GENEVA, Switzerland, Nov. 26 (UPI) -- The World Trade Organization granted authorization Friday to the European Union, Japan, Canada, Korea, Mexico, India, and Brazil, to slap retaliatory sanctions if the U.S. fails to repeal the Byrd amendment.
Washington insiders close to influential members of Congress, however, say it's not likely the Byrd amendment will be repealed soon.
Failure by U.S. to act could, say trade diplomats, escalate trade tensions with major partners and also sour the atmosphere in the Doha round of liberalization talks.
It's estimated U.S. products could be, based on the latest year, subject to punitive tariffs totaling $150 million with Japan and the EU accounting for the largest share with about $78 million and $50 million in damages, respectively.
U.S. products on the indicative hit lists of Japan, the EU, Korea, and Canada for example, include, among other: textiles and apparel, cement, base metals, paper, electrical machinery and vehicles, crane lorries, prefabricated buildings, photocopying apparatus, paper products, ceramics, furniture, air conditioning machines, beer whiskies, and fish.
The Byrd amendment, named after its sponsor Sen. Robert Byrd, a powerful West Virginia Democrat, penalizes foreign companies that compete unfairly in the U.S. market by dumping goods -- selling at below cost or fair value -- or receiving subsidies.
But the measure was found in violation of global trade rules by a WTO panel in September 2002 and upheld in an appellate ruling in January 2003.
A WTO arbitrator on Aug. 31, 2004 approved sanctions against the U.S. equal to 72 per cent of the duties it levied on imported products from the seven WTO members.
Raimund Raith of the EU urged the U.S. administration to transmit the concerns of the seven to Congress.
The EU official also stressed the U.S. administration needs to defend its credibility in the WTO and to comply with its obligations "without further delay."
Mexico said that since Byrd came into force in 2000 "American industries have been benefiting from illegal contributions for more than $750 million."
And Brazil said the Byrd amendment "was designed to assist U.S. companies at the expense of its foreign competitors."
In response to the salvos by the seven, Steven Fabry, U.S. legal advisor to the WTO, told delegates attending the DSB session the U.S. "intends to comply " with the recommendations and rulings.
Alan Wolff, head of international trade practice at Dewey Ballantine, Washington, told UPI it would be inappropriate for the seven to retaliate as there has been, as he put it, "no trade damage."
Wolff, a former deputy U.S. Trade Representative, said "its another step in the wrong direction by the WTO," and added it will "cause the WTO to fall in greater disrepute in the U.S. particularly in the U.S Congress."
Critics consider the Byrd amendment, however, as a "protectionist" instrument and argue the WTO sanctions will set in motion political forces that will help ensure its repeal sometime in the next couple of years.
The Bush administration in March of this year proposed legislation to repeal the U.S. Continued Dumping and Subsidy Offset Act of 2000.
But Rambod Behboodi of Canada critically remarked, the US has had ample time for compliance and remarked "its one thing to state intentions and its quite another to act on these intentions."
It's time, he said, for the U.S. to make repeal of the measure a priority.
The EU's Raith said that since the Byrd came into force, to date more than $800 million have been collected on foreign products to subsidize directly competing U.S. products.
In a similar vein Japan complained the U.S. "is ready for executing yet another round of disbursements to its domestic companies under CDSOA amounting to $294 million."
Other punitive sanctions authorized by the WTO in recent years have included the punitive tariffs of $4 billion granted to the EU against the U.S. over the tax breaks Foreign Sales Corporation dispute.
Similarly, in 1999 the WTO gave the go ahead for the U.S. to slap punitive duties of $116.8 million against the EU over its import ban on hormone treated beef and $191.4 million also again the EU over its failure to amend its restrictive banana import regime.
