Dispute Settlement
US Byrd Amendment – WTO says eight WTO Members may retaliate
against the US -
Press statement by Brazil, Canada, Chile, the EU, India, Japan,
Korea, and Mexico –31 August 2004
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 .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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