Japan has proceeded to file its request for formal authorization from the WTO Dispute Settlement Body (DSB) to impose retaliation with six WTO members - Brazil, Canada, the EU, India, Korea and Mexico - against the U.S. for failing to comply with its international trade obligations. This is a formal step before retaliation may be imposed. The DSB is scheduled to consider the request at its regular meeting on 24 November. The request will be formally authorised unless the DSB unanimously rejects them. As stipulated in the request of Japan, the retaliatory measure consist in the imposition of additional import duties and may cover a wide variety of U.S. products, such as machinery, steel, textile or paper products among others. Further to the DSB’s authorisation, Japan will be free to impose retaliation at any time, unless the U.S. comes to full compliance with WTO ruling. Japan strongly urges the U.S. to act immediately to repeal the illegal “Byrd Amendment”.

In January 2003, the DSB ruled as illegal a piece of U.S. legislation commonly known as the “Byrd Amendment”, under which anti-dumping and countervailing duties are distributed to the domestic companies that had requested or supported the imposition of those duties.

Last August, a panel of WTO arbitrators gave its green light to eight members (Brazil, Canada, Chile, the EU, India, Japan, Korea and Mexico) to retaliate against the US for failing to put its legislation in conformity with WTO rules. Today’s request was made in accordance with this arbitrator’s decision as required by the WTO rules.

Background

The Continued Dumping and Subsidy Offset Act of 2000 (so-called Byrd amendment) mandates the distribution of the anti-dumping and countervailing duties to the companies that brought or supported the complaints. It therefore creates an undue incentive for U.S. industries to seek the imposition of duties on imported goods, thereby improving their competitive position and receiving cash payments.

A total of US $ 231 million was distributed in 2001 and around US $ 330 million in 2002. The main recipients have been in the bearing, steel and other metal, household item and food (in particular pasta) sectors. Though 2003 data regarding disbursements has yet to be finalised, information published so far indicates that distribution for that year would amount to about US $ 240 million.

Eleven WTO Members (Australia, Brazil, Canada, Chile, EU, India, Indonesia, Japan, Korea, Mexico and Thailand) combined forces to challenge the WTO compatibility of the legislation in 2001. A Panel in September 2002 and the Appellate Body in January 2003 confirmed that the Byrd amendment is an illegal response to dumping and subsidisation. The US had until 27 December 2003 to bring this legislation into conformity with the WTO rules. Eight WTO members (Brazil, Canada, Chile, the EU, India, Korea, Japan and Mexico) then requested the DSB to authorise the retaliations on 26 January 2004. The US objected to these requests and the issue of the level of retaliations was referred to arbitration. The arbitrator issued its decision on 31 August 2004. Under the WTO rules, following the arbitrator’s decision, a renewed request and the formal authorisation by the DSB thereon is required before the retaliatory measures may actually be imposed

Despite calls by the US administration to repeal the law, the US Congress has not yet implemented the WTO ruling. Two bills are pending, but neither has so far reached the discussion stage.

Contact:

Shigehiro TANAKA, Etsuo SATO
Hideki MAKIHARA, Ikuyo KATSUTA

Multilateral Trade System Dept., METI

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