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WTO Approves Sanctions on U.S. Exports

November 26, 2004

GENEVA – The World Trade Organization on Friday approved stiff sanctions on a wide range of American exports intended to punish the United States for failing to repeal what it considers protectionist legislation, a trade diplomat said.

“It’s been approved,” said Amina C. Mohamed, Kenyan ambassador to the WTO and chairwoman of the organization’s dispute settlement body.

The European Union and other plaintiffs sought formal WTO authorization to retaliate by imposing new duties against various U.S. products. Among the potential targets are cod, textiles, glassware, mobile homes and apples.

The WTO dispute settlement body had been scheduled to take the action Wednesday, but U.S. trade diplomats held last-minute talks with counterparts from the European Union and countries including Canada and India.

Although U.S. officials declined comment, the move was believed to have followed wrangling after Washington requested fine-tuning of documents submitted to the WTO.

The 2000 law, named for Sen. Robert Byrd, D-W.Va., was written with the steel industry in mind. It 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 at below-market prices, making it impossible for American producers to compete.

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

In August, a WTO arbitrator approved penalties of up to 72 percent of the money collected from foreign exporters and handed to American companies and said the winners in the case should submit lists of potential targets. Under WTO rules, however, formal authorization must come from the dispute settlement body.

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

Only the EU, Japan, South Korea and India have so far submitted lists, but all except Chile requested formal authorization to retaliate – and Canada has said it is pondering which products to target.

On Tuesday, new EU trade chief Peter Mandelson said the sanctions could be applied early next year.

Their value has yet to be determined, but trade officials have said they could amount to more than $150 million a year – a tiny sum in comparison with the $2 billion in sanctions the EU threatened in its successful bid to force the United States to lift illegal tariffs on foreign steel last year.

Earlier this month, then-EU trade spokeswoman Arancha Gonzalez said the target list included “vocal U.S. sectors that could help Congress focus its mind on compliance.”

Other products on the EU list include heavy machinery made by companies such as Caterpillar Inc., which is based in Illinois, the home state of House Speaker Dennis Hastert.

On Wednesday, U.S. Ambassador Linnet Deily told the WTO that the Bush administration was working with Congress to bring the law into line with the global body’s rules.




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