News Release
Pascal Lamy
No. 127/04
August 31, 2004
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
The WTO arbitrators have today given a green light for eight WTO Members to
retaliate up to more than $150 million against the US for failing to comply with
its international trade obligations. In January 2003, the WTO ruled as illegal
a piece of US 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 US until December 2003 to comply with the WTO ruling
but the US missed this deadline. The failure by the US 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 authorization from the WTO to impose
additional import duties on US products or to suspend other obligations to the
US.
Reacting to the news, EU Trade
Commissioner Pascal
Lamy said: "The Byrd Amendment has raised widespread concerns from
the outset as evidenced by the large number of complainants in this case. Trade
defense instruments are a legitimate tool, but they have to follow WTO rules.
It is clear that the Byrd Amendment is a WTO-incompatible response to dumping
and subsidization and must therefore go. I hope the US will now take action to
remove this measure, thus avoiding the risk of sanction."
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 US industries to seek the imposition of duties on imported goods,
thereby improving their competitive position and receiving cash payments.
A total of $231 million was distributed in 2001 and around $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
have yet to be finalized, information published so far indicates that distribution
for that year would amount to about $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 subsidization. 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 [WTO Dispute Settlement
Body] 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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Press Contacts:
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Anthony Gooch
202-862-9523
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Maeve O'Beirne
202-862-9549
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