WTO Says Tariff-Sharing Law Illegal
A U.S. law that directed the government to share tariff revenue with private companies has been declared illegal by the World Trade Organization, U.S. officials said Tuesday.
Analysts said the decision by the 144-nation organization represents another trade-related setback for the United States and could reinforce perceptions that the government preaches free trade but practices protectionism.
The action is aimed at a law enacted in 2000 on behalf of U.S. steelmakers and other companies that are hurt when foreign competitors “dump” products in the United States at less than the cost of production.
The law, known as the Byrd Amendment, allows the companies to receive the proceeds from punitive tariffs imposed in anti-dumping cases. It was challenged by the European Union, Canada and eight other WTO members.
More than $200 million has been distributed to U.S. companies since the law took effect. The WTO decision does not require the U.S. government to take back those funds but will cloud the legality of any additional distributions.
Critics said the law created a double incentive for companies to file complaints leading to anti-dumping actions by the government. Not only do they benefit from the higher prices that result from the protective duties, but they get the proceeds of the tariffs as well.
The WTO action finalizes a provisional decision in July. Though it was not announced, U.S. officials said the decision was approved over the weekend by the WTO panel handling the case.
“It is final, and we intend to appeal,” said Richard Mills, spokesman for U.S. Trade Representative Robert Zoellick.
Despite the promised appeal, Gary Hufbauer, senior fellow at the Institute for International Economics in Washington, said neither the Clinton administration nor the Bush administration was enthusiastic about enforcing the law.
“Probably nobody in the U.S. government is shedding any tears over this,” Hufbauer said.
The three-person WTO tribunal that handled the case concluded that the law violated nine provisions of global trade agreements. It urged the United States to repeal it outright, rather than attempt to amend it.
Hufbauer said the law was a significant irritant in relations between the United States and its major trading partners. Those relations have been strained in recent months by U.S. approval of big subsidies for U.S. farmers and punitive tariffs on imported steel and lumber.
Last week, the WTO authorized the European Union to impose tariffs of up to $4 billion on U.S.-made products to compensate for a U.S. tax credit that subsidizes multinational corporations.
As traditional tariffs and quotas have been gradually reduced under global trade agreements, the United States increasingly has used its anti-dumping laws to protect industries that find it hard to compete against low-cost imports.
