Sanctions against US

So it's not just on the battlefield where the US fights dirty.

From the FT, August 31 2004.

"The World Trade Organisation on Tuesday gave the green light for the European Union and seven other WTO members to impose up to $150m a year in sanctions on the US for its failure to repeal a trade law declared illegal by the WTO."

Known as the Byrd amendment, the law requires US customs authorities to distribute the proceeds of anti-dumping and anti-subsidy duties to the companies that initiated the cases.

The ruling by the organisation's arbitrators is certain to fuel anti-WTO sentiment in the US congress, where many legislators are openly opposed to repeal of the legislation, and will add to transatlantic trade frictions as the US presidential campaign goes into top gear.

The EU is already applying sanctions to selected US goods in retaliation for failure to alter US laws granting companies tax breaks for exports, and disputes are simmering on genetically-modified foods and subsidies to the European Airbus.

Since the Byrd amendment was enacted in 2000, about $800m (€663m, £445m) has been paid out to makers of ball-bearings, steel, candles and pasta, among other products.

The US congressional budget office projected earlier this year that a further $2.35bn will be disbursed between 2005 and 2009.

The WTO arbitrators, in a complex judgment based on economic modelling of the trade effects of the US measure, said the eight complainants could impose sanctions of up to 72 per cent of the duties on their companies passed on to US rivals.

The complainants say this could allow them to levy duties worth up to $150m in any year. In 2003 they amounted to an estimated $121m, of which Japanese companies accounted for $80.5m and EU companies $13.6m. The other countries involved are Brazil, Canada, Chile, India, Mexico and South Korea.

The European Commission has already drawn up a sanctions list of politically sensitive US products it targeted in the trade dispute over US steel safeguards last year. But Pascal Lamy, EU trade commissioner, said yesterday the EU had not yet decided whether to go ahead with retaliation.

“I hope the US will now take action to remove this measure, thus avoiding the risk of sanctions,” he said. In a joint statement, all eight complainants urged the US to act immediately to repeal the Byrd amendment, ruled illegal by the WTO last year.

Christopher Padilla, spokesman for the US trade representative, said the US government would work closely with Congress to comply with its WTO obligations. The Bush administration has called on the legislature to repeal the law but neither of the two bills pending has reached the discussion stage.

Tuesday's ruling covers only those countries requesting sanctions authorisation. Three others Australia, Indonesia and Thailand that joined the original complaint against the Byrd amendment did not press for sanctions, agreeing instead to give the US until the end of this year to repeal the legislation.

China, whose imports have accounted for about a third of all anti-dumping and countervailing duties collected by the US authorities in recent years, was not a complainant and will not be able to impose sanctions.