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The eBearing News
August 19, 2005
Japan Sets Retaliatory Duties
on U.S. Bearings and Steel
copyright © 2005 eBearing Inc.
Japan, as threatened, has put in place a series of countervailing / retaliatory import
duties on U.S. bearings and steel, effective September 1, 2005. This marks Japan's first-ever
use of retaliatory duties against any trading partner.
Making the official announcement, Shoichi Nakagawa -- head of the Ministry of Economy, Trade and
Industry (METI) -- said the cabinet passed the new duties as recommended by the Finance Ministry, but denied
the retaliation would have any lasting impact on U.S. - Japanese trade relations.
read the METI press release here
Chief Cabinet Secretary, Hiroyuki Hosoda, said: "We are just following the rules -- we should not
be concerned about whether this will hurt bilateral relations." Prime Minister Junichiro Koisumi
said, "We are always keeping in mind that one conflict will not affect overall relations. So we do
not need to make an issue out of this."
The duties come in response to U.S. failure to repeal the "Byrd Amendment," or Continued
Dumping and Subsidy Offset Act (CDSOA), enacted in 2000 and subsequently ruled illegal by the World Trade
Organization.
Japan has established 15% retaliatory duties on seven types of ball and roller bearings:
HS code 848210000 - Ball bearings
HS code 848220000 - Tapered roller bearings, including cone and tapered roller assemblies
HS code 848240000 - Needle roller bearings
HS code 848250000 - Other cylindrical roller bearings
HS code 848280000 - Roller bearings, including combined ball/roller bearings,
other than subheadings Nos. 8482.20 to 8482.50
HS code 848291000 - Balls, needles and rollers of ball or roller bearings
HS code 848299000 - Parts of ball or roller bearings, other than balls, needles and rollers
along with three types of steel, navigational instruments,
machinery accessories, printing machines, forklifts, and industrial belting.
Through its continued support of the Byrd Amendment and by failing to repeal it, the U.S. Congress
has now opened U.S. manufacturers and exporters to trade retaliation allowed by the WTO.
The WTO ruled the Byrd Amendment illegal back in 1993 because it instructs Customs and Homeland Security to
set aside import duties and tariffs collected, then pay out that money to the companies which filed
the trade complaints which led to those duties and tariffs. Duties accumulate with Customs over the entire
fiscal year, then are paid out to the companies based on what they claim as damages sustained during that year.
In itself, said the WTO, levying duties and tariffs is a common practice and is not illegal. What is illegal about
the Byrd Amendment is that it pays out those duties directly to the companies filing the lawsuits,
which amounts to a de facto direct-pay government subsidy of those claimants.
In fact, the WTO pointed out, the Byrd Amendment punishes non-U.S. companies twice. First, by imposing a
tariff which makes their goods more expensive in the U.S. market. Second, by paying out those tariffs
directly to the U.S. competitors as an after-tax subsidy bonus.
That is exactly what Senator Robert Byrd said he intended from
the beginning, to put unvarnished protectionist measures in place to protect his constituency, specifically
the at-the-time hard-hit steel industry. Mr. Byrd's office calculated and believed, mistakenly, it now
turns out, the duty kickbacks would bring enough money back keep the then-ailing steel industry
from collapsing. In the end, market forces, not political protectionism, saved the U.S. steel industry.
Before the Byrd Amendment, all duties and tariffs simply went into the general fund.
In total, WTO allows Japan's duties to top out at ¥ 56.8 billion (USD $52 million), calculated
based on fiscal year 2004 disbursements made in December 2004.
Japan's move follows similar findings and 15% retaliatory duty moves by the European Union and Canada
which went into effect May 1, 2005. Mexico has scheduled retaliatory duties totaling $21 million,
from a 30% tariff on various dairy products.
duties Canada's retaliation centers on various animals and cigarettes. Brazil, Chile, India and Korea are also
eligible under WTO rulings to impose sanctions against the U.S. but have not yet done so.
read Canada's official decision and retaliation schedule here
The Office of the U.S. Trade Representative said in a statement that they were "disappointed" with
Japan's action. The USTR said it was legitimately working to get the Byrd Amendment
repealed "before Japan's action, and we will continue to do so now. The US. is working to comply
with its WTO obligations."
Mr. Nakagawa said, "The USTR has indicated that the United States needs to follow the WTO decision.
The Japanese government has decided that there is a need to more effectively pressure the U.S. by
implementing retaliatory measures and promoting the repeal of the amendment in Congress,"
Other trade representatives also reacted with anger and disbelief at the USTR statement. In WTO hearings,
they point out, the U.S. continues to claim it is working to repeal the Byrd Amendment when in fact
there has been no progress and no serious effort is ongoing. They also point out that the
U.S. has had a very long time to address the Byrd Amendment repeal -- the WTO's deadline for repeal
was back in December 31, 2003.
The largest single beneficiary of the Byrd Amendment has been the Timken Company, since 2000
reaping more than $200 million in payouts. Timken is scheduled for a fifth round at the end of 2005 unless
the CDSOA is repealed, which remains unlikely. The tariffs to
be paid out in December 2005 have already been collected, as the government fiscal year ends July 1, 2005.
A bill sponsored by Reps. Jim Ramstad (R-MN) and Clay Shaw (R-FL), H.R. 1121, would repeal the
Byrd Amendment (section 754 of the Tariff Act of 1930). It was introduced March 3 but immediately stalled
in the House Ways and Means committee, where it remains today.
read the Summary and Status of 109th Congress HR 1121
Japan has also joined other countries in filing complaints with the WTO over the U.S. use of "zeroing" to
calculate dumping and dumping duty margins. In its complaint, Japan specifically mentions its bearing
industry as being particularly hard-hit by the misuse of the zeroing method. Zeroing has also
been ruled illegal by the WTO; all other WTO members have agreed to stop using the method.
article: Japan complains U.S. zeroing unfairly impacts its bearing industry
Background:
eBearing's section dedicated to the CDSOA
article: WTO rules U.S. open to retaliation by trading partners over CDSOA
article: Countries list goods subject to CDSOA retaliatory tariffs
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- by Bruce A. Carr
from individual research,
tips and commercial sources.
Bruce Carr edited this content.
Copyrighted material; unauthorized reproduction prohibited.
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eBearing.com ... for everything that moves™
Entire contents Copyright © 1999-2011, eBearing Inc. All rights reserved.
eBearing.com and "... for everything that moves" are registered trademarks of eBearing Inc.
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