[Congressional Record Volume 149, Number 78 (Friday, May 23, 2003)]
[Senate]
[Pages S7152-S7154]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. GRASSLEY:
  S. 1155. A bill to repeal section 801 of the Revenue Act of 1916; to 
the Committee on Finance.

[[Page S7153]]

  Mr. GRASSLEY. Mr. President, today I am introducing a bill to bring 
the United States into compliance with its obligations under the World 
Trade Organization.
  The basic thrust of the bill is simple--it repeals section 801 of the 
Revenue Act of 1916 which the WTO Appellate Body found to be 
inconsistent with our responsibilities under Article VI of the GATT 
1994 and the WTO Antidumping Agreement. Repealing section 801 will 
therefore bring the United States into conformity with its WTO 
obligations.
  Section 801, which has been referred to as the Antidumping Act of 
1916, allows private parties to sue importers of dumped imports in U.S. 
district courts, and also establishes criminal liability for importing 
dumped goods. While the provision is seldom used, there are several 
recent court cases pending in the United States where litigants have 
sued under the Antidumping Act of 1916.
  I am introducing this legislation because I believe it is important 
that the United States comply with its WTO obligations. While we may 
not agree with each and every decision that comes out of the WTO, we 
should not pick and choose which decisions we will comply with. The 
bottom line is that the United States benefits greatly from a rules-
based world trading system. We have had considerable success in 
bringing down foreign import barriers, and this has resulted in 
increased trade, economic growth, and more jobs right here in the 
United States. When we comply with adverse decisions we only strengthen 
our position in other cases where we challenge the impermissible import 
restraints of our trading partners, such as the de facto biotechnology 
moratorium adopted by the European Union, which continues to hurt 
farmers in Iowa and is now under challenge before the WTO. I want other 
countries to comply when we win, so I think it is important to comply 
when we lose.
  I would also like to point out an important aspect of the bill I am 
introducing. The bill brings us into compliance with our WTO 
obligations, but it does not apply retroactively. I think retroactive 
application of repeal would be wrong in this case for a number of 
reasons.
  First, the U.S. Supreme Court has held that under the constitutional 
due process standard, retroactive application of economic legislation 
is acceptable only where it is justified by a rational legislative 
purpose. To my knowledge, no one has yet articulated any reason, let 
alone a rational legislative purpose, for depriving litigants in U.S. 
courts of the opportunity for final adjudication of their disputes in 
this case. In fact, the Appellate Body Ruling itself does not call for 
a retroactive repeal of section 801 in order for the United States to 
conform to its WTO obligations. It seems to me that no rational 
legislative purpose is served by retroactive repeal of section 801 when 
the Appellate Body Report does not ask for retroactive repeal and the 
Administration has not explained why retroactive repeal is necessary.
  The Supreme Court has also held that the justification for 
prospective application of legislation may not suffice for retroactive 
application of the same legislation. The justification for repeal of 
section 801 is to conform to our WTO obligations; again, if WTO 
compliance does not call for retroactive repeal, then the justification 
for repealing section 801 should not extend to a retroactive repeal of 
this provision.
  Second, the administration and Congress have consistently taken the 
position that retroactive repeal is not necessary to ensure compliance 
with our WTO obligations in all cases, particularly in cases dealing 
with U.S. trade remedy laws. The Joint Report of the Committee of 
Finance, Committee on Agriculture, Nutrition, and Forestry, Committee 
on Government Affairs of the U.S. Senate which accompanied the 
legislation implementing the Uruguay Round Agreements Act explicitly 
noted that compliance with WTO panels in trade remedy cases applied 
prospectively only. The Joint Report continued that prospective 
application ``is consistent with the general principle in the GATT, and 
in the future WTO, that panel decisions do not have retroactive 
effect.''
  This principle is fully consistent with the text of the WTO agreement 
itself. Article 19.1 of the Dispute Settlement Understanding states 
only that ``{w here a panel or the Appellate Body concludes that a 
measure is inconsistent with a covered agreement, it shall recommend 
that the Member concerned bring the measure into conformity with that 
Agreement. In addition to its recommendations, the panel or Appellate 
Body may suggest ways in which the Member concerned could implement the 
recommendations.'' Thus, the text of the WTO calls only for ``bringing 
the measure into conformity'' and not retroactive application of an 
Appellate Body decision.
  To my knowledge, this is the position which has consistently been 
taken by the U.S. Government and the WTO Appellate Body. In fact, with 
the exception of one aberrant decision by a panel in the case of 
Australian Automotive Leather, WTO panels and the Appellate Body have 
continued to adhere to the general principle that retroactive 
compliance measures are inappropriate.
  The panel ruling in Australian Automotive Leather is instructive. The 
WTO Dispute Settlement Body adopted a panel report that recommended the 
Australian recipient of a subsidy pay back the entire amount of the $30 
million Australian dollar subsidy it had received. This recommendation 
went far beyond what the United States asked for. The United States 
sought only the return of the prospective value of the subsidy that the 
Australian automotive leather company had received. The United States 
argued that repayment of the entire subsidy was inappropriate and 
ultimately settled the dispute with Australia in a deal that required 
the automotive leather company to pay back $7.2 million Australian 
dollars to the Government of Australia, which reflected the prospective 
value of the subsidy. Thus, both U.S. law and U.S. trade policy conform 
to the general principle that compliance measures should be prospective 
in nature.
  Finally, I believe that as a general matter, attempts at retroactive 
compliance with WTO rulings can make for bad trade policy. The intent 
of the rules-based trading system established under the WTO is to bring 
Members into compliance so that going forward international trade can 
be conducted on a level playing field. There is just no telling where 
efforts at retroactive compliance may lead. While in this instance the 
retroactive repeal of section 801 may seem clear-cut to some, it could 
set a dangerous precedent for future cases. Imagine if the WTO 
Appellate Body required or the U.S. Government advocated for 
retroactive application of a measure repealing the Extraterritorial 
Income Act/Foreign Sales Corporation tax regime. The result would be 
ludicrous.
  Rather than foster the establishment of a level playing field, 
efforts at retroactive compliance may well distort markets to an extent 
even greater than the underlying measure that was found to be WTO 
inconsistent. We need to carefully consider whether retroactive repeal 
of a statutory provision is appropriate. I believe that considerations 
of judicial precedent, legislative intent, established practice under 
the GATT and the WTO, as well as good trade policy, all mitigate 
against the retroactive repeal of section 801.
  I call upon my colleagues to support this bill repealing section 801. 
Passing the bill will bring us into compliance with our WTO 
obligations, demonstrate our continued commitment to the rules-based 
trading system, and strengthen our position in future cases where we 
prove successful in challenging impermissible import restraints erected 
by our trading partners.
  I ask unanimous consent that the text of the bill be printed in the 
Record.
  There being no objection the bill was ordered to be printed in the 
Record, as follows:

                                S. 1155

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. REPEAL OF ANTIDUMPING PROVISION OF REVENUE ACT OF 
                   1916.

       (a) Repeal.--Section 801 of the Act entitled ``An Act to 
     increase the revenue, and for other purposes'', approved 
     September 8, 1916 (15 U.S.C. 72), is repealed.
       (b) Effect of Repeal.--The repeal made by subsection (a) 
     shall not affect any action under section 801 of the Act 
     referred to in

[[Page S7154]]

     subsection (a) that was commenced before the date of the 
     enactment of this Act and is pending on such date.
                                 ______