Trade Retaliation: The "Carousel" Approach

RS20715: Trade Retaliation: The "Carousel" Approach Lenore Sek Specialist in International Trade and Finance Foreign Affairs, Defense, and Trade Division Updated January 8, 2001 Summary 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. As the USTR prepares to implement the Trade Act's provisions, the EU has challenged U.S. carousel retaliation in the WTO dispute process