U.S. `disappointed' by tariff tiff

Tokyo levies prompted by Byrd amendment

Markets

August 02, 2005|By James P. Miller | James P. Miller,CHICAGO TRIBUNE

The U.S. government's top trade group said yesterday that it is "disappointed" that Japan - frustrated by U.S. lawmakers' failure to repeal a controversial anti-dumping measure - has moved to impose punitive tariffs on certain American-made goods.

Japan's move early yesterday underscores the escalating difficulties that the divisive trade measure known as the "Byrd amendment" poses to many American manufacturers as well as the White House.

The World Trade Organization already has ruled that the five-year-old amendment violates global trade laws, in a finding that cleared the way for retaliatory moves like the one Japan announced yesterday.

The Byrd measure will remain U.S. law until Congress formally repeals it, however, and to date legislators have ignored Bush administration calls to eliminate the law.

"The Japanese government has decided that there is a need to more effectively pressure the U.S. by implementing retaliatory measures and promoting the repeal of the amendment in Congress," Trade Minister Shochi Nakagawa said in Tokyo, in announcing that Japan's Ministry of Economy, Trade and Industry is establishing up to $51 million in tariffs on U.S.-made ball bearings, airplane parts and other products.

The "Continued Dumping and Subsidy Offset Act" was adopted in October 2000, at the behest of West Virginia Democratic Sen. Robert C. Byrd.

The amendment added a twist to existing U.S. trade-law enforcement regarding "dumping," a practice in which foreign producers attempting to expand their market share sell their products in the United States at a cost below what they charge in their home country. If the United States decides that offshore industries are dumping, it imposes tariffs on the allegedly underpriced goods.

For years, the tariffs the United States collected from foreign producers went into the coffers of the U.S. government. But the Byrd amendment changed that: Now, the government hands out the tariffs it collects from foreign producers to U.S. companies in the affected industries.

That's wrong, say critics inside and outside the United States.

The Byrd amendment "ought to be scrapped," House Ways and Means Committee member Rep. Jim Ramstad, a Minnesota Republican, said in a recent speech, "because this illegal subsidy provides financial incentives for companies to seek anti-dumping and countervailing duty rewards."

Ramstad is co-sponsor of a bill that would repeal the amendment.

International trade rules allows countries to protect their domestic markets. But the World Trade Organization ruled that the Byrd measure violates international law because it punishes offshore companies twice - once by imposing the tariff, making their goods more expensive in the United States, and a second time by giving money to the foreign companies' U.S. competitors.

That finding formally cleared the way for trading partners to retaliate against the United States. This year, the European Union and Canada announced imposition of a 15 percent tariff on a variety of U.S. items, ranging from paper to farm and textile products, which took effect May 1. Early yesterday, Japan followed, with its levies slated to become effective Sept. 1.

The WTO ruling also put the United States on the wrong side of a hot-button international issue, even though the Bush administration has been backing repeal of the Byrd measure.

"We are disappointed" with Japan's decision, said a spokesman for the Office of the United States Trade Representative. The USTR, the government agency responsible for developing and coordinating U.S. international trade policy, was working to get the Byrd amendment repealed "before Japan's action, and we will continue to do so now," he added. "The U.S. is working to comply with its WTO obligations."

The Chicago Tribune is a Tribune Publishing newspaper.

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