Relationship of WTO obligations to U.S. international trade law: internationalist vision meets domestic reality.(United States Court of International Trade 25th Anniversary Celebration)

1. INTRODUCTION

This Article examines recent developments in the relationship between World Trade Organization (WTO) obligations and U.S. international trade law. (1) Even before the United States approved the WTO agreements, the effect of international trade agreements had already emerged as an issue in U.S. trade litigation in the context of pre-WTO General Agreement on Tariffs and Trade (GATT) agreements. At the time of this writing, more than eleven years after Congress approved the WTO agreements, the issue remains highly controversial.

The U.S. implementation of the WTO agreements, as well as the earlier GATT agreements, unquestionably represents a dualist model in which WTO agreements and decisions do not have direct effect in U.S. law. (2) The absence of direct effect begs the question of whether WTO agreements and decisions have an indirect effect, namely, as aids to interpreting the trade statutes. (3) The issue is usually described as the applicability of the Charming Betsy doctrine, which states "an act of Congress ought never to be construed to violate the law of nations if any other possible construction remains," (4) or, as set out in the Restatement (Third) of U.S. Foreign Relations Law, "[w]here fairly possible, a United States statute is to be construed so as not to conflict with international law or an international agreement of the United States." (5)

At least superficially, there appear to be two inconsistent lines of case law in U.S. courts. The first line of cases stems from the Federal Circuit's 1992 decision in Suramerica de Aleaciones Laminadas, C.A. v. United States, (6) which stated that "[t] he GATT does not trump domestic legislation; if the statutory provisions ... are inconsistent with the GATT, it is a matter for Congress and not this court to decide and remedy." This case law consistently rejects arguments seeking to have U.S. law interpreted to be consistent with WTO/GATT norms, sometimes implying that it is unnecessary to consider WTO/GATT norms. (7) The second line of cases stems from the Federal Circuit's 1995 decision in Federal Mogul Corp. v. United States, (8) which stated that "absent express Congressional language to the contrary, statutes should not be interpreted to conflict with international obligations." This case law evaluates

pertinent WTO/GATT obligations and ultimately interprets U.S. law to avoid a conflict with those obligations. (9) Furthermore, in 2005, a North American Free Trade Agreement (NAFTA) binational panel applying U.S. law ruled that a contested agency decision was unlawful solely because it conflicted with a WTO dispute settlement decision. (10) Most recently, the Federal Circuit's decision in Cummins Inc. v. United States (11) in July 2006 appears to hold that the status of international decisions is governed by a completely different legal standard from the Charming Betsy canon of interpreting statutes, if possible, to avoid conflicts with international obligations.

Commentary on the relationship of WTO obligations to U.S. law is also divided. One position offers an isolationist perspective and argues that U.S. law precludes considering whether or not a domestic statute or its interpretation is consistent with WTO/GATT norms. (12) The opposite position offers an internationalist perspective and argues that U.S. law requires U.S. statutes to be interpreted so as to be consistent with WTO/GATT norms unless Congress clearly intends otherwise, (13) or at least that the law should require WTO-consistent interpretations. (14) An intermediate position is that WTO/GATT agreements and decisions may be considered, but their significance is limited and WTO decisions by themselves are not sufficient to warrant overturning an agency's statutory interpretation. (15)

This Article argues that case law under the international trade statutes strongly supports the intermediate position. The U.S. courts generally exercise considerable judicial restraint, rarely overturning the responsible administrative agency's view of the extent to which the U.S. statutes should be interpreted to be consistent with WTO/GATT agreements and dispute settlement decisions. The U.S. courts have only adopted to a limited degree the Charming Betsy doctrine that U.S. statutes, if fairly possible, should not be construed to violate international obligations. The doctrine applies principally to the WTO agreements themselves. Under the Federal Circuit's July 2006 decision in Cummins, and implicitly under its prior decisions, the Charming Betsy doctrine does not extend to interpretations of international agreements by international tribunals, which instead only merit "respectful consideration." (16) Therefore, increased consistency between agency interpretations of U.S. trade laws and WTO panel and Appellate Body interpretations is unlikely to be achieved through judicial review. Instead, it would depend on amendments to the statutory framework.

Part 2 of this Article describes the statutory framework of the relationship of WTO agreements and WTO decisions to U.S. law. (17) This dualist model limits the effect of WTO obligations and establishes a political process for implementing those obligations. Part 3 of the Article presents preliminary and conceptual issues affecting consistency between U.S. law and WTO obligations, including whether the Charming Betsy doctrine applies at all in U.S. international trade law and how interpreting statutes to be consistent with international obligations relates to the legal standard for judicial review of agency determinations. Part 3 also examines how results depend on whether the statutory language is ambiguous or not; how congressional intent concerning WTO agreements differs from congressional intent concerning WTO dispute settlement decisions; why the separation of powers doctrine is significant; and whether case law dealing with constitutional issues has any relevance. (18) Part 4 examines how and to what extent U.S. courts have, in practice, used WTO agreements and dispute settlement decisions as aids to interpreting U.S. trade statutes. (19) This Part illustrates that cases should be distinguished based on whether the potential WTO-inconsistency arises from the text of an agreement, whether it is the federal agency's interpretation that WTO norms support, and whether the agency's interpretation is claimed to be inconsistent with a WTO dispute settlement decision. Part 4 concludes with a discussion of the Federal Circuit's new Cummins decision. Part 5 examines cases in which a WTO dispute settlement decision has ruled that the specific agency interpretation before the court violates WTO obligations. (20) As explained there, the considerations relating to enforcement of a WTO decision differ from those applicable where the court is simply urged to harmonize a statutory interpretation with a WTO agreement or decision. Finally, Part 6 of the Article summarizes the Article's conclusions and presents recommendations for statutory amendments that would improve consistency between agency interpretations of statutes and WTO obligations, without significantly changing the existing dualist model of U.S. law. (21)

2. THE STATUTORY FRAMEWORK OF THE RELATIONSHIP OF WTO OBLIGATIONS TO U.S. LAW

The U.S. implementation of the WTO international trade agreements and decisions has been comprehensively analyzed elsewhere, (22) but requires summary here because it is crucial to understanding the case law to be discussed below. David Leebron noted that "[m]any provisions of the implementing legislation are aimed at limiting the status and import of the Uruguay Round Agreements in domestic law, and exercising close supervision over the ... World Trade Organization and its dispute settlement process." (23) In sum, he concluded that "It]he implementation of trade agreements in the United States remains a highly political process." (24) Matsushita and coauthors draw the related conclusion that U.S. implementation represents a strongly dualist approach in which, as a general rule, "the legal issues arising under the WTO agreements [for U.S. domestic purposes] will be decided under U.S. legislation ... regardless of whether it is consistent with international law." (25)

2.1 Status of WTO Agreements

The relationship of WTO agreements to U.S. law is governed by section 102(a) of the Uruguay Round Agreements Act (URAA), enacted in 1994. (26)

Section 102(a) sets out three principles. First, the trade agreements are not self-executing. This means that "the agreements do not take effect without implementing legislation." (27) The legislative history states that the "Uruguay Round agreements ... are not self-executing and thus their legal effect in the United States is governed by implementing legislation." (28) Strictly speaking, moreover, it is the implementing legislation rather than the agreements that is given effect as law in the United States. (29) Second, no provision of the trade agreements that is inconsistent with U.S. law is given effect. (30) This principle establishes the supremacy of U.S. law over the agreements. As stated in the House report on the URAA, "U.S. law shall prevail if inconsistent with any provision of the agreements," and "U.S. laws prevail over any conflicting provisions of the international agreements." (31) Third, the trade agreements do not create any private rights of action. (32) They do not allow a private party to challenge any action or inaction by federal departments or agencies as inconsistent with any trade agreement. (33)

Although the URAA limits the status and effect of the WTO agreements in U.S. law, the legislative history nevertheless states that the URAA "incorporate [d] all amendments to existing Federal statutes or provision of new authorities ... known to be necessary or appropriate

to enable full implementation of, and compliance with, U.S. obligations under the agreements." (34) It was "intended to bring U.S. law fully into compliance with U.S. obligations under those agreements." (35) It "accomplishe[d] that objective with respect to federal legislation by amending existing federal statutes that would otherwise be inconsistent with the agreements and, in certain instances, by creating entirely new provisions of law." (36) For this reason, supremacy of U.S. law over the international agreements "will not prevent implementation of federal statutes consistent with the agreements, where permissible under the terms of such statutes." (37) Moreover, "[t]he prohibition of a private right of action based on the Uruguay Round Agreements ... does not preclude any agency of government from considering, or entertaining argument on, whether its action or proposed action is consistent with the Uruguay Round agreements, although any change in agency action would have to be authorized by domestic law." (38)

In sum, although URAA section 102(a) is captioned "relationship of agreements to United States law," it does not define what the relationship is. (39) Rather, it defines what the relationship is not: WTO agreements are not self-executing, have no direct effect, have no domestic effect at all if they are inconsistent with U.S. law, and do not create any private cause of action. The statute precludes possible alternative relationships in which WTO agreements would have different legal effects, but it does not explain fully what the relationship between the WTO agreements and U.S. law is.

2.2 Effect of WTO Dispute Settlement Decisions

URAA sections 123 and 129 govern the effect of decisions under the WTO Dispute Settlement Understanding that determine that a U.S. law, regulation, or other measure is inconsistent with WTO obligations. Under the URAA, "the results of any WTO dispute settlement proceedings will not be incorporated into United States law without following a specified domestic implementation process." (40) Two fundamental observations apply at the outset. First, "[i] t was never seriously considered that a WTO dispute settlement decision would apply directly in U.S. law." (41) Second, "any dispute settlement findings that a U.S. statute is inconsistent with an agreement ... cannot be implemented except by legislation approved by the Congress..." (42)

In contrast, if a WTO dispute settlement decision rules that an agency's regulation or practice under a federal statute is inconsistent with WTO obligations, Congress does not need to approve new legislation "if [WTO-]consistent implementation is permissible under the terms of the statute." (43) But in this case, "the Congress required that certain procedures be followed in order to implement any such decision, even if ordinarily an administrative agency might have had discretion to change its regulations to comply with the decision." (44) Section 123(g) of the URAA (19 U.S.C. [section] 3533(g)) provides that an agency's WTO-inconsistent regulation or practice may not be modified until after the Administration consults with and reports to relevant congressional committees, considers advice from private sector advisory committees, considers public comments on the proposed change in regulation or practice, and, usually, waits until a 60-day consultation period elapses. (45) In addition to section 123 governing agency relations and practices, URAA section 129 (19 U.S.C. [section] 3538) sets out procedures for implementing adverse WTO dispute settlement decisions relating to specific individual antidumping and countervailing duty cases. (46) Thus, implementation of WTO decisions relating to U.S. antidumping and countervailing duty laws might require both modification of an agency regulation or practice governed by URAA section 123 and implementation of a WTO-consistent determination in an individual case governed by URAA section 129.

3. THRESHOLD AND CONCEPTUAL ISSUES RELATING TO WTO CONSISTENCY

As discussed in the introduction to this Article, the argument that the WTO agreements and decisions should be used as aids to interpreting U.S. trade statutes is generally described as the applicability of the Charming Betsy doctrine that "an act of Congress ought never to be construed to violate the law of nations if any other possible construction remains." (47) A threshold issue is whether the Charming Betsy doctrine can apply at all, particularly in view of the dualist statutory framework discussed above. At the same time, since U.S. international trade litigation consists in judicial review of actions of federal administrative agencies, (48) the issue of consistency with WTO agreements and decisions is intertwined with the standard of judicial review that U.S. courts use to adjudicate whether an agency's interpretation of a statute it administers is in accordance with law.

In antidumping and countervailing duty cases, judicial review of the Commerce Department's and International Trade Commission's statutory interpretations is governed by the two-step methodology established in Chevron U.S.A., Inc. v. Natural Resources Defense Council (49) and commonly known as "Chevron analysis." (50) The Supreme Court ruled in Chevron that a court reviewing an agency's interpretation of a statute it administers "is confronted with two questions." (51) The "[f]irst, always, is whether Congress has spoken to the precise question at issue," and "[i]f the intent of Congress is clear, that is the end of the matter; for the court, as well as the agency, must give effect to the unambiguously expressed intent of Congress." (52) But, "if the statute is silent or ambiguous with respect to the specific issue," the reviewing court under step two of its analysis will sustain an agency's interpretation if it represents "a permissible construction" or "a reasonable interpretation" of the statute. (53)

These preliminary and conceptual issues relating to the application of the Charming Betsy doctrine in international trade litigation are addressed below. Sections 3.1 and 3.2 explain that a distinction must be made between an unambiguous statute governed by step one of Chevron analysis and an ambiguous statute governed by step two of Chevron analysis. Sections 3.3 through 3.6 review four broad issues: the significance of congressional intent relating to WTO agreements (section 3.3); the different congressional intent relating to WTO decisions (section 3.4); the significance of the separation of powers and the related doctrine of statutory delegation of authority to administrative agencies (section 3.5); and the potential relevance of the Supreme Court's manner of integrating constitutional issues into Chevron analysis (section 3.6).

3.1 Irrelevance of WTO Norms Where a Statute Is Unambiguous

The supremacy of statutes over WTO agreements under URAA section 102(a) (1) and Chevron step one jointly establish that if a court holds that a statute is unambiguous, it is irrelevant whether the statute is consistent or inconsistent with WTO norms. (54) In this situation, the statute has only one correct interpretation, and the unambiguously expressed intent of Congress is given effect.

If the unambiguous statute is inconsistent with WTO norms, the statute prevails for domestic purposes under URAA section 102(a) (1). The only way for the United States to bring itself into conformity with WTO obligations is "by legislation approved by the Congress...." (55) For example, a WTO decision held that a provision of the U.S. antidumping and countervailing duty statute providing for disbursement of the collected duties to the domestic petitioner violated WTO norms in United States--Continued Dumping and Subsidy Offset Act of 2000 (56) (the "Byrd Amendment" case). The Byrd Amendment plainly could not be challenged in U.S. courts on grounds of WTO inconsistency and no party tried to do so. In practice, only one case appears to rule that a statute unambiguously required a result inconsistent with GATT or WTO norms, but the case involves unusual facts in that the statute would have allowed a GATT-consistent result if the importer-plaintiff had not made an error in its customs declaration. (57)

If the unambiguous statute is consistent with WTO norms, it is unnecessary to consider WTO consistency. For example, in Turtle Island Restoration Network v. Evans, (58) the …