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The eBearing News
September 2, 2004
WTO Rules U.S. Now Open to
Sanctions for CDSOA / Byrd Amendment
copyright © 2004 eBearing Inc.
The World Trade Organization's Dispute Settlement Body has ruled, as expected, that the 25-nation European Union and
seven other countries may now hit the United States with massive trade sanctions. The sanctions are
available in response to continued
U.S. failure to repeal or properly modify the Continued Dumping and
Subsidy Offset Act of 2000 (CDSOA or "Byrd Amendment"). The WTO has repeatedly found the CDSOA
illegal on a variety of grounds; orders to modify or repeal it have gone unheeded by Congress.
Details of the CDSOA / Byrd Amendment and WTO complaints are complex,
but eBearing maintains a section dedicated to the legislation here, including
timelines for WTO action, other country and U.S. activities:
eBearing's section on the CDSOA / Byrd Amendment
In essence, the CDSOA forces U.S. customs to route all dumping and countervailing duties paid
by certain industries into escrow accounts. At the end of each government fiscal year, the money in those
accounts is paid out by U.S. Customs to successful complainants in dumping duty cases.
Complainants to the WTO said the CDSOA amounts to an unfair "double dip" for U.S. manufacturers
because it protects them with higher prices and tariffs while later on awarding them a cash
payout from those same funds.
Although it was originally pushed as a way to support the U.S. steel manufacturing industry, by
far the CDSOA's largest beneficiaries have been two bearing manufacturers -- Timken and Torrington. In total,
the two companies have received well over $310 million since payouts first began in December 2001.
Put in perspective, the average complainant's CDSOA payout is $165,000.
The only other bearing manufacturers to receive a payouts under the CDSOA have been McGill
(since 1990, a division of Emerson Power Transmission Manufacturing) and Pacamor Kubar.
In December 2003, McGill received $1.6 million, the 12th largest individual payout last year.
Kubar (Pacamor Kubar Bearing Inc.) netted received approximately $780,000 in 2003, after having
to refund the government approximately $125,000 for overpayments from 2001.
L&S Bearing remains on the government eligibility list, but has been defunct for several years.
Bearing manufacturers (Timken, Torrington, McGill and Pacamor) received over $112 million in CDSOA
payouts in 2003. The entire U.S. steel industry received a combined total of only $34 million in 2003.
Crawfish farmers were third on the list at $9.7 million, followed by canned pineapple at $5.7 million
and polyester staple fiber producers at $4.1 million.
International trade experts told eBearing they believe this latest WTO action truly marks the end for the
CDSOA, and the U.S. must now begin an honest move toward repealing it or face retaliatory tariffs and
duties from its largest trading partners.
Total sanctions approved by the WTO are up to 72% of the amounts received by U.S. firms under the
CDSOA. Every country is different, but for the EU, this means it could levy approximately $150 million in
punitive duties on U.S. goods. Japan is another big winner, as U.S. imports match its own exports to where
it could hit like products immediately with up to $81 million in penalties.
EU Trade Commissioner Pascal Lamy said, "The Byrd Amendment has raised widespread concerns from the outset
as evidenced by the large number of complainants in this case. Trade defense instruments are a legitimate
tool, but they have to follow WTO rules. It is clear that the Byrd Amendment is a WTO-incompatible response
to dumping and subsidization and must therefore go. I hope the US will now take action to remove this
measure, thus avoiding the risk of sanction."
Tokyo's Ministry of Foreign Affairs said, "Japan, in cooperation with the co-complainants, will again lodge with
the WTO an application for retaliatory measures as early as this autumn."
Joint Press Statement by
Brazil, Canada, Chile, the European Union, India, Japan, Korea,
and Mexico
United States Trade Representative Spokesman, Christopher Padilla, issued a relatively defiant -- given
that all eight WTO decisions have gone strongly against the CDSOA -- official
reaction to the WTO's rulings. He said, "The United States will comply with its WTO obligations, and the
administration will work closely with Congress to do so in a way that supports American jobs and
American workers."
Spokesman Padilla's statement
The 25-nation EU has already drawn up a list of products which it intends to hit with punitive tariffs, and
bearings are likely to be at or near the top of the list. This could spell trouble for U.S. bearing manufacturers
and exporters if those three dozen key trading partners hit bearings with tariffs to the same extent their
bearings have been targeted by U.S. tariffs.
Most of the participants have indicated they are resigned to doing nothing about sanctions until after the
U.S. Presidential elections. "With elections coming and its dockets full, Congress will not do anything about
the CDSOA; it will have to wait until after the elections," pointed out one EU participant.
Before any retaliatory actions can be taken, the countries must go back to the WTO Dispute Settlement Board
and request approval for their specifically targeted retaliatory trade arrangement.
Australia, Thailand and Indonesia, all of which joined the original suit later, have said they will
give the United States until the end of 2004 to repeal or change the CDSOA before pursuing sanctions.
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- by Bruce A. Carr
from individual research,
tips and commercial sources.
Copyrighted material; unauthorized reproduction prohibited.
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Entire contents Copyright © 1999-2010, eBearing Inc. All rights reserved.
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