STOCK QUOTES     More market data...

WTO to allow retaliation for U.S. anti-dumping law

By Paul Blustein
The Washington Post

European Union Trade Commissioner Pascal Lamy.

E-mail this article Print this article Search archive Most read articles Most e-mailed articles

The ruling is the latest in a series of setbacks for the United States at the Geneva-based trade body that have angered U.S. lawmakers.

A WTO panel held that U.S. exporters could be penalized for the damage caused to foreign firms by the "Byrd amendment," named for Sen. Robert Byrd, D-W.Va.

That law, which Congress approved four years ago, provides that when foreign manufacturers are found to be dumping goods in the U.S. market — that is, selling at unfairly low prices — any anti-dumping duties that are imposed can be handed over to the U.S. companies that brought the dumping case, rather than to the U.S. Treasury.

"It is clear that the Byrd Amendment is a WTO-incompatible response to dumping ... and must therefore go," said EU Trade Commissioner Pascal Lamy in Brussels, Belgium.

The law is popular on Capitol Hill, especially in the Senate, and it has benefited U.S. firms in industries ranging from steel to pasta.

From beef to bananas: EU-U.S. fight over trade The following is a list of past and present trade battles involving Brussels and Washington: Foreign-sales corporation: A system of tax breaks for U.S. exporters, WTO declared it an illegal export subsidy and gave the EU the right to impose sanctions worth $4 billion a year on U.S. goods. The EU has chosen to impose the measures gradually. It started with extra duties of 5 percent from March 1 on a wide range of products, rising by 1 percent a month. This will be worth $315 million in 2004 and $666 million in 2005, unless the tax breaks are repealed by Congress. Genetically modified foods: The United States, along with other complainants, took the EU to the WTO over the bloc's 5-year-old moratorium on new imports of genetically modified foods. The U.S. says its farmers lose $300 million a year in sales due to EU stonewalling. EU approved imports in May of one type of maize, but the U.S. says it has not yet done enough. Banana wars: The U.S. and EU battled for years over limits Europe placed on imports of bananas. The U.S. imposed sanctions worth $190 million in 1999, hitting Body Shop and Gucci products. A 2001 deal ended the dispute. Beef battle: The EU's ban on beef from cattle treated with growth-promoting hormones led to U.S. sanctions worth $116 million in July 1999, including on delicacies such as Roquefort cheese and Belgian chocolates. The EU has said its ban is based on scientific evidence and called for U.S. sanctions to end. 1916 anti-dumping act: The WTO in February gave the EU the right to hit back at the United States over a 1916 law that allows companies to claim damages from foreign firms accused of dumping goods on the U.S. market. The WTO said the EU can apply similar measures to U.S. firms, although it must prove its companies have suffered damage before retaliating. Byrd amendment and zeroing: The EU, Japan, Canada, Brazil, India, Mexico, South Korea and Chile were given permission yesterday to impose sanctions on U.S. goods over the Byrd amendment, which distributes the proceeds of anti-dumping duties to U.S. companies. The measure was long ago ruled illegal by the WTO, but Washington had argued that sanctions were unwarranted because the law, it said, had no measurable impact on foreign firms. The EU has also appealed to the WTO to rule against the way the United States calculates anti-dumping duties in a practice called zeroing. Havana Club or Section 211: A dispute over U.S. legislation that stops the use of trademarks granted by Cuba to foreign companies. This particularly concerns French group Pernod Ricard, which wants to market its Havana Club rum in the U.S. market. Source: Reuters

But the WTO ruled in 2002 that the law violates international trade rules, siding with major U.S. trading partners including the EU, Japan, Canada, Mexico, Brazil, Chile, South Korea and India.

Until yesterday, it wasn't clear whether that ruling would carry the threat of sanctions. The Bush administration argued that no WTO sanctions were in order because even if the Byrd amendment were illegal, foreign producers were not being damaged by the fact that anti-dumping duties were being paid to U.S. firms rather than the government.

The amendment's critics contended it inflicts a double penalty on foreign companies, by forcing them to pay duties and also providing a reward to U.S. rivals.

The WTO essentially agreed with Washington's opponents, allowing them to slap retaliatory tariffs on U.S. goods equal to 72 percent of the money collected under the amendment during the most recent fiscal year. That would translate into as much as $144 million in duties on U.S. exports, according to U.S. officials. Foreign governments put the figure slightly higher.

Top EU and Japanese officials said they would not impose duties immediately, in the hope that Washington would change the law instead.

The retaliatory tariffs are less than the Europeans and others had sought, and are far less than the $4 billion the WTO authorized the European Union to impose in another case involving U.S. export subsidies.

But yesterday's loss fueled grievances among lawmakers who have grown increasingly critical of the WTO for repeatedly ruling against U.S. dumping laws. It also prompted attacks from Democrats eager to capitalize on the trade issue.

The presidential campaign of Sen. John Kerry released a statement deriding "the inability of the Bush administration to fight hard enough" to protect the Byrd amendment. It quoted Kerry as saying, "Once again the Bush administration failed to stand up for American companies and workers at the WTO, and as a result, unfair trade practices are hurting our economy and middle-class families."

In response, Chris Padilla, a spokesman for U.S. Trade Representative Robert Zoellick, cited a number of recent anti-dumping decisions in which the Commerce Department ruled in favor of complaints brought by U.S. companies. "The administration not only vigorously defends our trade laws at the WTO, we've not hesitated to use them to defend the economic interests of American workers," Padilla said.

The White House, while opposing sanctions in the Byrd amendment case, wants Congress to comply with the initial WTO ruling by altering the law.

Padilla reiterated that position, stating, "The United States will comply with its WTO obligations, and the administration will work closely with Congress to do so in a way that supports American jobs and American workers."

That statement clearly hinted at a compromise that has been bandied around on Capitol Hill under which duties collected through the anti-dumping law would go to workers or communities hard hit by import competition, instead of companies.

Material from The Associated Press is included in this report.

Copyright © 2004 The Seattle Times Company

E-mail this article

Print this article

Search archive

More business & technology headlines...