The European Union yesterday threatened to retaliate against an 87-year-old U.S. trade law unless Congress repealed it, marking an escalation in one of several festering disputes between the two powers.
The United States and the 15-nation European Union have the largest trade and investment relationship in the world, but a series of disagreements and the collapse this month of World Trade Organization talks in Cancun, Mexico, have added tension to trans-Atlantic economic relations.
The European Union yesterday took aim at the U.S. Anti-Dumping Act of 1916, a seldom-used law affecting few companies that the WTO three years ago said was illegal. The act allows the government to fine companies or place fees on foreign products when they are dumped, or sold below cost, in the U.S. market. Three cases involving five European firms were pending, said an EU official, who asked not to be named.
“The sign that international trade law will simply be ignored is very disturbing and cannot go unchallenged. I hope that our move will give the impetus for immediate action by Congress,” said Pascal Lamy, the EU trade commissioner.
The European Union is asking the WTO to allow it to impose fees on U.S. products when they reach its borders, but the exact figure is uncertain. Europe also has proposed a law that would allow its companies to sue U.S. firms for costs, damages and expenses caused by the application of the Anti-Dumping Act of 1916.
“We’re working with Congress to address this matter as expeditiously as possible,” said Richard Mills, spokesman for U.S. Trade Representative Robert B. Zoellick.
Quick action is unlikely, though. Bills to repeal the act have been introduced but not discussed.
Congress instead is focusing on repealing and replacing a different piece of legislation that the WTO said is illegal, and that has brought the prospect of $4 billion in retaliation by the European Union.
Lawmakers are considering different bills in the House and Senate — there are three main proposals — that would end tax breaks on some exports and foreign leases, and instead offer tax breaks for manufacturers and rewrite part of the international tax code.
Moving the tax bill to a House-Senate conference by the end of the year was a main trade-related tax priority, a Senate aide, who asked not to be named, said yesterday.
The United States, European Union and other countries usually turn to the WTO during trade disputes, with the United States the most frequent defendant.
Challenges at the WTO have bothered the United States especially when decisions require changes to laws or trade practices.