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WTO Dispute Settlement
US Byrd Amendment – WTO says eight WTO Members may retaliate
against
the US Joint Press statement by Brazil, Canada, Chile, the
EU, India, Japan, Korea, and Mexico, Brussels, 31 August
The WTO arbitrators have today given a green light for eight
WTO Members to retaliate up to more than $150 million
against the U.S. for failing to comply with its
international trade obligations. In January 2003, the WTO
ruled as illegal a piece of U.S. legislation commonly known
as the “Byrd Amendment”, under which anti-dumping and
countervailing duties are distributed to the domestic
companies that had requested or supported the imposition of
those duties. The WTO gave the U.S. until December 2003 to
comply with the WTO ruling but the U.S. missed this
deadline. The failure by the U.S. to bring its measure into
conformity with WTO rules prompted eight WTO members -
Brazil, Canada, Chile, the EU, India, Korea, Japan and
Mexico – to request authorisation from the WTO to impose
additional import duties on US products or to suspend other
obligations to the US. Further to today's award, the
co-complainants may exercise their retaliatory rights, at
any time deemed appropriate, in accordance with the award
and the requirements of the WTO rules on the settlement of
trade disputes. The award of the Arbitrators cannot be
appealed. The eight WTO Members strongly urge the US to act
immediately to repeal the illegal “Byrd Amendment”.
In today's decision, the WTO has taken the approach to
calculate the level of the additional import duty or other
countermeasures based on the amount of payments disbursed to
the US industry in the latest annual distribution.
Specifically, the authorized level of retaliation is based
on the trade effects of the most recent payments distributed
from anti-dumping or countervailing duties collected on the
products originating from each Member. Accordingly those
payments shall be multiplied by a factor of 0.72, which is
based on an economic model developed by the arbitrator to
determine such trade effects.
The level of sanctions may vary every year so as to reflect
the wide variations in the amount of payments made under the
Byrd amendment from one year to the other.
Background
The Continued Dumping and Subsidy Offset Act of 2000
(so-called Byrd amendment) mandates the distribution of the
anti-dumping and countervailing duties to the companies that
brought or supported the complaints. It therefore creates an
undue incentive for U.S. industries to seek the imposition
of duties on imported goods, thereby improving their
competitive position and receiving cash payments.
A total of US $ 231 million was distributed in 2001 and
around US $ 330 million in 2002. The main recipients have
been in the bearing, steel and other metal, household item
and food (in particular pasta) sectors. Though 2003 data
regarding disbursements has yet to be finalised, information
published so far indicates that distribution for that year
would amount to about US $ 240 million.
Eleven WTO Members (Australia, Brazil, Canada, Chile, EU,
India, Indonesia, Japan, Korea, Mexico and Thailand)
combined forces to challenge the WTO compatibility of the
legislation in 2001. A Panel in September 2002 and the
Appellate Body in January 2003 confirmed that the Byrd
amendment is an illegal response to dumping and
subsidisation. The US had until 27 December 2003 to bring
this legislation into conformity with the WTO rules. Eight
WTO members (Brazil, Canada, Chile, the EU, India, Korea,
Japan and Mexico) then requested the DSB to authorize the
countermeasures on 26 January 2004. The US objected to these
requests and the issue of the level of countermeasures was
referred to arbitration.
Despite calls by the US administration to repeal the law,
the US Congress has not yet implemented the WTO ruling. Two
bills are pending, but neither has so far reached the
discussion stage.
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