Japan Threatens Retaliatory Tariffs Against US Imports Over Byrd Amendment

by Mary Swire, Tax-News.com, Hong Kong

01 August 2005

The Japanese government is currently considering whether to impose retaliatory tariffs on certain imports from the United States in response to US anti-dumping laws that penalise foreign firms and provide subsidies to domestic companies.

Under the Continued Dumping and Subsidy Offset Act of 2000, also known as the Byrd amendment, overseas firms which sell their products at below cost price in the US can be fined by the government, with the money going to the US firm or firms which initially made the anti-dumping complaint.

The European Union, Brazil, Canada, Chile, India, Mexico, and South Korea have also been arguing for several years that such a regime permits illegal subsidies for the industries in question, and is therefore incompatible with WTO rules. The Organisation itself came out in support of this view in 2002, ruling the Byrd amendment illegal, and giving the US government until December 2003 to repeal the measure.

In response to a lack of action on the part of the US Congress to overturn the Byrd amendment, the European Commission agreed in March to the imposition of a 15% additional duty on US exports including paper, textile and farm products. Canada also recently agreed to impose the 15% tax on a range of US exports.

According to a report in the Japan Times, Tokyo is expected to apply tariffs on about 10 products, which would be hiked by about 15%. It is thought that steel products imported from the United States will be the first target of the Japanese government. A Finance Ministry committee will reportedly make a formal decision on the matter on August 1.

If the ministry decides to go ahead with the retaliatory tariffs, it will mark the first time that Japan has acted against the US in a trade dispute. Despite fears in Japan that the move could damage bilateral relations, Chief Cabinet Secretary, Hiroyuki Hosoda remarked on Thursday that it is "common sense" to follow the procedure. It has also been pointed out by some in Japan that President Bush supports the repeal of the Byrd amendment.

"We're just following the rules - we shouldn't be concerned about whether this will hurt bilateral relations," noted Hosoda.

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