The European Union and Canada have proposed lists of United States products which face tariff retaliation as a result of the United States' maintenance of the Continued Dumping and Subsidy Offset Act of 2000, more commonly known as the "Byrd Amendment".

     The "Byrd Amendment" provides for the distribution of antidumping and countervailing duties collected by United States Customs and Border Protection to domestic firms which petitioned for the antidumping or countervailing duty relief. To date, the United States has distributed tens of millions of dollars' worth of such duty receipts to domestic manufacturers.

     The World Trade Organization (WTO) Dispute Settlement Body (DSB) in 2003 adopted a Panel Report which found the "Byrd Amendment" to violate international trading rules. In August, 2004, a WTO Arbitrator approved an amount of trade retaliation to be imposed by the United States' trading partners in the event the Byrd Amendment was not dismantled. The trade retaliation will be in the form of the suspension of duty concessions on United States products - i.e., the imposition of retaliatory tariffs. Seven countries were authorized to take retaliatory measures against the United States.

     Both the EU and Canada recently announced lists of products which are candidates for retaliatory tariffs in the event the United States does not eliminate the "Byrd Amendment". These governments are requesting public comment concerning which of the identified products should, or should not, be selected for retaliation.

     Although the Byrd Amendment clearly violates United States trade rules, it has proven politically popular with domestic industries and with members of Congress. Since Congressional legislation would be required to abolish the Byrd Amendment, it may not be a quick or simple process to meet the WTO's objections or mollify the United States' affected trading partners.

     Highlights of the EU and Canadian lists of proposed retaliation candidates are as follows:

European Union

     A copy of the EU list of retaliation candidates is attached as Exhibit A .

     The EU's proposed retaliation list includes a wide variety of paper, textile and apparel articles, home furnishings and footwear. It is intended to concentrate its impact on United States industries which are already reeling under pressure from import competition. The decision to target textile and apparel imports just as WTO quota restraints are set to expire is no doubt intended to provide some short-term relief to European textile producers.

Canada

     A copy of Canada's list of retaliation candidates is attached as Exhibit B .

     Canada's retaliation list includes a broad range of agricultural products, including beans, legumes, prepared and preserved vegetables, waters (flavored and unflavored), beer and liquor, and wood and paper products.

Governmental Requests for Comments

     The governments of the EU and Canada are seeking comments concerning which products should, or should not, be selected for retaliation. In the case of the EU, the grievance over the Byrd Amendment is simply another in a long list of trade issues. The Byrd Amendment has special importance for the Canadian government, since the United States currently holds nearly $2 billion in antidumping and countervailing duty deposits in respect of Canadian softwood lumber imports, and has adopted the position that it will refuse to refund them, regardless of the outcome of the softwood lumber trade disputes.

     We stand ready to furnish any additional information or assistance which may be necessary to address these retaliation proposals. Please call if you have any questions.

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Exhibit A

Exhibit B

 

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