September 16, 2002
The World Trade Organization ruled on Monday that the United States violated key trade agreements with a law that channels anti-dumping duties on imports to U.S. firms making similar products. U.S. officials in Washington said they would appeal the decision, which is the latest in a series of WTO rulings against duties imposed by the United States to protect domestic producers against "unfairly" priced or subsidized imports.
The law, widely known as the Byrd Amendment, requires the U.S. Customs Service to distribute the proceeds of antidumping and countervailing duties to U.S. companies which complain that the cheap imports have undermined their business. A WTO panel -- created at the request of the 15-nation European Union and 10 other members of the trade body -- ruled that the Byrd Amendment should be brought into line with WTO rules. The three-man panel said the best way to do this would be to repeal the law, proposed by Democratic Senator Robert Byrd of West Virginia.
Richard Mills, a spokesman for the U.S. Trade Representative's office, said the United States had no intention of repealing the provision. "We believe that Congress' ability to direct the use of AD/CVD proceeds is consistent with WTO rules. We vigorously defended the Byrd amendment. We disagree with the panel's conclusion and we intend to appeal," Mills said. Congress passed the law in 2000 against the advice of then President Bill Clinton's administration. Charlene Barshefsky, trade representative at the time, warned that the Byrd Amendment contradicted WTO rules. But the law quickly won the support of new President Bush.
The law caused an uproar in the WTO, where dozens of countries said it undermined principles of the global trading system by encouraging U.S. firms facing cheap foreign competition to claim they were being hurt by dumped imports. The panel effectively supported this argument, saying the law encouraged U.S. companies to apply for compensation "irrespective of their need for relief..." and that this was "inconsistent with the principle of good faith." Bush administration officials argued that WTO accords do not state what countries can, or cannot do, with the proceeds of anti-dumping levies.
But the panel rejected this argument, saying the Byrd Amendment's provisions were not a "permissible remedy." However, the panel rejected a Mexican complaint that the law amounted to a subsidy to U.S. firms producing goods that compete specifically with imports from Mexico. The panel ruled that Mexico had failed to show it had been specially targeted.
The United States' decision to appeal is expected to delay a final decision in the case for at least three to six months.
In the meantime, the Bush administration plans to proceed with a second tranche of distributions to U.S. companies this fall under the Byrd amendment. Last year, companies received about $200 million in funds under the program.
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