A WTO panel report has concluded that the US Continued Dumping and Subsidy Offset Act (the so-called ‘Byrd amendment’) is incompatible with WTO rules.
The Byrd Amendment, known as the Continued Dumping and Subsidy Offset Act of October 28 2000, directs the US Government to pay anti-dumping and anti-subsidy duties to domestic US producers who filed petitions in the first place.
These companies are entitled to receive payments to cover certain expenses (such as investment in manufacturing facilities and acquisition of technology) incurred after the imposition of the anti-dumping measures. In the first annual distribution in January 2002, almost $207 million dollars were distributed, mostly to steel producers; the next distribution is scheduled for November 2002.
This law immediately raised concerns among WTO members.
Hence, a panel was formed comprising eleven WTO members and six other third parties who have just issued a report that confirms that the US law is an illegal response to dumping and subsidisation.
The panel say that the Byrd Amendment constitutes ‘a remedy in addition to the imposition of an anti-dumping or countervailing duty and ‘this remedy is not envisaged in the WTO legislation’.
The payments to the US companies flow automatically once the constituent elements of dumping or subsidisation have been established. They confer a competitive advantage to the domestic industry which may be eliminated only if dumping or subsidisation has first ceased. They also create an incentive to file and support petitions since payments are limited to domestic producers who have supported the petition.
Because of this effect, the US law was also found inconsistent with the WTO provisions which require the investigating authorities to determine if the supporters of a petition represent a certain percentage of the total domestic production before initiating an investigation. These provisions were introduced to ensure that support is not just assumed (as in the pre-WTO US legislation) but actually exists, and reflects an industry-wide concern at dumping or subsidisation.
The Panel has confirmed the WTO inconsistency of the US law and has recommended that the US repeal the Byrd amendment.
EU Trade Commissioner Lamy said, ‘I am very pleased that the panel has confirmed the views of the EU and ten other co-complainants that the Byrd amendment is in breach of the US obligations under the WTO. I strongly hope that, in view of the clear condemnation of the legislation itself and the very broad interests affected, the US will promptly repeal the Byrd amendment as recommended by the panel.’