- The Washington Times - Tuesday, August 31, 2004

The World Trade Organization yesterday said leading U.S. export markets can throw up barriers against American products because Congress and the Bush administration failed to repeal a popular trade law that violates international rules.

The WTOlast year ruled against the so-called Byrd amendment, a measure that allows U.S. companies to pocket money from foreign rivals. Named for Sen. Robert C. Byrd, the West Virginia Democrat who ushered it into law, the rule compelled foreign companies to pay $329 million in 2002 and as much as $240 million last year to U.S. makers of bearings, steel and other products as well as food.

Yesterday’s ruling would allow Canada, the 25-nation European Union, Japan and other major trade partners to impose retaliatory fines equal to 72 percent of the payouts, less than they wanted but enough to be painful to American exporters.

The complaining countries indicated they would prefer U.S. compliance to an escalating trade war.

“I hope the U.S. will now take action to remove this measure, thus avoiding the risk of sanctions,” said EU Trade Commissioner Pascal Lamy. He did not specify which products would be targeted if the bloc retaliates.

The Bush administration has proposed repealing the Byrd rule but Congress has been reluctant.

“The United States will comply with its WTO obligations, and the administration will work closely with Congress to do so in a way that supports American jobs and American workers,” said Christopher Padilla, a spokesman for the U.S. trade representative’s office.

But last year 70 senators wrote Mr. Bush demanding that the rule remain on the books.

“Nothing in this [WTO] decision will stop the United States from continuing to distribute the duties it collects under the Byrd amendment as it does today,” Mr. Byrd said yesterday.

“Funds distributed under this law have helped, and will continue to help, hundreds of American companies, their workers and entire communities injured by unfair trade,” he added.

The money is collected from overseas producers when U.S. companies convince the U.S. government they face unfair foreign competition, leading to duties on products including lumber, steel, pasta, honey, garlic and crawfish.

Under the amendment, funds from overseas producers are funneled directly to U.S. companies — creating an incentive to file cases and distorting markets, according to countries that protested the law. Before the amendment went into effect in 2001, the duties collected at the border would go to the U.S. Treasury.

Mr. Padilla said that yesterday’s decision would not affect the ability of the United States to enforce its trade laws or to impose duties on countries that sell dumped or subsidized products in the U.S. market.

“The Byrd amendment simply deals with how the funds collected from such duties are disbursed by the Treasury,” he said.

Brazil, Chile, India, South Korea and Mexico also won the right to retaliate in yesterday’s WTO decision.

The European Union in March leveled the first WTO-authorized sanctions against the United States after Congress failed to repeal an illegal export subsidy.

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