Guador, a small country in South America, is a member of the WTO. American fruit producers recently succeeded in persuading several members of Congress to introduce a bill to remedy Guador's alleged unfair trade practices in the citrus fruit industry

Question

The bill provides for a unilateral threefold increase in the tariff solely applicable to citrus fruits originating in Guador. Furthermore, the bill imposes periodic testing procedures upon Guadorian citrus fruits from which American producers are exempt. Finally, the bill caps imports of Guadorian citrus fruits into the United States at $20 million in value annually. If enacted, would the bill violate American obligations pursuant to the GATT? Why or why not?

Answer 1

Yes, the bill would violate U.S. obligations pursuant to the GATT. The bill proposes a quota by placing an impermissible numeric limitation upon imports, specifically, upon the value of imported fruit. The bill also violates normal trade relations by imposing tariffs upon citrus fruits originating from Guador that are not imposed upon fruit originating from other states. The bill also imposes testing procedures upon citrus fruits originating from Guador that are not applicable to U.S. citrus fruits in violation of national treatment. Finally, the bill violates the Dispute Settlement Understanding by authorizing unilateral retaliation against Guador for its alleged unfair trade practices.