Combest, Stenholm Propose 'Carousel Retaliation'

October 4

House Agriculture Committee Chairman Larry Combest (R-TX) and ranking Democrat Charles Stenholm (TX) are proposing legislation that requires changing products on a trade retaliation list every six months. The process is nicknamed the "carousel" approach to retaliation. Using a carousel approach, more people would be affected as more products are subjected to import duties.

If the United States issues a retaliation list because a country fails to implement a World Trade Organization decision, the legislation would require the U.S. trade representative to review the list of products every six months. USDA would be required to change the products on the list by changing the entire list or part of the list.

The issue of a carousel approach came up earlier this year over the European Union's failure to implement a WTO dispute settlement panel's decision that the EU's ban on meat products from animals treated with growth hormones was not justified.

Combest and Stenholm reason that instead of a static, unchanging list of imported products subject to trade retaliation, the more varied the trade pressure is to different sectors of a nation's economy, more citizens are affected and the more pressure they will place on their governments to implement the WTO decision.

There are two exceptions in the bill to the six-month revisions: No revision is required if the USTR finds that a country will implement the WTO decision at about the same time a six-month review is due or if the USTR and the affected U.S. industry agree that it is not necessary to revise the retaliation list.

When the WTO rulings grant the United States retaliation against foreign imports, the total dollar amount is based on a formula of lost trade. Since the USTR publishes a first list of items for retaliation and then narrows the list down to one-half to one-third of the original list, the rotation of items subject to retaliation would be selected from the original list. No additional work would be required by USTR, say Combest and Stenholm.