Setting the Tone for Trade Talks
An effort by the United States to resolve one of its thorniest trade disputes may have bought some goodwill to press forward on stalled global trade talks.
The House of Representatives’ vote repealing the controversial anti-dumping law known as the Byrd amendment comes at a crucial time for negotiators trying to make progress before a meeting of the World Trade Organization next month in Hong Kong.
The 148-member WTO has set a deadline of 2006 for completion of the so-called Doha round of talks, which the United States and other supporters hope will reduce tariffs and government subsidies and boost trade in services.
U.S. manufacturers, which have benefited from measures that penalize countries that dump cheap goods in the United States, were unhappy with the latest move. But analysts said the United States needed to prove to its negotiating partners that it was willing to comply with global trade laws, even if it meant upsetting powerful domestic constituencies.
Trade supporters say the Bush administration has been undermined by Congress’ unwillingness to bring U.S. laws and procedures into compliance with global trade rules.
“It has become more and more embarrassing for the U.S. to be advocating trade liberalization and the rule of law when at the same time we’re in gross violation of major international trade agreements,” said Daniel Griswold, chief trade analyst at the Cato Institute, a strong advocate of open markets. “The Byrd amendment is a flagrant example.”
The House approved a repeal of the Byrd amendment Nov. 18. That legislation, which is named after its champion, Sen. Robert C. Byrd (D-W.Va.), allows trade penalties to be distributed to U.S. companies that are believed to have been harmed by dumping. After the WTO declared the Byrd amendment illegal in 2002, Canada, the European Union, Japan and Mexico imposed retaliatory duties on U.S. goods that amounted to $114 million in 2004.
Criticism of that measure increased after the nonpartisan Government Accountability Office reported that a small number of companies in three industries -- steel, candles and ball bearings -- had received two-thirds of the $1 billion in Byrd amendment penalties disbursed over the last four years.
However, the amendment still has strong support in the Senate. In testimony this year before a congressional committee, Byrd said he would not cave in to pressure from “faceless WTO bureaucrats” to change a U.S. trade law designed to protect American companies from unfair foreign competition. The outcome will be decided by a conference committee because the House attached the amendment’s repeal to a budget bill and the Senate version of that legislation didn’t contain a similar measure.
U.S. Trade Representative Rob Portman said Tuesday that the House repeal was “quite an accomplishment” given the political sensitivities facing politicians in manufacturing-dependent regions. Portman knows the pressures. Before his present job, he was a congressman in Ohio, home of Timken Co., which along with its subsidiaries collected $395 million, or 40%, of the Byrd payouts, according to the GAO.
“The United States wants to comply with our WTO obligations,” Portman said from Geneva, where he was meeting with trade ministers to try to make progress on the Doha pact before the Dec. 13-18 meeting in Hong Kong.
Timken spokesman Jeff Dafler said Wednesday that his company thought there was still strong bipartisan support in the Senate for preserving the Byrd amendment. He said Timken, the last major U.S. bearing producer, believed anti-dumping measures were necessary to protect U.S. companies from predatory foreign firms.
“We think that it’s important that governments have the right to continue to insist that those foreign producers that are guilty of dumping activities be held accountable,” he said.
But Edward Gresser, a trade analyst at the Progressive Policy Institute, a think tank affiliated with the Democratic Party, said domestic support for anti-dumping measures might weaken as companies became global and were exposed to unfair trade complaints.
While foreign countries have increased their filing of anti-dumping cases against U.S. companies, the U.S. has become more judicious in its use of that trade weapon. Gresser said the U.S. government had initiated 11 anti-dumping investigations this year, down from 80 to 90 a year a decade ago.
A separate effort last week by the U.S. to resolve one of the key tensions in its relationship with Canada turned sour Thanksgiving Day when the Canadian government announced that it was giving its lumber producers $1.3 billion in aid.
U.S. officials viewed the announcement as a slap in the face because just two days earlier, the Commerce Department had agreed to reduce duties on Canadian softwood lumber from an average of 16% to less than 1%. The U.S. had been ordered to revise the duties by a panel established under the North American Free Trade Agreement. The panel upheld Canada’s contention that the duties had not been calculated correctly.
Michael Hart, a former Canadian trade negotiator and professor at Carleton University in Ottawa, called the U.S. move a “rather small” gesture aimed at appeasing angry Canadians. However, a failure to comply with the ruling, he said, would have badly weakened the NAFTA agreement and would “seriously bring into question the U.S. commitment to any of its trade relationships.”
Steve Swanson, chairman of the Coalition for Fair Lumber Imports, said the NAFTA ruling was based on inaccurate information and the reduction of duties would be “devastating” to U.S. lumber companies and private timberland owners.
U.S. officials said Thursday that they were considering an appeal of the NAFTA decision and would look into whether the newest Canadian government package violated trade rules. The U.S. also is pursuing a separate claim in the WTO, where a panel has ruled in its favor on a different aspect of the softwood lumber trade case.
