Trade Tiff Could Cost Millions
The European Union, Japan and South Korea asked the World Trade Organization for permission to impose sanctions on the United States in a dispute about a law that gives American firms money raised in fines levied on foreign rivals.
Other nations, including Brazil, Chile and Thailand, were expected to lodge similar requests after the U.S. Congress failed to repeal the so-called Byrd Amendment, which has been ruled illegal by the WTO.
WTO, the Geneva-based trade organization that sets rules on cross-border trade, had given the United States until Dec. 27 to act.
"The Byrd amendment has raised widespread concerns from the outset as evidenced by the large number of complainants in this case," said EU trade commissioner Pascal Lamy.
"I hope the U.S. will now take action to remove this measure, thus avoiding the risk of sanctions," he said in a statement.
The EU did not specify the level of sanctions it will seek, but spokeswoman Arancha Gonzalez said the U.S. legislation had cost companies from the EU some $70 million last year. In Tokyo, Trade Ministry spokesman Tamotsu Moriguchi said Japan will seek permission to impose sanctions worth $100 million on unspecified American products.
Under the three-year-old Byrd Amendment — named for its sponsor, U.S. Sen. Robert Byrd — hundreds of millions of dollars in fines collected by the U.S. government have been handed over to companies that lodge complaints against foreign exporters judged to be selling products in the United States at artificially low prices.
The WTO's dispute settlement body is expected to discuss the sanctions requests at a special meeting Jan. 26. Although it acknowledges that it hasn't repealed the amendment, the United States still may appeal against the sanctions.
Gonzalez said she expected a decision on the sanctions in the spring.
Besides the EU, the law provoked formal complaints from Australia, Brazil, Chile, India, Indonesia, Japan, South Korea, Thailand, Canada and Mexico. They claimed that the law punishes exporters to the United States twice because first they are fined and then those fines are passed on to their competitors.
The U.S. steel industry was the major beneficiary, while other recipients included makers of pasta and candles.
The rift over the Byrd amendment is only one of several trade disputes between the United States and its key trading partners in Europe and elsewhere — part of continued tension between free trade and domestic concerns.
Last week, the U.S. accused South Korea of failing to halt the piracy of American movies and music that it said was costing U.S. companies millions of dollars in lost revenue.
The administration announced that South Korea was being added to a priority list of countries that are subject to special monitoring and consultations aimed at making sure the foreign government acts to address the copyright piracy issues that have been uncovered.
Last month, President Bush scrapped import tariffs he had imposed in 2002 to help the battered steel industry, after the EU threatened to impose $2.2 billion in fines on a wide range of products from key election states Mr. Bush is hoping to win this year such as Florida, California, Louisiana and the Carolinas.
In the past year, the U.S. and EU have also squabbled over European restrictions on genetically engineered food and a policy banning countries who opposed the Iraq war, like France and Germany, from reconstruction projects there.
Mr. Bush signaled this week at the Summit of the Americas that he may ease that policy for future rounds of reconstruction work.
At that same summit, however, Latin American countries resisted the president's push for a Western Hemisphere free-trade zone and said U.S. farm subsidies made trade with the United States unfair.