February 17, 2006

US faces further WTO protest over Byrd law

GENEVA (Reuters) - The European Union, Canada, Japan and
others accused the United States on Friday of failing to end
illegal payments to U.S. companies, known as the Byrd
amendment, indicating that their retaliatory tariffs would
remain in force.

The United States told the World Trade Organization's (WTO)
Dispute Settlement Body (DSB) that the amendment, which the
Geneva-based WTO has repeatedly condemned, was repealed by
Congress last month.

But 12 WTO states, among them Brazil, India, Australia and
Mexico, countered that the U.S. move was inadequate because
funds will continue to be paid out for years to come.

"Until such time as disbursements are fully and completely
ceased, the United States will remain in violation of its WTO
obligations," Canada said in a statement.

Last March, the EU slapped an extra 15 percent tariff worth
a total $28 million on U.S. goods including paper,
agricultural, textile and machinery products, to hit back at
Washington for failing to remove the measure.

Canada has imposed extra tariffs on U.S. goods worth $11
million, while those of Japan are the largest at $52 million.
The amounts can be revised annually.

Under the disputed U.S. law, named after Senator Robert
Byrd, Washington collected duties on imports which it had
decided were unfairly priced, or subsidized, and distributed
the cash to U.S. competitors of the foreign companies.

Congress struck down the measure last month in a close
vote, but only with effect from October 1, 2007.

Over the next 18 months, according to official figures,
U.S. firms will receive more than $2 billion under the Byrd
amendment, compared with the $1.26 billion paid out since the
program began in 2000.

At the same DSB meeting, the WTO agreed to a new
investigation, requested by the EU, into alleged illegal
subsidies to U.S. planemaker Boeing.

The move, which is largely procedural, was made necessary
after Washington challenged some of the evidence put forward by
Brussels in support of its arguments in the tit-for-tat
transatlantic subsidies action both launched last year.

A separate trade panel -- which on the evidence of past
cases will eventually be merged with the original investigation
-- will now look at the additional evidence.