EU Welcomes Repeal Of Byrd Amendment

by Ulrika Lomas, for LawAndTax-News.com, Brussels

07 February 2006

The European Commission announced this week that it welcomed the passage on February 1 of the US Deficit Reduction Act 2005, which among other provisions repeals the Continued Dumping and Subsidy Offset Act, more commonly known as the 'Byrd Amendment'.

The Deficit Reduction Act will enter into force once the President signs it into law.

The Byrd Amendment has been a persistent source of tension between the United States and some of its main trading partners, and provides that proceeds from anti-dumping and countervailing duties shall be paid to the US companies responsible for bringing the case at the origin of the measure.

The EU and 10 other WTO members (Australia, Brazil, Canada, Chile, India, Indonesia, Japan, Korea, Mexico and Thailand) brought a complaint before the WTO dispute settlement system on the matter. In January 2003, the WTO ruled the Act as an impermissible response to dumping and subsidisation, thus upholding the core of the complainants' claims. The United States had until 27 December 2003 to comply with the WTO ruling, but failed to do so.

Responding to the US' perceived inaction on the matter, the EU applied retaliatory measures in the form of a 15% additional import duty applicable since 1 May 2005 on a range of US products, including paper and textile products, machinery and sweet corn. Three other WTO members have also applied retaliation. Brazil, Chile, India and Korea have also completed all required steps in the WTO allowing them to apply retaliation.

Despite expressing pleasure at the passage of the Deficit Reduction Act, the European Commission also stated that it regrets that repeal of the Byrd Amendment will not be effective immediately.

Under a transition clause, duties imposed on goods imported into the United States up to 30 September 2007 will still be distributed after their collection, which in turn, under US practice, can take place several years after the import.

That means, according to the EC, that distribution of collected anti-dumping and anti-subsidy duties to US companies will continue to distort the conditions of competition on the US market at the expense of imported goods for a number of years.

EU Trade Commissioner Peter Mandelson commented:

"I welcome the fact that the US Congress has chosen to bring US law into compliance with its international obligations. I think that this is a constructive step, although I regret that the US has chosen to provide a transition period rather than ending these payments at once."

The Commission will carefully review the details of the compromise reached in Congress and its implications for EU companies. In so doing, the EU will work in close coordination with the other complainants.

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