WTO Holds Off on Sanctions Over U.S. Law

Associated Press - 11.24.2004, 10:36 AM

The World Trade Organization on Wednesday held off approving stiff sanctions on U.S. exports ranging from cod to mobile homes intended to punish Washington until it repeals the so-called Byrd amendment.

U.S. trade diplomats held last-minute talks with counterparts from the European Union and countries including Canada, Japan and India, after all sides agreed to suspend a meeting of the WTO dispute settlement body, officials said.

The move was believed to have followed procedural wrangling after Washington requested fine-tuning of documents submitted to the WTO, and was not expected to affect the final decision.

Officials said the WTO body would likely reconvene later Wednesday - or on Thursday morning - to give the EU and other plaintiffs formal authorization to retaliate by imposing new duties against various U.S. products. Among the other potential targets are textiles, glassware, heavy machinery, sweet corn and apples.

The Byrd amendment of 2000 was ruled illegal two years ago by the 148-nation WTO - which referees global commerce - following a complaint spearheaded by the EU. The contested law allows American companies to receive proceeds from duties levied on foreign rivals for alleged "dumping" - selling goods cheap to grab U.S. market share unfairly.

The WTO backed claims that the amendment breaks trade laws by punishing exporters to the United States twice because they are fined first, and then those fines are passed on to their competitors.

The EU was joined in its complaint by seven other countries: Brazil, Canada, Mexico, South Korea, Japan, India and Chile.

Named for its sponsor, West Virginia Sen. Robert Byrd, the amendment has diverted an estimated US$800 million (euro608 million) to American companies since 2001, according to critics.

In August, a WTO arbitrator proposed penalties of up to 72 percent of the money collected from foreign exporters and handed to American companies and said the winners should submit lists of potential targets.

"If nothing is done (to repeal the law), we will have to move to the application of the additional import duty, which could be early in 2005," new EU trade chief Peter Mandelson said during a visit Tuesday to WTO headquarters.

Besides the EU, only India, Japan and South Korea submitted lists to the WTO.

On Tuesday, however, Canadian officials said they were seeking input from their country's firms about which U.S. products could be targets of retaliatory duties.

"Retaliation is not the preferred course of action, but this is about respecting international trade laws," said Canadian Trade Minister Jim Peterson.

Before Wednesday's meeting was suspended, EU trade official said Washington's efforts to respect the 2002 ruling could "be summarized in two words - no progress."

But U.S. Ambassador Linnet Deily said the Bush administration was working with Congress to bring the law into line with WTO rules.