US to repeal Byrd Amendment following WTO ruling

Published: Friday 28 February 2003

A recent ruling by the World Trade Organization (WTO) would require the US to repeal the controversial 'Byrd Amendment'. This law had allowed payments of more than US $470 million, collected in anti-dumping duties, to steel manufacturers and other firms. The verdict has come as a major victory for India and 10 other members of the WTO.

According to the ruling: "The Continued Dumping and Subsidy Offset Act of 2000 (CDSOA), popularly known as the Byrd Amendment, constitutes a non-permissible action against dumping and subsidies, which is contrary to the provisions in two WTO agreements -- the Anti-Dumping and the Subsidies and Countervailing Measures." The actions permitted in the two accords include definitive anti-dumping or countervailing duties, provisional measures, price undertakings and multilaterally sanctioned countermeasures under the dispute settlement system. But, the Byrd Amendment is none of these measures.

The amendment was proposed in 2000 as a low-cost method of benefiting steel companies affected by illegal cheaper imports. At the time of signing it, the then US President, Bill Clinton, had called on the Congress to override it. He felt that some industries would be provided a subsidy beyond the level of protection needed. Ignoring his call, the Congress amended the US Tariffs Act of 1930 to include the law in October 2000.

It allowed redistribution of duties collected from anti-dumping and countervailing subsidies to domestic producers for expenses, if an affected company succeeded in convincing the federal government about the need to impose an anti-dumping or countervailing duty on the imports. Since then under the act, 900 companies have qualified for payments in 2001, as per the CDSOA annual report.

Countries including Australia, Brazil, Chile, India, Indonesia, Japan, Korea, Thailand, Canada, Mexico and members of the EU had argued that the act was inconsistent with WTO agreements. Moreover, they viewed it as an incentive for domestic producers in the US to file or support petitions for anti-dumping and anti-subsidy measures.

They claimed that they were doubly affected, first when the duty was imposed on the imported product and again when the domestic companies were subsidised from the duties collected. The complainants added that the act impaired, even nullified, the benefits accruing to them under the agreements.

Welcoming the verdict, EU trade commissioner Pascal Lamy said, "We had maintained that this measure clearly flies in the face of the letter and spirit of WTO law." The US is now expected to take necessary steps to comply with the recommendations made in the ruling.

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