A decision passed by a WTO panel on August 31, 2004 will cost the US $150 million in penalty tariffs on exports, and will take a toll on the relationship between the U.S. and the WTO. In his September 2, 2004 article titled “The WTO Loses Friends on the Hill,” BusinessWeek’s Washington bureau correspondent, Paul Magnusson, reports: “On August 31, a WTO panel authorized the European Union, Japan, Canada, Mexico, and three other nations to levy $150 million in penalty tariffs on U.S. exports.” The WTO’s objective in this ruling was to “make up for a U.S. law passed in 2000 that the WTO says violates its international trade rules.”
The above-mentioned U.S. law, termed the Byrd Amendment, was introduced to Congress by Senator Robert Byrd (D-West Virginia) in 2000. The Amendment requires that the U.S. Treasury distribute the capital collected from anti-dumping and anti-subsidy duties to the U.S. companies damaged by foreign imports.
The Byrd Amendment immediately raised concerns within the international community. Numerous Members held that the US law constituted an illegitimate response to dumping and subsidization. With Australia, Argentina, Brazil, Canada, Chile, China, Costa Rica, EU, Hong Kong, India, Indonesia, Israel, Japan, Korea, Mexico, Norway, Thailand all criticizing the incompatibility of the legislation to the WTO obligations, the Byrd Amendment became the most contested piece of legislation in the history of the WTO.
In response to U.S. law, the WTO Appellate Body ruled on January 16, 2003 that the Byrd Amendment was incompatible with WTO rules. EU Trade Commissioner Pascal Lamy commented: "The EU and 10 other countries had maintained that this measure clearly flies in the face of the letter and the spirit of WTO law. This was our conviction from the outset and I am glad that the Appellate Body has now clearly and definitively condemned this measure. We now expect the US to act quickly in order to repeal the Byrd amendment."
Since the U.S. delayed in its repeal of the Byrd Amendment, the WTO issued the decision on August 31, authorizing $150 million in penalty tariffs against the U.S. These penalty tariffs will hit hard, as according to Magnusson, “the Congressional Government Accountability Office (GAO) has already noted that $25 million was overpaid from the U.S. treasury to U.S. companies.”
The penalties assessed by the WTO contribute greatly to the growing disharmony between the U.S. and the WTO and raise concerns about the future participation of the U.S. in the WTO. If you would like know more about matters concerning the WTO, please contact Lee Hunter at (801) 328-3600 or by e-mail at lhunter@kmclaw.com.