The Hindu Business Line : US comes under fire at WTO's dispute settlement meet

A GROUP of developed and developing countries including India have succeeded in getting the World Trade Organisation (WTO) Dispute Settlement Body to authorise suspension of concessions and other obligations to the US under the latter's so-called "Byrd Amendment" case.

These seven countries could now take retaliatory measures against the US for failing to bring its legislation into line with its international obligations.

The seven complainants composed of the European Commission, Brazil, India, Japan, Korea, Canada and Mexico had told the DSB meeting in Geneva that the US had not implemented the DSB recommendation after the expiry of implementation time on December 27, 2003 and that sanctions were the only tool left with them to get the US to comply. Hence the DSB in its hearing on November 24 and 26, 2004 agreed to grant authorisation to suspend the application to the US of tariff concessions and other obligations in response to request by these seven countries.

In its defence at the WTO, the US said that its administration was working with Congress to achieve further progress, but the EU and Japan complained that the US has not reported any progress.

Canada complained that $3 billion duties had been collected in one sector alone and therefore would seek authorisation to suspend the application of tariff concessions to the US. Brazil specified that $1 billion had been disbursed, while Chile voiced disappointment that the US did not seize its last opportunity to repeal the Continuing Dumping and Subsidy Act of 2000. In Brussels, the EU said that this was a formal step before retaliatory measures could be imposed. These measures will take the form of additional import duties on wide variety of US products from an indicative list approved by the WTO that includes machinery, foodstuffs, textiles and paper products. The EU has urged the US to avoid retaliation by complying with its international obligations.

It might be noted that the Continued Dumping and Subsidy Offset Act of 2000 (the `Byrd Amendment') mandates the distribution of anti-dumping and countervailing duties to the US companies that brought or supported the complaints.

It creates an undue or perverse incentive for US industries to seek the imposition of duties on imported goods, improving their competitive position and assisting them in the form of cash payments. The WTO ruled that this constituted a double penalty on non-US competitors; it ruled the Byrd Amendment illegal in January 2003.

A total of $231 million was distributed in 2001 and around $330 million in 2002. Information published indicates that distribution for 2003 would amount to about $240 million.

If the US does not bring its legislation into conformity with its international obligations the EU would impose retaliatory measures early in 2005, the EU warned.

Meanwhile, trade analysts here told Business Line that the rule-based trading regime exemplified by the WTO has dealt a blow to the world's trading major by asking it to fall in line with its commitment to multilateralism and it is construed here as a sort of victory to developing countries like India for having gathered the gumption to stand up to trade majors when the rules of the game are not adhered to.