Resolving Trade Disputes at the New World Trade Organization

In April of 1996, three judges of the Appellate Body affinned the first major ruling under the trade dispute resolution procedures administered by the new World Trade Organization (WTO). The judges - from the Philippines, Japan, and New Zealand - held that key regulations adopted by the Environmental Protection Administration (EPA) pursuant to the 1990 Clean Air Act Amendments discriminated against imported gasoline in violation of U.S. obligations under the 1994 General Agreement on Trade and Tariffs (GATT). A nation's international trade obligations under GATT can, and often do, conflict with its domestic laws and regulations and with fundamental principles of sovereignty. The imported gasoline decision provides the first test of the ability of the WTO to resolve trade disputes. The United States will be given a reasonable period of time to bring its EPA regulations into conformity with the GATT obligations. Failing that, the countries that brought the case, Venezuela and Brazil, will be authorized by the WTO to suspend trade benefits previously granted to U.S. products