling these alternative hypotheses out, we find that they are all intertwined political and economic factors. As aforementioned, economists may argue that trade imbalances accumulation (and national trade deficit) may not be detrimental to the aspects of gross domestic product and economic growth rate, and even other economic indicators such as unemployment rate. Nonetheless, the flip side of the impact of trade imbalances (and the size of its accumulation) from the IPE (international political economy) perspective suggests that it has every reason to be considered as an independent variable to U.S. protectionist behavior. Inevitably, via lobbying in the Congress, U.S. domestic firms, big and small, and local constituency propel the drive for political action and legislation to protect local industries as well as push for bilateral political pressures in the event that certain illegal trading acts of trading partners persists. Consequently, the U.S. continuously initiates and engages in trade conflicts (as well as cooperation for garnering further benefits), of which the roots can be traced back to, the accumulation of loss in trade - trade imbalances. Comparative disadvantage in trade is always a very crucial factor for the U.S, which in turn affects voting behavior in national and congressional elections, just as long as there are apparent industrial losses or unemployment due to the trade imbalances. One way to delve further into the intertwined political and economic factors of U.S. WTO dispute initiation is to look into powerful U.S. multinational corporations, and the dynamics of trade unions vs. companies. The foreign policy guru in Washington may run the U.S. in terms of policy-making, but voicing of both public and private interest may impact politicization. We can start from looking into industry-specific sectors and highlighting them. And in practice, the more trade deficits accumulation, the more dependent the US economy becomes on the other. The underlying assumption here is that the more 8

9 the US economy becomes dependent (by sectors respectively), the interests of firms boost the congressional politics in the U.S. to become protectionist. 11 For elaboration on cases of other U.S. trade with countries exhibiting huge trade imbalances, possible considerations for case studies can be made for countries other than the three main economies of interest, China, Japan, and South Korea. Throwing in Taiwan, Singapore, and Malaysia, or even oil-producing countries into the qualitative analysis is plausible. Apparently, these are countries that run huge trade surpluses by trading with the United States. Their current account surpluses/gdp range from 12 to 15 percent - even oil-producing countries run more than 3 percent. In addition, if certain countries that are profitable are seen as potential targets for the U.S. for attacks via trade dispute initiation, factors regarding the structural adjustments of trade will always matter. However, these countries lack in the common factors that the three Northeast Asian economies have faced amidst its trade conflict with the U.S; namely, trade imbalances accumulation, domestic mobilization of industrial interests, U.S. congressional and presidential politics, bilateral economic pressures (regarding the aspects of trade and currency appreciation), and finally, U.S. bureaucratic decisions for WTO dispute initiation. Singapore, for one, runs huge trading surplus by trading with the U.S. but U.S. retaliation is may not be necessary, all the more because Singapore is prone to free-trade, and there must be some illegal violations of trade laws - you can t just sue a country in the WTO. There are some bottom-lines to consider in qualitative terms: one, to answer why the U.S. chooses to file certain cases and some cases not, and how the decision-making of the USTR affects the final decision, finding out to what extent trade imbalances motivate the US policy decision making, then the conditions regarding the filing of the cases would be central key factors to explain for. Two, differentiating whether 11 Nonetheless, the scope and query of the research will be confined to investigating government action in the end. This is not about multinational companies such as Microsoft, Google, and Apple suing foreign firms; the focus primarily remains on government relationships, but on the basis of understanding that there are several other private firms and companies that choose to engage in legal battles at the federal level in the United States. 9

10 it is macro-aggregate trade deficit or trade deficit by sector in the analysis is necessary. 12 While aggregate trade-deficit could be incorporated into a large-n data analysis, sectorial trade deficit can be analyzed within the spectrum of each three bilateral trade relations (U.S.-China, U.S.-Japan, and U.S.-Korea). III. U.S. Trade Politics: Industries, USTR, and Congressional Politics towards WTO Disputes Mobilization of Interests and Lobbying by Industries U.S. domestic industries actively engage in the action of lobbying for their economic interests and the protection of the economy. 13 The ability of individuals, groups, and corporations to lobby the government is protected by the right to petition in the First Amendment to the United States Constitution. In the given time with legislators and executive branch officials, lobbyists explain the goals of the organizations they represent, and present those organizations' points of view. Another important function of lobbyists is to serve as a conduit for information flowing the other way, from officials to the people employing the lobbyists. Thus, they can also serve as legislative tacticians, determining the best way for an organization to fulfill its goals. Lobbying activities are also performed at the state level, and lobbyists try to influence legislation in the state legislatures in each of the 50 states. At the municipal level, some lobbying activities occur with city council members and county commissioners, especially in the larger cities and more populous counties. Since 1998, 43 percent of the 198 members of Congress who left government to join the private sector have registered to lobby using the 'revolving door of influence'. The Lobbying Disclosure Act of 1995 and Honest Leadership and Open Government Act of 2007 increased regulation and transparency In the latter case, there are specific things to look into. It is perceived that when industry competitions get severe, the likelihood of trade deficit accumulation has always been low. Since the mid-1970 s, the U.S. has imported more goods that it has exported. This balance began to improve in the early 1990s but has again significantly increased. Some believe the trade deficit is evidence that American companies are failing to compete in global markets or that U.S. exporters face unfair trade barriers abroad. Other economists observe that it is the sign of a healthy economy, which has the resources to purchase a large volume of goods. In fact, it is noted that from 1992 to 1997, the U.S. trade deficit almost tripled, while at the same time U.S. industrial production increased by 24 percent and manufacturing output by 27 percent (Griswold, 1998). 13 Though process-tracing lobbying data would be helpful in qualitative aspects, retrieving comprehensive lobbying data for a large-n analysis appears to be problematic and difficult, particularly given changes in disclosure requirements over time. Obtaining fine-grained data for some periods of the analysis may be possible, but not for the whole period. Subsequent research on pursuing the quantitative research path is therefore critical and desired for future research. 14 In 2009 U.S. President Barack Obama signed two executive orders and three presidential memoranda on his first day in office governing how former lobbyists can be employed in the government, and restrictions on lobbying once leaving the government. 10

11 United States Trade Representative (USTR) and Section 301 of the U.S. Trade Act of 1974 The USTR is the organization in which public-private partnerships occur via industrial lobbying to convey the agenda for trade disputes and negotiations to the U.S. Congress and the Presidency. The Office of the U.S. Trade Representative (USTR) is responsible for developing and coordinating U.S. international trade, commodity, and direct investment policy, and overseeing negotiations with other countries. The head of USTR is the U.S. Trade Representative, a Cabinet member who serves as the President s principal trade advisor, negotiator, and spokesperson on trade issues. USTR is part of the Executive Office of the President. Through an interagency structure, USTR coordinates trade policy, resolves disagreements, and frames issues for presidential decision. 15 One legal aspect which has not been fully activated during the Obama Administration is the Section 301 Section 301 of the U.S. Trade Act of 1974, which authorizes the President to take all appropriate action, including retaliation, to obtain the removal of any act, policy, or practice of a foreign government that violates an international trade agreement or is unjustified, unreasonable, or discriminatory, and that burdens or restricts U.S. commerce. Section 301 cases can be self-initiated by the United States Trade Representative (USTR) or as the result of a petition filed by a firm or industry group. If USTR initiates a Section 301 investigation, it must seek to negotiate a settlement with the foreign country in the form of compensation or elimination of the trade barrier. For cases involving trade agreements, the USTR is required to request formal dispute proceedings as provided by the trade agreements. The law does not require that the U.S. government wait until it receives authorization from the World Trade Organization (WTO) to take enforcement actions, but the U.S. has committed itself to pursuing the resolution of disputes under WTO agreements through the WTO dispute settlement mechanism. As enacted, Section 301 required the USTR in 1989 and 1990 to issue a report on its trade priorities and to identify priority foreign countries that practiced unfair trade and priority practices that had the greatest effect on restricting In the United States, the Internal Revenue Service (IRS) makes a clear distinction for nonprofit organizations between lobbying and advocacy, limiting the former to "asking policymakers to take a specific position on a specific piece of legislation, or that ask others to ask the same ; other activities that seek to influence policies, possibly including public demonstrations are termed as "advocacy". 15 Office of the United States Trade Representative, Executive Office of the President ( 11

12 U.S. exports. The USTR then would initiate a Section 301 investigation against the priority countries to obtain elimination of the practices that impeded U.S. exports, in the expectation that doing so would substantially expand U.S. exports. If the White House finds that the support violates international trade rules, Section 301 allows it to respond with a range of aggressive measures, including tariffs. This strategy has worked before: in the 1980s and 90s, the United States used its 301 authority to combat Japanese and Korean subsidies and trade barriers. Though critics warned of bitter trade wars, the get-tough approach actually led to more balanced trade relationships, and even encouraged foreign investors to build plants in the U.S. In response to the recent impact of the Chinese economy on U.S. trade deficit, Section 301 has now resurfaced as a foreign economic policy tool to amend trade specificities. 16 The U.S. Congress and Presidency The Congress presses the USTR to support specific industries and company interests, and U.S. firms therefore maintain great leverage over U.S. trade policy. U.S. firms participation and sponsorship are crucial for financing congressional and national campaigns in times of elections. Members of the House of Representatives of small districts that rely on specific industries or firms for employment are especially vulnerable to individual firms. The Congress created the USTR to respond to private interests and their congressional defenders in monitoring committees such as the trade subcommittees of the Senate Finance and the House Ways and Means Committees. These committees call the USTR before them to testify and 16 The original Super 301 provisions expired in 1990, but during the Clinton Administration, an Executive Order (EO 12901) was issued to reactivate Super 301 for two years ( ). The Super 301 process was again extended through 1997 by EO (September 1995), but was not in operation in On March 31, 1999, Super 301 again was re-instated and revised by EO It required the USTR by April 30 to issue its Super 301 report on priority foreign trade practices and to initiate section 301 cases against such practices if agreement is not reached after 90 days. Neither the USTR s April 1999 nor April 2000 Super 301 report identified any priority foreign trade practices under Super 301, but USTR did announce that it would initiate Section 301 cases against trade practices in several countries. In a January 2002 letter report to the Senate Finance Committee on activities under Section 301, the USTR did not identify any priority foreign trade practices under Super 301, although it did report on other activities undertaken under Section of the Trade Act of As of late, on September 9, 2010, the Obama administration accepted a petition, filed by the United Steelworkers under Section 301 of the 1974 Trade Act, to investigate China s state support for clean-energy exports. In response, U.S. Trade Representative Ron Kirk announced that the United States has initiated an investigation under Section 301 of the 1974 Trade Act with respect to acts, policies and practices of the Government of China affecting trade and investment in green technologies. 12

13 explain its actions. 17 If unsatisfied with USTR policy, Congress has the power to pass legislation forcing the USTR to act, to withhold or to withdraw trade-negotiating authority, to block ratification of signed agreements, to limit budgetary allocations, or to hold other legislation hostage. U.S. Private and Public Partnership for WTO Litigation U.S. domestic industries can voice their interests and opinions regarding trade specificities, losses and concerns through the USTR. But given the number of complicated cases that the USTR must litigate, the number of litigates, the need for legally sophisticated factual development and argument, the tight deadlines imposed by the WTO Dispute Settlement mechanisms, and the political stakes of wining or losing WTO cases, the USTR typically requires the industries to submit convincing factual and legal memoranda as a prerequisite to its filing of a WTO complaint. The USTR seeks for a commitment for firms to respond to time-sensitive demands for materials from WTO panels. Evidence for each case is also collected and submitted to the USTR by each of the industries. The USTR thus relies heavily on domestic industries for evidence to submit to the WTO panels for each case. 18 GATT and WTO Disputes A dispute arises when one country adopts a trade policy measure or takes some action that one or more fellow-wto members consider to be breaking the WTO agreements, or to be a failure to live up to obligations. A third group of countries can declare that they have an interest in the case and enjoy some rights. A procedure for settling disputes existed under the old GATT (General Agreement on Tariffs and Trade), but it had no fixed timetables, rulings were easier to block, and many cases dragged on for a long time inconclusively. The Uruguay Round agreement introduced a more structured process with more clearly defined stages in the procedure. It introduced greater discipline for the length of time a case should take to be settled, 17 The Office of Congressional Affairs provides briefings to Congress and interested third party stakeholders, responds to Congressional inquiries, provides advice to Congressional constituents, and coordinates with other USTR offices to help negotiate trade agreements and resolve trade disputes. 18 (Shaffer 2003) 13

14 with flexible deadlines set in various stages of the procedure. The agreement emphasizes that prompt settlement is essential if the WTO is to function effectively. It sets out in considerable detail the procedures and the timetable to be followed in resolving disputes. If a case runs its full course to a first ruling, it should not normally take more than about one year 15 months if the case is appealed. The agreed time limits are flexible, and if the case is considered urgent (e.g. if perishable goods are involved), it is accelerated as much as possible. The Uruguay Round agreement also made it impossible for the country losing a case to block the adoption of the ruling. Under the previous GATT procedure, rulings could only be adopted by consensus, meaning that a single objection could block the ruling. Now, rulings are automatically adopted unless there is a consensus to reject a ruling any country wanting to block a ruling has to persuade all other WTO members (including its adversary in the case) to share its view. 19 There are various stages a dispute can go through in the WTO. At all stages, countries in dispute are encouraged to consult each other in order to settle out of court. At all stages, the WTO director-general is available to offer his good offices, to mediate or to help achieve conciliation. Below are approximate periods for each stage of a dispute settlement procedure the agreement is flexible. In addition, the countries can settle their dispute themselves at any stage. Totals are also approximate. IV. U.S. Trade Disputes in the GATT and the WTO Bilateral Level Disputes at the International Level Most of the U.S. complaints in the WTO involve setting the rules of trade straight in the international organization, which entails disputes with its major trading partners. The U.S. is an active participant in the WTO, and as of October 15, 2010, of the total of 92 complaints (85 original, 7 compliance) the United States, as a complaining party, has filed so far, 67 (including 2 that are partially concluded) have been concluded; 4 were merged with other complaints; 4 are in the litigation stage; and 19 are either in the prelitigation consultation stage or currently inactive. Consultations before the creation of a Panel stage that 19 (Kostecki 2009) 14

15 have been filed by the U.S. as a complaint appear below. If the conflict can be resolved by negotiation at the consultation stage, the U.S. need not request a panel in the WTO dispute settlement system. To separate the cases of which the U.S. filed in a request for panel setup for in the WTO for dispute settlement or not, here I provide the list of cases that were raised by the USTR for consultations before litigation stage in the WTO. A longer long list of U.S. WTO dispute settlements panel cases are attached in the Appendix section, but for convenience in this section the map of U.S. disputes in the WTO is given below for comparison between which cases were actually filed for litigation and which were not. Again, consultation does not necessarily lead to actual dispute in the WTO, but it is an opening door for reevaluation of the current status of trade between trading partners, and the U.S. has been following this routine in its practices of WTO dispute settlement participation. The next section of the chapter dwells on trade relations of countries of interest. While the modeling and analysis of statistical results are targeting a large-n analysis, the bilateral trade relations that are central to this research are U.S.-China, U.S.-Japan, and U.S.-Korea; in other words, U.S.-Northeast Asian trade. These three respective economic relations are crucial in terms of investigating the perceptions of the policy of dispute initiation and the responses from the respective three states. U.S.-Japan Trade Imbalances and GATT/WTO Disputes In 1965, Japan experienced an export surplus in bilateral trade with the United States for the first time, which was one of the major causes of Japan s overall trade surplus. The large overall trade surplus 1971 and 1972 intensified criticism of Japan in the United States. This coincided with a huge bilateral export surplus first with the United States, and then with European countries a year later. Japan s trade has expanded in all directions, but trade with the U.S. remains by far its most important market and its chief supplier of imports. A closer focus on the structural differences of the two economies during the period of trade imbalance accumulation leads us to the answer that trade conflicts were unavoidable. The structure of trade is very 15

16 different on the two sides, even in the present day. 20 At the height of trade conflicts in the 1970s, more than half of the U.S.-Japan trade was a vertical exchange of American primary products with Japanese manufactured goods, in which, it is sometimes said, the U.S. is playing the role of the less developed country. The rest of trade was made up of a horizontal exchange of various kinds of manufactured goods. The component in bilateral trade is unstable, precarious and depends upon trade policy on both sides. 21 Japan received several claims under the GATT system, which was a tedious mechanism for a trade dispute settling procedure. Because the procedures under GATT did not have a thorough and strict mechanism for resolving trade disputes, Japan suffered during the GATT more from unilateral and critical attacks on its trade behavior than it does under the WTO system. Beginning with textiles in the 1950s, a number of Japanese exports to the United States were subject to opposition from United States industry. Complaints from the U.S. generally alleged unfair trading practices, such as dumping (selling at a lower cost than at home, or selling below the cost of production) and patent infringement. The result of negotiations was often Japan's agreement to "voluntarily" restrain exports to the United States (VER: Voluntary Export Restriction). 22 Meanwhile, Japan s meticulous participation in WTO dispute settlement reflects its resolute position to exercise both its rights and responsibilities as a member. To date, Japan has filed 14 cases as a complainant, was involved in 15 cases as a respondent, and participated as third party to 106 cases in which panels had been set up for a dispute. U.S.-Korea Trade Imbalances and GATT/WTO Disputes 20 Japan was the United States' 4th largest goods export market in 2010, accounting for 4.7% of overall U.S. exports in The top export categories (2-digit Harmonized System Codes) in 2010 were optic and medical Instruments ($7.2 billion), machinery ($5.2 billion), aircraft ($5.1 billion), electrical machinery ($4.3 billion), and cereals (corn and wheat) ($4.2 billion). Japan is also the United States' 4th largest supplier of goods imports (2010 present), accounting for 6.3 percent of overall U.S. imports in The five largest import categories in 2010 were: Vehicles ($41.5 billion), Machinery ($24.8 billion), Electrical Machinery ($18.3 billion), Optic and Medical Instruments ($6.1 billion), and Organic Chemicals ($3.0 billion). Despite services trade surplus of $20.1 billion with Japan in 2009, the U.S. goods trade deficit with Japan was $59.8 billion in 2010, a 33.9% increase ($15.1 billion) over The U.S. goods trade deficit with Japan accounted for 9.4% of the overall U.S. goods trade deficit in (Kojima 2011) 22 In addition, the Structural Impediments Initiative, a series of talks designed to deal with domestic structural problems limiting trade on both sides, was launched in Agreements were reached in April and July 1990 that promised major changes in such sensitive areas as Japanese retailing practices, Japan s laws regarding large retail stores, the behavior of corporate groups known as keiretsu, enforcement of antitrust laws, spending on infrastructure. The United States pledged to deal more effectively with its budget deficit and to increase domestic savings. The Clinton administration decided to end the Structural Impediments Initiative in the summer of 1993 as a framework for dealing with United States-Japan bilateral relations. 16

17 The U.S.-Korea trade disputes adds importance to the regional spectrum of the story, as U.S.-Korea trade imbalances, political pressures by the U.S. on South Korean monetary policy, and the Korean won s fluctuation against the US dollar have remained compelling driving forces of South Korea s economic transformation throughout the past decade. Korea is also a very volatile economy that had proved vulnerable during the two previous financial crises of 1997 and Regardless, U.S.-Korea trade imbalances, political pressures, and the Korean won s fluctuation against the US dollar (the scarcity of academic work is owing to lesser policy importance and the smaller size of the Korean economy). Since the 1980s, South Korea had been subject to increasing protectionist pressures as well as demands that it open its market to high-end goods and services by the United States and other developed trading partners. At the same time, it has had to cope with increasing and intensifying competition for low-end products from cheaper-wage developing countries. The 1980s for South Korea was the transitional period from a newly industrialized economy to a developed one. Towards the end of the Cold War, Washington emerged as the principal agent of globalization and South Korea was viewed less as a military ally and more as a competing economy and mercantilist state. South Korea s history and trends in the trade imbalance with the U.S. is slightly different from those of Japan s and China s in that it experienced the deterioration of trade balance after the golden period, scoring trade deficits with the U.S. in the mid-1990s. In contrast, Japan and China have always had trade surpluses with the U.S. without any shifts, and at a larger scale in terms of absolute amount. Principally, this is one of the reasons why the South Korean part of the U.S. trade deficit challenge story differs greatly from those of Japan s and China s, as in terms of economy of scale and trade imbalances accumulation it did not contest the U.S. economy as a risk or threat. While the Japanese economy at the height of trade imbalances accumulation with the U.S. and China today have shared the notoriety of having the potential to defeat the U.S. economy at a given time in the future, Korea was never really considered a risk-factor even throughout the periods of trade imbalances. 17

18 In the mid-1980s, a period of relief in the form of low oil prices and low international loan rates, and on top of that, the Plaza Accord in the autumn of 1985 which brought about the appreciation of the Japanese yen against the South Korean won, greatly improved South Korea s terms of trade as more and more of its exports began competing with Japan s. 23 Nevertheless, the positive trade balance of turned negative in The trade deficit reached $23.7 billion in 1996, with the current account balance /GDP deteriorating from 2.3 percent surplus in 1989 to 4.9 percent deficit in Consequently, the U.S. did not suffer from trade deficits with South Korea from These deficits from the Korean side occurred within the context of the sustained appreciation of the won against the dollar, which was a result of policy pressure from the United States in an effort to increase its exports to South Korea. 24 A large part of the trade balance shift was due to increasing protectionism in the U.S. against Korean products and pressures to eliminate its barriers against U.S. goods and services. South Korea s active participation and behavior in the WTO are very similar to those of Japan s, with numerous cases involving the country - 15 cases filed as complainant, 14 as respondent, and 58 cases as third party. Over time, both countries have learned to exercise their rights in defense of their trade interests against complaints from trading partners, and have gained the legal knowledge and skills to resolve trade conflicts in the WTO. Overall, the WTO dispute settlement mechanism has enabled the U.S. and its trading partners to rigorously make use of the litigious system, but also under the careful consideration and peruse of the probability of winning the case if filed for dispute. U.S.-China Trade Imbalances and WTO Disputes (2001~2011) 23 Though the appreciation of the Japanese yen may have brought about some deterioration for Japanese exports in large scales, bureaucrats of the time of the Plaza Accord negotiation provide an unexpected recount that such an adjustment was necessary for Japan, and that it was Japan which also desired such an outcome in order to engage as an active and responsible participant in the global economy. (Interview with Tanaka Hitoshi, April 27, 2011) Given the current Japanese perceptions on the Chinese economy, the Japanese advice for the same policy choice could be made from the Japanese side regarding China s currency appreciation, but Chinese officials would challenge such a position in fear of following the paths of Japan s economic downturn. 24 The U.S. Treasury Department was empowered by Section 3004 of the Omnibus Trade and Competitiveness Act of 1988 to apply sanctions against countries manipulating their currency for trade advantages, and repeatedly put pressure on South Korea to appreciate the won. 18

19 For the past decade, China has sought to internationalize its currency, the yuan or renminbi (RMB) in an effort to broaden the usage of its local currency in the global economy for international transactions. In tandem with such efforts, it has been accused of exchange rate manipulation that has caused large U.S. trade deficits, which have reduced U.S. welfare by increasing unemployment and reducing wages. 25 Needless to say, China has reached the height of its economic development, with massive inflows of foreign capital for investment with record-high economic growth rates averaging 7-10% since its accession to the WTO in Much of the WTO proceedings for dispute settlement in which the U.S. is a defendant be it on poultry, intellectual property, or tires - involves China or the EU at the present stage. The United States is concerned that China s investigating authorities, in levying these duties, appear to have failed to adhere to their WTO obligations in numerous respects. In particular, China seems to have failed to observe numerous transparency and due process requirements, failed to properly explain the basis for its findings and conclusions, incorrectly calculated dumping margins, incorrectly calculated subsidy rates and made unsupported findings of injury to China s domestic industry. In reference to what has come about in the U.S.-Japan economic conflict and trade imbalances, it is highly likely that the current trends of U.S.-China trade imbalances will continue for the time being. While the U.S.-China trade deficit is at the forefront of the domestic political agenda in Washington as well as the bilateral relationship between China and the US, a substantial near or even medium-term shift is unlikely. Just as it was in the U.S.-Japan case, this is mainly due to structural abnormalities on both sides as one party (China) under-consumes, over-saves and over-produces while the other (America) over-consumes, under-saves, and has feeble export levels. 26 The latter is further intensified by America s export controls on many high-tech (and potentially dual-use) items to China. Moreover, America s burgeoning household, corporate and government debt levels and unsustainable consumption patterns 25 (Woo 2008) 26 Reflecting on the previous U.S.-Japan trade conflicts, a WTO Appellate Body member recounts that there are given similarities in U.S.-Japan economic conflict and U.S.-China conflict regarding trade imbalances and disputes. (Interview with Shotaro Oshima, July 29, 2011). In analyzing each of the dispute settlement cases, he notes that it is very important to differentiate and see the roots of disputes initiation in an articulate manner some may be purely political (as in the Fuji-Kodak Case in which the U.S. lost), but some may be with a high expectation of winning in the WTO, in pursuit of protection of certain domestic industries. 19

20 have been in the making since the 1970s and are deeply ingrained trends. The nature of America s political system makes it particularly difficult and quite risky for popularly elected politicians (especially at the local and state level) to take actions to depress consumption levels and scale back on government spending. This is particularly true regarding social security programmes. 27 Such trends compel the U.S. domestic politics to drive for an answer outside the national spectrum. Addressing the issues of deficit at an international authority such as the WTO allows policy makers to have a resort in which answers could be found to resolve the trade imbalance outside the domestic arena. It is also an opportunity to display U.S. economic interests to the rest of the WTO membership with regard to trade practices that the U.S. is sensitively responding to. As long as a trading partner is a party to the WTO, abiding by the rules and regulations under the WTO would be crucial if it did not seek for a trade dispute within the international organization. 28 On the other side, China faces institutional hurdles in that it is governed by the unelected Chinese Communist Party (CCP), which hinges a substantial portion of its legitimacy on continued high levels of economic growth and job creation. Being equipped with high-tech product manufacturing capability would be a first and foremost task for China, one step forward from the current stage. As upgrading any labor force is a multi-generational process, which requires high levels of sustained investment in education, the export of low- and mid-technology goods along with the final assembly of high-tech goods is a sector of which the CCP is anxious about de- prioritizing. This is due to fears of unemployment, 27 (Clarke 2011) 28 United States Trade Representative Ron Kirk announced today that the U.S. has filed a case against China before the World Trade Organization (WTO) to protect jobs in America s poultry processing sector, which directly employs 300,000 workers, as jobs in this sector are threatened by China s imposition of duties on imports of American chicken products. This is the latest in a series of enforcement steps the United States has taken to hold China accountable for its WTO commitments, including actions at the WTO against China s treatment of steel products, industrial raw materials, electronic payment services and wind power equipment as well as actions in the United States to address rapidly increasing Chinese tire imports. In each of these matters, the USTR stresses that the key principle at stake is that China must play by the rules to which it agreed when it joined the WTO, including commitments to maintain open markets on a non-discriminatory basis, and to follow procedures in a transparent way. On September 27, 2009, China s Ministry of Commerce (MOFCOM) initiated antidumping and countervailing investigations of imports of chicken broiler products from the United States, and then imposed antidumping and countervailing duties on September 26, 2010 and August 30, 2010, respectively. The duties were based on China s findings that American broiler products had been sold at less than fair value (i.e., dumped ) into the Chinese market as well as subsidized. WTO rules permit Member countries to impose duties on imports of merchandise that are found to be dumped or subsidized, if those imports cause injury to the domestic industry. However, WTO rules also require Member countries to follow specific procedures and legal standards when conducting their investigations and making determinations. (USTR Press Release, September 20, 2011) 20

21 social and labor unrest, a reversal of the trend of moderately increasing domestic consumption, which has gathered pace in recent years, and a spike in bad loans and the associated risk of bank insolvency. These concerns are further aggravated by the lack of a social safety net in the country. III. Analytical Framework and Hypothesis Theoretical Analysis First, in conducting theoretical analysis for this research, the best unit of analysis for the dataset would be to look at observable instances of trade "disputes" - cases of overt conflicts of interest on trade policy. The dependent variable then would be, which of these 'disputes' does the US decide to take to the WTO as legal complaints, and which does it not? Previous work on the WTO dispute settlement cases have used this approach regarding antidumping, since antidumping offers a clean test bed for identifying cases where WTO legal complaints could be used (not all of which result in such complaints). 29 Second, defining the exact theoretical approach is needed. The main approach here is that the U.S. executive branch (USTR) responds to Congressional pressure with WTO ligitation. 30 In addition, what this research seeks to learn, is what the alternatives are to a WTO complaint. The main claim here is not that Congressional pressure is only impetus for U.S. action, but is rather that WTO legal action in particular is a way for the President to show Congress he is doing something without the danger inherent in a unilateral action (e.g., foreign retaliation, etc.) 31 The Structure of the Dataset The current dataset was constructed by merging data from the United States Department of Commerce Bureau of Economic Analysis, the United States Bureau of Labor, Lexis Nexis Congressional Universe and the World Bank World Development Indicators. Pooled cross-sectional analysis builds upon the 29 (Kostecki 2009; Reinhardt 2008) 30 However, in the long run, because both the executive branch and the legislative branch are responding to private interest group pressure, refining the analysis to capture the power of pressure in another variable other than trade imbalances would be necessary for future research. 31 This is a key insight about litigation (Hudec, 2002). For research purposes, the hard part would be in identifying what the universe of possible alternative actions might be - e.g., unfair trade actions (AD/CVD), safeguards, PTA talks focusing on that sector, etc. 21

22 traditional cross-sectional study by examining multiple cross-sections or by studying a single crosssection at multiple time points. The pooled technique enables researchers to make better comparisons, study a large number of research subjects and better measure changes over time. By pooled crosssectional data, it means that the dataset has multiple countries comprising of events occurring in a span of time. The available data timeline ranges from 1960 to 2010; however, in order to observe the cases of WTO dispute settlement initiation, the point of observation would be starting from 1995 to (This issue could be resolved by obtaining GATT disputes data from 1947 at a later stage of revision of this chapter.) Because the aggregate dataset is pooled cross-sectional data comprising multiple countries and events in sequences of years, an event count model is chosen for application to research. The Proposed Model: Negative Binomial Regression Model (NBRM) Estimation and Expected Results The expected results of the NBRM analysis is as follows: the NBRM model presented will demonstrate that changes in trade imbalance levels provide political pressures and domestic demands on policy makers to resolve the trade imbalance by resorting to a trade dispute in an international institution. Hypothesis H 1 : The United States is more likely to initiate a WTO dispute case against countries that it runs trade deficits with. Equation for the Negative Binomial Regression Model µ it = USWTO complaint it = exp (β 0 + β 1 Trade Imbalances it /USGDP it + β 2 ForeignExchangeReservesAccumulation it + β 3 USCongressional Hearing t + β 4 USProtectionistLegislation t + β 5 USHouseSenateReports t + β 6 USUnemploymentRate t +Year Effects + ε it ) where 22

23 USWTO complaint it = expected value of the likelihood of the U.S. filing a request for the establishment of a WTO panel to express its economic interest (dispute initiation) and Trade Imbalances/USGDP it = Trade Imbalances (Exports-Imports) of each U.S. trading partner who is a party to the WTO divided U.S. GDP (Current US Dollars) ForeignExchangeReservesAccumulation it = Foreign Exchange Reserves Accumulation of each U.S. trading partner who is a party to the WTO USCongressional Hearing t = U.S. Congressional Hearing regarding trade deficit (imbalances) USProtectionistLegislation t = U.S. Legislative History regarding trade deficit for each year USHouseSenateReports t = U.S. House & Senate Reports on trade deficit for each year USUnemploymentRate t = Unemployment Rate of the United States for each year. Data The World Bank WTO Dispute Settlement Data 32 The most comprehensive dataset on WTO Dispute Settlement is the World Bank WTO Dispute Settlement Data by Henrik Horn and Petros C. Mavroidis, which is a dataset covering various aspects of the World Trade Organization (WTO) Dispute Settlement (DS) system that has been compiled in project financed by the World Bank. However, due to the constraints of the dataset which is that it only covers a total of 351 WTO disputes initiated through the official filing of a Request for Consultations at the WTO, from 1 January 1995 until October 25, 2006, for events occurring until December 31, 2006, updated data dating to September 2011 has been manually added by referencing dispute records on the WTO website. 33 Bureau of Economic Analysis (BEA) Data, the U.S. Department of Commerce The World Bank WTO Dispute Settlement Database ( 33 For these disputes, the dataset covers exhaustively all stages of dispute settlement proceedings, from the moment when consultations are being requested to the eventual implementation of the rulings. The dataset contains several hundred variables, providing information on various aspects of the legal procedure. The total number of entries is approximately 28,000. The dataset has been compiled on the basis of approximately 3,000 official WTO documents available at the WTO web site ( 34 The U.S. Department of Commerce Bureau of Economic Analysis International Transactions Database ( 23

24 The BEA's international transactions (balance of payments) accounts include all transactions between U.S. and foreign residents. The current account includes exports and imports of goods, services, income, and net unilateral current transfers. The capital account includes mainly capital transfers, such as U.S. government debt forgiveness. The financial account includes transactions in financial assets, such as U.S. purchases and sales of foreign securities, foreign purchases and sales of U.S. securities, U.S. direct investment abroad, foreign direct investment in the United States, U.S. bank lending to foreigners, and U.S. bank borrowing from foreigners. In this research, the calculation for the independent variable, trade imbalances, is derived from subtracting imports of goods and services and income payments from exports of goods and services and income receipts, of which both figures are included in the current account. Simply put, U.S. Trade Imbalances = ( X M ) This U.S. trade imbalances data from U.S. Bureau of Economic Analysis (BEA) is for time periods ranging from 1989 to However, in consideration of the duration of the WTO dispute settlement data available, the model will only deploy trade imbalances data from 1995 to U.S. Congressional Hearings and Legislative History Data, Lexis Nexis Congressional Universe 35 The Lexis Nexis Congressional provides a vast dataset consisting of U.S. Committee Prints and miscellaneous publications (1830-present), House & Senate Reports (1817-present), CRS Reports (1916- present), Legislative histories (1969-present), Congressional Hearings (1824-present), and House & Senate Documents (1817-present). Amongst the congressional data available, U.S. congressional hearings, U.S. House and Senate reports and U.S legislative history data regarding trade disputes is used to reflect the mobilization of U.S. policy agenda setting towards a WTO dispute. 35 Lexis Nexis Congressional Universe ( 24

25 IV. Conclusions and Policy Implications The negative binomial regression results show the impact of each variable in US WTO trade dispute initiation. Models 1 through 7 reveal the significance of the independent variable TradeImbalances it /USGDP it on the dependent variable USWTO complaint it. The negative signs of the coefficients reflect the trade imbalances data in negative figures. The results tell us that the bigger the trade imbalances in minus, the more likely that the U.S. would initiate a WTO dispute. These specifications fail to provide us with good results of statistical significance of the competing variables in U.S. politics, albeit the actual relevance in U.S. policy making. It may well be that as long as the variable TradeImbalances it /USGDP it is included in the specification, it is difficult for other variables to carry a great amount of weight in significance. It may also be that these political variables could be collinear to each other, and due to this collinearity, some year dummy variables are omitted in the models. Overall, the NBRM models for the testing of two hypotheses on U.S. behavior in the WTO have its strengths and weaknesses. The NBRM presented here has the explanatory power insofar as trade imbalances are concerned, but fail to address the importance of political variables in the U.S. policymaking process. The analysis presented in the NBRM results demonstrates that changes in trade imbalance levels provide political pressures and domestic demands on policy makers to resolve the trade imbalance by resorting to a trade dispute in an international institution. It also finds the impact of another variable of importance other than trade imbalances, which are foreign exchange reserves of the trading partners on in Model 2. The policy implication for the future is that the growth of trade imbalances will continue to culminate to trade conflicts and frictions as Northeast Asian economies expand. In order for these economies to avoid confrontations in the WTO, seeking for policy alternatives other than accumulating foreign exchange reserves or leaving the trade imbalances issue unresolved would be necessary. Rebalancing the real effective exchange rate or increasing internal demands and boosting domestic economy appears to be a possible and necessary option for these economies, but this is a highly unlikely option that China will implement in the immediate future. 25

26 Results Table 5. NBRM Regression Results 26

27 Complete List of WTO Dispute Settlement Cases (U.S. as Complainant) DS3 Korea, Republic of Measures Concerning the Testing and Inspection of Agricultural Products(Complainant: United States) 4 April 1995 DS5 Korea, Republic of Measures Concerning the Shelf-Life of Products (Complainant: United States) 3 May 1995 DS7 European Communities Trade Description of Scallops (Complainant: Canada) 19 May 1995 DS11 Japan Taxes on Alcoholic Beverages (Complainant: United States) 7 July 1995 DS12 European Communities Trade Description of Scallops (Complainant: Peru) 18 July 1995 DS13 European Communities Duties on Imports of Grains (Complainant: United States) 19 July 1995 DS14 European Communities Trade Description of Scallops (Complainant: Chile) 24 July 1995 DS16 European Communities Regime for the Importation, Sale and Distribution of Bananas(Complainants: Guatemala; Honduras; Mexico; United States) 28 September 1995 DS18 Australia Measures Affecting Importation of Salmon (Complainant: Canada) 5 October 1995 DS21 Australia Measures Affecting the Importation of Salmonids (Complainant: United States) 20 November 1995 DS22 Brazil Measures Affecting Desiccated Coconut (Complainant: Philippines) 30 November 1995 DS26 European Communities Measures Concerning Meat and Meat Products (Hormones) (Complainant: United States) 26 January 1996 DS27 European Communities Regime for the Importation, Sale and Distribution of Bananas(Complainants: Ecuador; Guatemala; Honduras; Mexico; United States) 5 February 1996 DS28 Japan Measures Concerning Sound Recordings (Complainant: United States) 9 February 1996 DS31 Canada Certain Measures Concerning Periodicals (Complainant: United States) 11 March 1996 DS34 Turkey Restrictions on Imports of Textile and Clothing Products (Complainant: India) 21 March 1996 DS35 Hungary Export Subsidies in respect of Agricultural Products (Complainants: Argentina; Australia; Canada; New Zealand; Thailand; United States) 27 March 1996 DS36 Pakistan Patent Protection for Pharmaceutical and Agricultural Chemical Products (Complainant: United States) 30 April 1996 DS37 Portugal Patent Protection under the Industrial Property Act (Complainant: United States) 30 April 1996 DS41 Korea, Republic of Measures concerning Inspection of Agricultural Products (Complainant: United States) 24 May 1996 DS43 Turkey Taxation of Foreign Film Revenues (Complainant: United States) 12 June 1996 DS44 Japan Measures Affecting Consumer Photographic Film and Paper (Complainant: United States) 13 June 1996 DS45 Japan Measures Affecting Distribution Services (Complainant: United States) 13 June 1996 DS46 Brazil Export Financing Programme for Aircraft (Complainant: Canada) 19 June 1996 DS48 European Communities Measures Concerning Meat and Meat Products (Hormones) (Complainant: Canada) 28 July 1996 DS50 India Patent Protection for Pharmaceutical and Agricultural Chemical Products (Complainant: United States) 2 July 1996 DS52 Brazil Certain Measures Affecting Trade and Investment in the Automotive Sector (Complainant: United States) 9 August 1996 DS54 Indonesia Certain Measures Affecting the Automobile Industry (Complainant: European Communities) 3 October 1996 DS55 Indonesia Certain Measures Affecting the Automobile Industry (Complainant: Japan) 4 October 1996 DS56 Argentina Measures Affecting Imports of Footwear, Textiles, Apparel and other Items(Complainant: United States) 4 October 1996 DS57 Australia Textile, Clothing and Footwear Import Credit Scheme (Complainant: United States) 7 October 1996 DS59 Indonesia Certain Measures Affecting the Automobile Industry (Complainant: United States) 8 October 1996 DS60 Guatemala Anti-Dumping Investigation Regarding Portland Cement from Mexico (Complainant: Mexico) 17 October 1996 DS62 European Communities Customs Classification of Certain Computer Equipment (Complainant: United States) 8 November 1996 DS64 Indonesia Certain Measures Affecting the Automobile Industry (Complainant: Japan) 29 November 1996 DS65 Brazil Certain Measures Affecting Trade and Investment in the Automotive Sector (Complainant: United States) 10 January

28 DS69 European Communities Measures Affecting Importation of Certain Poultry Products (Complainant: Brazil) 24 February 1997 DS70 Canada Measures Affecting the Export of Civilian Aircraft (Complainant: Brazil) 10 March 1997 DS72 European Communities Measures Affecting Butter Products (Complainant: New Zealand) 24 March 1997 DS74 Philippines Measures Affecting Pork and Poultry (Complainant: United States) 1 April 1997 DS76 Japan Measures Affecting Agricultural Products (Complainant: United States) 7 April 1997 DS77 Argentina Measures Affecting Textiles, Clothing and Footwear (Complainant: European Communities) 21 April 1997 DS79 India Patent Protection for Pharmaceutical and Agricultural Chemical Products (Complainant: European Communities) 28 April 1997 DS80 Belgium Measures Affecting Commercial Telephone Directory Services (Complainant: United States) 2 May 1997 DS82 Ireland Measures Affecting the Grant of Copyright and Neighbouring Rights (Complainant: United States) 14 May 1997 DS83 Denmark Measures Affecting the Enforcement of Intellectual Property Rights (Complainant: United States) 14 May 1997 DS84 Korea, Republic of Taxes on Alcoholic Beverages (Complainant: United States) 23 May 1997 DS86 Sweden Measures Affecting the Enforcement of Intellectual Property Rights (Complainant: United States) 28 May 1997 DS87 Chile Taxes on Alcoholic Beverages (Complainant: European Communities) 4 June 1997 DS90 India Quantitative Restrictions on Imports of Agricultural, Textile and Industrial Products(Complainant: United States) 15 July 1997 DS98 Korea, Republic of Definitive Safeguard Measure on Imports of Certain Dairy Products(Complainant: European Communities) 12 August 1997 DS101 Mexico Anti-Dumping Investigation of High-Fructose Corn Syrup (HFCS) from the United States(Complainant: United States) 4 September 1997 DS102 Philippines Measures Affecting Pork and Poultry (Complainant: United States) 7 October 1997 DS103 Canada Measures Affecting the Importation of Milk and the Exportation of Dairy Products(Complainant: United States) 8 October 1997 DS104 European Communities Measures Affecting the Exportation of Processed Cheese (Complainant: United States) 8 October 1997 DS106 Australia Subsidies Provided to Producers and Exporters of Automotive Leather (Complainant: United States) 10 November 1997 DS109 Chile Taxes on Alcoholic Beverages (Complainant: United States) 11 December 1997 DS110 Chile Taxes on Alcoholic Beverages (Complainant: European Communities) 15 December 1997 DS113 Canada Measures Affecting Dairy Exports (Complainant: New Zealand) 29 December 1997 DS114 Canada Patent Protection of Pharmaceutical Products (Complainant: European Communities) 19 December 1997 DS115 European Communities Measures Affecting the Grant of Copyright and Neighbouring Rights(Complainant: United States) 6 January 1998 DS121 Argentina Safeguard Measures on Imports of Footwear (Complainant: European Communities) 6 April 1998 DS122 Thailand Anti-Dumping Duties on Angles, Shapes and Sections of Iron or Non-Alloy Steel and H Beams from Poland (Complainant: Poland) 6 April 1998 DS124 European Communities Enforcement of Intellectual Property Rights for Motion Pictures and Television Programs (Complainant: United States) 30 April 1998 DS125 Greece Enforcement of Intellectual Property Rights for Motion Pictures and Television Programs(Complainant: United States) 4 May 1998 DS126 Australia Subsidies Provided to Producers and Exporters of Automotive Leather (Complainant: United States) 4 May 1998 DS127 Belgium Certain Income Tax Measures Constituting Subsidies (Complainant: United States) 5 May 1998 DS128 Netherlands Certain Income Tax Measures Constituting Subsidies (Complainant: United States) 5 May 1998 DS129 Greece Certain Income Tax Measures Constituting Subsidies (Complainant: United States) 5 May 1998 DS130 Ireland Certain Income Tax Measures Constituting Subsidies (Complainant: United States) 5 May 1998 DS131 France Certain Income Tax Measures Constituting Subsidies (Complainant: United States) 5 May 1998 DS132 Mexico Anti-Dumping Investigation of High-Fructose Corn Syrup (HFCS) from the United States(Complainant: United States) 8 May 1998 DS135 European Communities Measures Affecting Asbestos and Products Containing Asbestos(Complainant: Canada) 28 May 1998 DS139 Canada Certain Measures Affecting the Automotive Industry (Complainant: Japan) 3 July

29 DS141 European Communities Anti-Dumping Duties on Imports of Cotton-type Bed Linen from India(Complainant: India) 3 August 1998 DS142 Canada Certain Measures Affecting the Automotive Industry (Complainant: European Communities) 17 August 1998 DS155 Argentina Measures Affecting the Export of Bovine Hides and the Import of Finished Leather(Complainant: European Communities) 23 December 1998 DS156 Guatemala Definitive Anti-Dumping Measure on Grey Portland Cement from Mexico (Complainant: Mexico) 5 January 1999 DS158 European Communities Regime for the Importation, Sale and Distribution of Bananas(Complainants: Guatemala; Honduras; Mexico; Panama; United States) 20 January 1999 DS161 Korea, Republic of Measures Affecting Imports of Fresh, Chilled and Frozen Beef (Complainant: United States) 1 February 1999 DS163 Korea, Republic of Measures Affecting Government Procurement (Complainant: United States) 16 February 1999 DS164 Argentina Measures Affecting Imports of Footwear (Complainant: United States) 1 March 1999 DS169 Korea, Republic of Measures Affecting Imports of Fresh, Chilled and Frozen Beef (Complainant: Australia) 13 April 1999 DS170 Canada Term of Patent Protection (Complainant: United States) 6 May 1999 DS171 Argentina Patent Protection for Pharmaceuticals and Test Data Protection for Agricultural Chemicals (Complainant: United States) 6 May 1999 DS172 European Communities Measures Relating to the Development of a Flight Management System(Complainant: United States) 21 May 1999 DS173 France Measures Relating to the Development of a Flight Management System (Complainant: United States) 21 May 1999 DS174 European Communities Protection of Trademarks and Geographical Indications for Agricultural Products and Foodstuffs (Complainant: United States) 1 June 1999 DS175 India Measures Affecting Trade and Investment in the Motor Vehicle Sector (Complainant: United States) 2 June 1999 DS188 Nicaragua Measures Affecting Imports from Honduras and Colombia (Complainant: Colombia) 17 January 2000 DS189 Argentina Definitive Anti-Dumping Measures on Carton-Board Imports from Germany and Definitive Anti-Dumping Measures on Imports of Ceramic Tiles from 26 January 2000 Italy (Complainant: European Communities) DS190 Argentina Transitional Safeguard Measures on Certain Imports of Woven Fabric Products of Cotton and Cotton Mixtures Originating in Brazil (Complainant: 11 February 2000 Brazil) DS195 Philippines Measures Affecting Trade and Investment in the Motor Vehicle Sector (Complainant: United States) 23 May 2000 DS196 Argentina Certain Measures on the Protection of Patents and Test Data (Complainant: United States) 30 May 2000 DS197 Brazil Measures on Minimum Import Prices (Complainant: United States) 30 May 2000 DS198 Romania Measures on Minimum Import Prices (Complainant: United States) 30 May 2000 DS199 Brazil Measures Affecting Patent Protection (Complainant: United States) 30 May 2000 DS203 Mexico Measures Affecting Trade in Live Swine (Complainant: United States) 10 July 2000 DS204 Mexico Measures Affecting Telecommunications Services (Complainant: United States) 17 August 2000 DS207 Chile Price Band System and Safeguard Measures Relating to Certain Agricultural Products(Complainant: Argentina) 5 October 2000 DS210 Belgium Administration of Measures Establishing Customs Duties for Rice (Complainant: United States) 12 October 2000 DS211 Egypt Definitive Anti-Dumping Measures on Steel Rebar from Turkey (Complainant: Turkey) 6 November 2000 DS219 European Communities Anti-Dumping Duties on Malleable Cast Iron Tube or Pipe Fittings from Brazil (Complainant: Brazil) 21 December 2000 DS222 Canada Export Credits and Loan Guarantees for Regional Aircraft (Complainant: Brazil) 22 January 2001 DS223 European Communities Tariff-Rate Quota on Corn Gluten Feed from the United States(Complainant: United States) 25 January 2001 DS231 European Communities Trade Description of Sardines (Complainant: Peru) 20 March 2001 DS237 Turkey Certain Import Procedures for Fresh Fruit (Complainant: Ecuador) 31 August 2001 DS238 Argentina Definitive Safeguard Measure on Imports of Preserved Peaches (Complainant: Chile) 14 September 2001 DS241 Argentina Definitive Anti-Dumping Duties on Poultry from Brazil (Complainant: Brazil) 7 November 2001 DS245 Japan Measures Affecting the Importation of Apples (Complainant: United States) 1 March 2002 DS246 European Communities Conditions for the Granting of Tariff Preferences to Developing Countries(Complainant: India) 5 March

30 DS260 European Communities Provisional Safeguard Measures on Imports of Certain Steel Products(Complainant: United States) 30 May 2002 DS261 Uruguay Tax Treatment on Certain Products (Complainant: Chile) 18 June 2002 DS265 European Communities Export Subsidies on Sugar (Complainant: Australia) 27 September 2002 DS266 European Communities Export Subsidies on Sugar (Complainant: Brazil) 27 September 2002 DS269 European Communities Customs Classification of Frozen Boneless Chicken Cuts (Complainant: Brazil) 11 October 2002 DS270 Australia Certain Measures Affecting the Importation of Fresh Fruit and Vegetables (Complainant: Philippines) 18 October 2002 DS273 Korea, Republic of Measures Affecting Trade in Commercial Vessels (Complainant: European Communities) 21 October 2002 DS275 Venezuela, Bolivarian Republic of Import Licensing Measures on Certain Agricultural Products(Complainant: United States) 7 November 2002 DS276 Canada Measures Relating to Exports of Wheat and Treatment of Imported Grain (Complainant: United States) 17 December 2002 DS283 European Communities Export Subsidies on Sugar (Complainant: Thailand) 14 March 2003 DS286 European Communities Customs Classification of Frozen Boneless Chicken Cuts (Complainant: Thailand) 25 March 2003 DS287 Australia Quarantine Regime for Imports (Complainant: European Communities) 3 April 2003 DS290 European Communities Protection of Trademarks and Geographical Indications for Agricultural Products and Foodstuffs (Complainant: Australia) 17 April 2003 DS291 European Communities Measures Affecting the Approval and Marketing of Biotech Products(Complainant: United States) 13 May 2003 DS292 European Communities Measures Affecting the Approval and Marketing of Biotech Products(Complainant: Canada) 13 May 2003 DS293 European Communities Measures Affecting the Approval and Marketing of Biotech Products(Complainant: Argentina) 14 May 2003 DS295 Mexico Definitive Anti-Dumping Measures on Beef and Rice (Complainant: United States) 16 June 2003 DS299 European Communities Countervailing Measures on Dynamic Random Access Memory Chips from Korea (Complainant: Korea, Republic of) 25 July 2003 DS301 European Communities Measures Affecting Trade in Commercial Vessels (Complainant: Korea, Republic of) 3 September 2003 DS302 Dominican Republic Measures Affecting the Importation and Internal Sale of Cigarettes(Complainant: Honduras) 8 October 2003 DS305 Egypt Measures Affecting Imports of Textile and Apparel Products (Complainant: United States) 23 December 2003 DS308 Mexico Tax Measures on Soft Drinks and Other Beverages (Complainant: United States) 16 March 2004 DS309 China Value-Added Tax on Integrated Circuits (Complainant: United States) 18 March 2004 DS312 Korea, Republic of Anti-Dumping Duties on Imports of Certain Paper from Indonesia (Complainant: Indonesia) 4 June 2004 DS315 European Communities Selected Customs Matters (Complainant: United States) 21 September 2004 DS316 European Communities and Certain Member States Measures Affecting Trade in Large Civil Aircraft(Complainant: United States) 6 October 2004 DS321 Canada Continued Suspension of Obligations in the EC Hormones Dispute (Complainant: European Communities) 8 November 2004 DS323 Japan Import Quotas on Dried Laver and Seasoned Laver (Complainant: Korea, Republic of) 1 December 2004 DS331 Mexico Anti-Dumping Duties on Steel Pipes and Tubes from Guatemala (Complainant: Guatemala) 17 June 2005 DS332 Brazil Measures Affecting Imports of Retreaded Tyres (Complainant: European Communities) 20 June 2005 DS334 Turkey Measures Affecting the Importation of Rice (Complainant: United States) 2 November 2005 DS336 Japan Countervailing Duties on Dynamic Random Access Memories from Korea (Complainant: Korea, Republic of) 14 March 2006 DS337 European Communities Anti-Dumping Measure on Farmed Salmon from Norway (Complainant: Norway) 17 March 2006 DS338 Canada Provisional Anti-Dumping and Countervailing Duties on Grain Corn from the United States(Complainant: United States) 17 March 2006 DS340 China Measures Affecting Imports of Automobile Parts (Complainant: United States) 30 March 2006 DS341 Mexico Definitive Countervailing Measures on Olive Oil from the European Communities(Complainant: European Communities) 31 March 2006 DS347 European Communities and Certain Member States Measures Affecting Trade in Large Civil Aircraft (Second Complaint) (Complainant: United States) 31 January 2006 DS351 Chile Provisional Safeguard Measure on Certain Milk Products (Complainant: Argentina) 25 October

31 DS352 India Measures Affecting the Importation and Sale of Wines and Spirits from the European Communities (Complainant: European Communities) 20 November 2006 DS355 Brazil Anti-dumping Measures on Imports of Certain Resins from Argentina (Complainant: Argentina) 26 December 2006 DS356 Chile Definitive Safeguard Measures on Certain Milk Products (Complainant: Argentina) 28 December 2006 DS358 China Certain Measures Granting Refunds, Reductions or Exemptions from Taxes and Other Payments (Complainant: United States) 2 February 2007 DS360 India Additional and Extra-Additional Duties on Imports from the United States (Complainant: United States) 6 March 2007 DS362 China Measures Affecting the Protection and Enforcement of Intellectual Property Rights(Complainant: United States) 10 April 2007 DS363 China Measures Affecting Trading Rights and Distribution Services for Certain Publications and Audiovisual Entertainment Products (Complainant: United States) 10 April 2007 DS366 Colombia Indicative Prices and Restrictions on Ports of Entry (Complainant: Panama) 12 July 2007 DS367 Australia Measures Affecting the Importation of Apples from New Zealand (Complainant: New Zealand) 31 August 2007 DS371 Thailand Customs and Fiscal Measures on Cigarettes from the Philippines (Complainant: Philippines) 7 February 2008 DS373 China Measures Affecting Financial Information Services and Foreign Financial Information Suppliers (Complainant: United States) 3 March 2008 DS375 European Communities Tariff Treatment of Certain Information Technology Products(Complainant: United States) 28 May 2008 DS376 European Communities Tariff Treatment of Certain Information Technology Products(Complainant: Japan) 28 May 2008 DS377 European Communities Tariff Treatment of Certain Information Technology Products(Complainant: Chinese Taipei) 12 June 2008 DS387 China Grants, Loans and Other Incentives (Complainant: United States) 19 December 2008 DS389 European Communities Certain Measures Affecting Poultry Meat and Poultry Meat Products from the United States (Complainant: United States) 16 January 2009 DS391 Korea, Republic of Measures Affecting the Importation of Bovine Meat and Meat Products from Canada (Complainant: Canada) 9 April 2009 DS394 China Measures Related to the Exportation of Various Raw Materials (Complainant: United States) 23 June 2009 DS395 China Measures Related to the Exportation of Various Raw Materials (Complainant: European Communities) 23 June 2009 DS396 Philippines Taxes on Distilled Spirits (Complainant: European Communities) 29 July 2009 DS397 European Communities Definitive Anti-Dumping Measures on Certain Iron or Steel Fasteners from China (Complainant: China) 31 July 2009 DS398 China Measures Related to the Exportation of Various Raw Materials (Complainant: Mexico) 21 August 2009 DS403 Philippines Taxes on Distilled Spirits (Complainant: United States) 14 January 2010 DS405 European Union Anti-Dumping Measures on Certain Footwear from China (Complainant: China) 4 February 2010 DS413 China Certain Measures Affecting Electronic Payment Services (Complainant: United States) 15 September 2010 DS414 China Countervailing and Anti-Dumping Duties on Grain Oriented Flat-rolled Electrical Steel from the United States (Complainant: United States) 15 September 2010 DS415 Dominican Republic Safeguard Measures on Imports of Polypropylene Bags and Tubular Fabric(Complainant: Costa Rica) 15 October 2010 DS416 Dominican Republic Safeguard Measures on Imports of Polypropylene Bags and Tubular Fabric(Complainant: Guatemala) 15 October 2010 DS417 Dominican Republic Safeguard Measures on Imports of Polypropylene Bags and Tubular Fabric(Complainant: Honduras) 18 October 2010 DS418 Dominican Republic Safeguard Measures on Imports of Polypropylene Bags and Tubular Fabric(Complainant: El Salvador) 19 October 2010 DS419 China Measures concerning wind power equipment (Complainant: United States) 22 December 2010 DS427 China Anti-Dumping and Countervailing Duty Measures on Broiler Products from the United States(Complainant: United States) 20 September

32 Figure 1. Map of Disputes in the WTO (U.S. as complaint or respondent) Figure 2. Map of Disputes in the WTO (Japan as complaint or respondent) 6

33 Figure 3. Map of Disputes in the WTO (Korea as complaint or respondent) Figure 4. Map of Disputes in the WTO (China as complaint or respondent) Source: The World Trade Organization (Figures 1 through 4). Numbers in red arrows indicate cases filed by the country in the WTO as a complaint, while numbers in blue arrows indicate cases filed in by the country in the WTO as a respondent. 7

34 Figure 5. U.S-Japan Trade Imbalances (Year-to-date, July 2011) Figure 6. U.S.-Korea Trade Imbalances, Figure 7. U.S.-China Trade Imbalances, Source: U.S. Census Bureau Foreign Trade Statistics (Figures 5 through 7) NOTE: All figures are in millions of U.S. dollars on a nominal basis, not seasonally adjusted unless otherwise specified. Details may not equal totals due to rounding. 8