Dispute Settlement
WTO - Dispute Settlement Understanding (DSU)
Canada - US - Continued Dumping and Subsidy Offset Act of 2000
- (Byrd Amendment)
Friday, 3 June 2005
The Honorable
Rob J. Portman
United States Trade Representative
600 17th Street, NW
Washington, DC 20508
Please find attached an aide-mémoire on the United States'
Continued Dumping and Subsidy Offset Act, on behalf of:
Embassy of Brazil Delegation of the Embassy of the
European Commission Republic of Korea
Embassy of Canada Embassy of India Embassy of Mexico
Embassy of Chile Embassy of Japan
AIDE MÉMOIRE
DELIVERED ON BEHALF OF BRAZIL, CANADA, CHILE, THE EUROPEAN
UNION, INDIA, JAPAN, KOREA AND MEXICO
The United States’ Continued Dumping and Subsidy Offset Act
("CDSOA", commonly known as the "Byrd Amendment")
distributes collected anti-dumping and anti-subsidy duties to the
companies that brought or supported those trade remedy cases. As
a result, dumped or subsidised products are not only subject to
anti-dumping or anti-subsidy duties, but also provide the basis
for subsidising the US competing product.
The CDSOA was ruled to be contrary to the basic obligation agreed
by WTO Members to limit the remedies available against dumping or
subsidisation to those provided for in the anti-dumping and anti-subsidy
agreements.
WHAT IMPLEMENTATION (BYRD AMENDMENT REPEAL) DOES NOT IMPLY
The World Trade Organization (WTO) ruling does not dictate to
the United States how to spend the resources collected from antidumping
and anti-subsidy duties. It only recalls the obligation accepted
by all Members to limit the responses to dumping or subsidisation
to the actions specifically provided for in the anti-dumping and
anti-subsidy agreements (mainly the application of anti-dumping
and countervailing duties). All WTO Members, including the United
States are free to spend these revenues anyway they wish as long
as such use is consistent with the WTO obligations.
The WTO ruling does not deprive US companies and workers of a
legitimate protection against unfair competition caused by dumping
or subsidisation. These trading practices can be adequately addressed
by the imposition of anti-dumping and anti-subsidy duties. And,
if over time, dumping or subsidisation increases and the duty initially
imposed becomes insufficient to neutralise it, additional legal
recourses are available. Thus, WTO rules allow for the review of
the level of the duty and the retroactive application of the revised
duty, thereby cancelling out any unfair competitive advantage that
could result from increasing the level of dumping or subsidisation.
WHAT ARE THE CONSEQUENCES OF NOT IMPLEMENTING THE WTO
RULING?
The United States had 11 months (until 27 December 2003) to bring
its legislation into conformity with the WTO rules. More than a
year has now elapsed since the expiry of this implementation period.
The introduction of a repealing bill in the House of Representatives
in March 2005 is welcome. However, there is no indication that compliance
with the WTO ruling is imminent. During the last session of Congress,
two bills aiming to implement the WTO ruling were also introduced
but there was no attempt to discuss, even less to adopt any.
Given continued U.S. non-compliance, Brazil, Canada, Chile, the
European Union, India, Japan, Korea and Mexico saw no other option
than to protect their rights and request the authorisation to retaliate
against the United States. This is the first time in the history
of the WTO that so many Members have been authorised to impose retaliatory
measures. These eight Members represent 71% of total US exports
and 64% of total US imports. This shows the widespread concerns
adversely affected by the Byrd Amendment.
All eight WTO Members may apply additional import duty on US products
or suspend the application to the United States of other obligations
at any time they deem appropriate. Although we consider the application
of retaliation as a measure of last resort, we are determined to
stop the damage being caused to our industries. Since 2001, more
than US $ 1 billion has been paid by exporters directly to their
US competitors. A fifth distribution of collected duties (to start
on 1 October 2005) would add to the damage already done and cannot
be accepted.
In view of the above, the authorities of Brazil, Canada, Chile,
the European Union, India, Japan, Korea and Mexico wish to convey
the urgency of the repeal of the CDSOA. Since 1 May 2005, Canada
and the EU have been applying retaliation. Other complainants are
currently taking preparatory steps to exercise their retaliation
rights in the WTO. While the precise date for the application of
such duties depends on the respective domestic requirements, there
is the intention to apply retaliation by July 2005. As a result
of the different retaliatory actions, a broad range of U.S. industries
will be subject to increased duties by major U.S. trading partners.
On the other hand, the CDSOA provides windfall benefits on a handful
of companies. Two companies alone received more than one third of
the money distributed so far and every year half of the payments
went to a very limited number of companies (4 in 2001, 3 in 2002,
2 in 2003 and 7 in 2004).
The dispute settlement system is a fundamental pillar of the WTO
in providing security and predictability to the multilateral trading
system. Its credibility depends on its strict observance by the
members. The failure of the United States, one of the world’s
leading trading nations, to comply fully in timely manner with its
WTO obligations is damaging to the credibility and effective functioning
of the rule-based trading system. Undermining WTO disciplines harms
the interests of all Members, including those of the United States.
We ask for immediate action to bring the United States into conformity
with its WTO obligations.
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