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Introduction
The transatlantic trade of goods and services between the US and the European Union (EU) is the largest in the world, 45% of global services and 38% of goods, which amounts to more than $750 billion (Hocking and McGuire, 2002). Most EU and US firms trade amicably across borders. However, in this era of economic integration pacts, the complexity of international trade has gone beyond the traditional transfer of capital, goods, and services. Special issues - the environment, consumer safety and health, supply networks, and maintaining the competitive advantage of domestic firms - have created complex factors influencing domestic policies, trade barriers, and the definition of protectionism, tax breaks, subsidies, and standards of health and safety.
In the US, trade policies are mostly drawn based upon the private sector's interests, with the influence of strong lobbying groups (Jacek, 2000). In the EU, the European Commission (EC) is the deciding entity on policy making, with lobbying and special interest groups becoming more active (Hocking and McGuire, 2002). With the growing power of lobbying and special interest groups, international economic transactions are increasingly intertwined with political and domestic issues beyond the traditional concern for producer-protectionist measures.
In this paper, the role of the World Trade Organization in dispute resolution is analyzed in reference to two important areas of trade disputes between the US and the EU - agriculture and steel. These cases exemplify the effectiveness of the WTO in settling various trade disputes. Furthermore, the paper highlights structural factors that limit the capabilities of the WTO in resolving disputes.
World Trade Organization
The General Agreement on Tariffs and Trade (GATT), the predecessor to the WTO, dealt with the international trade disputes through a negotiation-based system and the decisions rendered by the dispute resolution panel of GATT had to be adopted by all parties involved (Brewster, 2006). Such decisions could be negotiated by the disputing bodies. However, any party involved in a dispute could block the decision of the panel or prolong the implementation of the decisions rendered by the WTO (Brewster, 2006).
During the Uruguay Round of trade negotiation between 1986 and 1993, an agreement was reached to establish the WTO with the ability to rule if a country's trade policies were discriminatory to foreign...