November 23, 2004 (9:45 a.m. EST) No. 134
BYRD AMENDMENT: GOVERNMENT OF CANADA SEEKS COMMENTS
ON POSSIBLE TRADE RETALIATION AGAINST UNITED STATES
The Government of Canada today announced that it is launching consultations with
Canadians on possible trade retaliation against the United States in light of U.S. failure
to comply with the World Trade Organization (WTO) ruling on the Byrd Amendment.
The Byrd Amendment, which allows U.S. companies to receive anti-dumping and
countervailing duties collected from foreign competitors, was found to be illegal under
the WTO.
“Clearly, retaliation is not Canada’s preferred option, but the U.S. has failed to live up to
its international trade obligations and repeal the Byrd Amendment,” said International
Trade Minister Jim Peterson. “These consultations will help us assess what actions
Canadians want us to take.”
“We want to hear from Canadian businesses themselves on the next steps that should
be taken in challenging this U.S. measure,” said Minister of Finance Ralph Goodale.
“The Government of Canada conducts public consultations every time retaliatory trade
action is considered, and this dialogue will ensure that our upcoming response will be in
Canada’s best interests.”
On August 31, 2004, the WTO ruled that Canada, Brazil, Chile, the European Union,
India, Japan, Mexico and South Korea could retaliate by up to 72 percent of the annual
anti-dumping and countervailing duties on exports from these countries disbursed to
U.S. companies in a given year.
On November 10, 2004, Canada joined other co-complainants in submitting to the
WTO the final retaliation authorization request reflecting the WTO Arbitrator’s decision
on retaliation; this step is required by the WTO before any retaliatory measures can be
applied. The request will be considered at a meeting of the WTO on November 24 and
will be automatically authorized unless it is unanimously rejected by WTO members.
Public consultations will assist the Government of Canada in assessing future actions.
A Canada Gazette Notice has been published today. Interested parties are asked to
comment by December 20, 2004, through the International Trade Canada Web site at
http://www.byrd-consultations.gc.ca.
The Canada Gazette Notice provides background information on the dispute and seeks
input from Canadians on two possible retaliatory measures: tariff measures on certain
imports from the U.S. and the suspension of the injury test in Canadian anti-dumping
and countervail investigations on imports from the U.S. The Notice also contains a list
of U.S. products upon which retaliatory surtaxes could be imposed. Canadian imports
of these products are valued at approximately $5 billion.
Those with additional questions on the public consultations or the Canada Gazette
Notice can contact the Government of Canada at 1 800 769-0674.
The Government of Canada will consider all comments received and will then
determine the appropriate action to be taken.
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A backgrounder is attached.
For further information, media representatives may contact:
Jacqueline LaRocque
Director of Communications
Office of the Minister of International Trade
(613) 992-7332
Media Relations Office
Foreign Affairs Canada and International Trade Canada
(613) 995-1874
http://www.international.gc.ca
Backgrounder
THE BYRD AMENDMENT
On October 28, 2000, U.S. President Bill Clinton signed the Continued Dumping and
Subsidy Offset Act of 2000, also known as the Byrd Amendment.
The Byrd Amendment allows U.S. companies who support petitions for anti-dumping
and/or countervailing duty investigations against foreign competitors to receive the
duties collected as a result of the anti-dumping and/or countervailing duty orders.
This means that U.S. companies bringing trade remedy cases to U.S. authorities stand
to benefit not only from the imposition of anti-dumping and countervailing duties on
competing imports, but also from direct payments from the U.S. government when
those duties are disbursed. The Byrd Amendment therefore creates an additional
financial incentive to file such cases.
In September 2001, 11 WTO members challenged the Byrd Amendment at the WTO:
Canada, Australia, Brazil, Chile, the European Union, India, Indonesia, Japan, Mexico,
South Korea and Thailand.
The WTO Panel agreed with the complainants, and in September 2002 determined that
these payments are not consistent with U.S. obligations under WTO agreements
governing anti-dumping, subsidies and countervailing measures. The Panel determined
that the payments constitute an additional measure against injurious dumping and
subsidization not contemplated in either agreement.
In January 2003, the WTO Appellate Body report, upholding the key Panel findings
against the Byrd Amendment, was adopted by the organization’s Dispute Settlement
Body (DSB).
An arbitrator subsequently gave the U.S. 11 months (until December 27, 2003) to bring
its measure into compliance. Nearly two years after the adoption of the Appellate
Body’s report, the U.S. has not repealed the Byrd Amendment to bring itself into
conformity with the WTO ruling.
On January 26, 2004, in order to protect its WTO rights, Canada, along with seven
other WTO members (Brazil, Chile, the European Union, India, Japan, Mexico and
South Korea), requested authorization from the WTO to retaliate against the United
States. The U.S. objected to the requests, and the level of retaliation was referred to
arbitration. The arbitration process lasted seven months.
Canada proposed two retaliatory options: tariff measures on certain imports from the
U.S. and the suspension of the injury test in the context of anti-dumping and
countervailing duty investigations involving imports from the U.S.
Under WTO rules, anti-dumping and countervailing duties may only be imposed if
dumped or subsidized imports are causing or threatening to cause injury to domestic
producers.
On August 31, 2004, the WTO Arbitrator ruled that Canada could retaliate against the
U.S. by up to 72 percent of the annual level of anti-dumping and countervailing duties
on Canadian exports disbursed to U.S. companies. All other WTO members involved in
the arbitration received the same level of retaliation.
On November 10, 2004, consistent with WTO rules, Canada returned to the WTO for a
second request for authorization to retaliate, reflecting the WTO Arbitrator’s decision.
That request will be considered at a meeting of the DSB on November 24. It will be
accepted unless all members at the meeting, including Canada, reject the request.
Distributions to U.S. companies under the Byrd Amendment amounted to
US$231 million in 2001, US$330 million in 2002 and US$240 million in 2003. The
primary recipients in the United States have been in the ball bearing, steel and other
metals, and household item sectors.
Disbursements linked directly to duties paid on Canadian goods amounted to
approximately US$5.2 million in 2001, US$2.5 million in 2002 and US$9.5 million in
2003.
Canadian softwood lumber producers have paid over US$3 billion in cash deposits to
date. Small amounts of softwood lumber duties, for which no administrative review was
requested, were disbursed in 2003. Approximately US$1 billion annually could begin to
be disbursed starting in late 2007. This is due to the ongoing process of administrative
reviews and NAFTA litigation.