Trade Retaliation: The 'Carousel' Approach [Updated March 5, 2002]   [open pdf - 58KB]

"Section 407 of the Trade and Development Act of 2000 (P.L. 106-200) requires the U.S. Trade Representative (USTR) to periodically revise the list of products subject to retaliation when another country fails to implement a World Trade Organization (WTO) dispute decision. This periodic revision of the product list has become known as 'carousel retaliation.' The intent of switching products is to exert more pressure on a trading partner to comply with a WTO ruling. The impetus for more pressure came principally from U.S. banana and livestock exporters, who had become frustrated with the European Union (EU) and its repeated postponement of compliance with WTO dispute rulings. To date, the USTR has not revised a product list under Section 407, but credits the threat of action under carousel authority with helping to resolve the banana case, and says that carousel authority might be used as leverage in the future. An EU challenge of U.S. carousel retaliation still stands in the WTO dispute process. Many U.S. policymakers have expressed concern over the effectiveness of the WTO dispute resolution process to convince other countries to remove various trade barriers. Two WTO dispute cases were especially exasperating to U.S. exporters because of the length of time to decide the cases and the improbability that the losing party would change its practices. These involved banana and beef trade disputes with the European Union (EU). They were the main reason that Congress considered alternative ways to pressure a trading partner to implement a WTO dispute decision."

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CRS Report for Congress, RS20715
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