WTO Allows EU Trade Sanctions on US

The World Trade Organization (WTO) has authorized the European Union and seven other leading US trading partners to impose over €123 million ($150 million) worth of sanctions against the United States for failing to repeal anti-dumping rules which the WTO regards as illegal. The ruling by the Geneva-based organization allows the complainants to fine the US up to 72 percent of the total money collected from foreign exporters under the so-called Byrd Amendment.

The European Union and the other complainants -- Brazil, Mexico, Chile, Canada, Japan, India and South Korea -- have all welcomed the World Trade Organization's ruling.

Europe satisfied with WTO ruling

"We are obviously satisfied that the WTO has recognized our right to retaliate against the United States but we want to use this right to retaliate with caution nonetheless as we only see sanctions as a means to foster compliance on the US side," Arrancha Gonzales, spokesperson for the EU Trade Commissioner Pascal Lamy, told DW-RADIO.

"We want to use that as a new instrument to push the US congress to repeal legislation which has been declared illegal by the WTO quite a while ago," she continued.

Lamy described the Byrd Amendment as a WTO-incompatible response to dumping.

"I hope the US will now take action to remove this measure, thus avoiding the risk of sanctions," he added.

The EU says it is not opposed to anti-dumping sanctions themselves, but to this practice of distributing the duties levied among US companies.

Legislation aimed at compensating US companies

That legislation, brought in the year 2000, empowers Washington to hand over to US companies the duties imposed on foreign firms judged to be unfairly dumping cheap goods on the US market. A statement from the eight complainants estimated that that money totaled about €196 million ($240 million) last year.

Named after its sponsor, West Virginia senator Robert Byrd, the amendment has primarily benefited American steel manufacturers as well as pasta and candle producers.

"Today's determination will not affect the ability of the United States to continue enforcing its trade laws to impose duties on countries that sell unfairly dumped or subsidized products in the US market", said Christopher Padilla, spokesman for the US Trade Representative's office in an interview with EUobserver.com.

"Some foreign countries claimed that US trade laws like the Byrd Amendment cause them significant economic damage, but the panel of arbitrators at the WTO agreed with the United States that those claims were grossly exaggerated," he continued.

The eight complainants, including the EU, had asked the WTO in January this year for a go-ahead to slap sanctions on the US if the Byrd Amendment was not repealed.

No imposing of sanctions as yet

However, they now say they’ll hold off imposing sanctions. But the EU and others hope that their strategy of using the threat of retaliation will pay off and pressure the US Congress to repeal the legislation.

But Japan's economy, trade and industry minister, Shoichi Nakagawa, has been quoted as saying that if the United States refuses to repeal the Byrd Amendment, Japan will ask the WTO to approve specific retaliatory measures possibly by fall.

While the complainants weigh up the consequences of actually imposing such measures, the US Congress too is bound to continue debate over whether the WTO is overstepping its authority in imposing fresh trade obligations on the United States.