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Abstract

Description of Topic: In settling trade disputes, members of the World Trade Organization use a dispute settlement mechanism set forth in the Uruguay Round of trade negotiations. This multilateral system of settling disputes is implemented if a member believes other members are violating trade rules. Disputes arise when countries adopt policies that break the WTO agreements or that cause them to fail to fulfill obligations. Dispute settlement procedures have existed under many different trade agreements. While current processes are more effective than those of past agreements, they still lack credibility and effectiveness. Research and Results: The United States and the European Union have used the WTO dispute settlement processes in settling many trade disputes over the past decade. Currently, the United States and European Union are involved in several disputes, including the trade of meat treated with growth hormones, the use of the U.S. Foreign Sales Corporation tax exemption, and state subsidization of the steel industry. Recent resolution of the long-standing dispute over the European Union banana regime is a positive indicator of progress in trade relations between the United States and the European Union. These cases will be used to illustrate the point that current WTO recommendations are not the most authoritative means of settling international trade disputes and to suggest improvements, such as increased use of negotiation and arbitration, to the dispute settlement process. The mutually benefiting trade relationships among independent nations can be greatly enhanced by cooperation in and resolution of trade issues. Improvements to the dispute settlement system would facilitate the edification of the global economic environment.

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