Current Retaliatory Actions

BYRD AMENDMENT

On October 28th, 2000, the United States Congress passed the Continued Dumping and Subsidy Offset Act of 2000 (a.k.a. the Byrd Amendment), which amends Title VII of the Tariff Act of 1930. The Byrd Amendment redistributes on an annual basis anti-dumping duties, countervailing duties or any other finding under the Antidumping Act of 1921 to affected products who were petitioners in the original antidumping /countervailing duties cases. Eleven WTO members (Australia, Brazil, Canada, Chile, the European Community (EC), India, Indonesia, Mexico, Japan, South Korea, and Thailand) took the United States to the WTO to dispute the Byrd Amendment. The WTO Dispute Settlement Body panel (and the Appellate body) found the United States' Byrd Amendment incompliant in January of 2003 and requested that the United States bring its law into compliance by the end of the year (December 27th, 2003).

The United States did not repeal the amendment by the WTO deadline. Brazil, Canada, Chile, the EU, India, Japan, Mexico and South Korea requested and were granted authorization from the WTO to suspend tariff concessions and other obligations against the United States. Canada and the EU began retaliating against the United States on May 1st 2005, imposing an additional 15 percent duty on U.S. products. There were 18 products on the EU list and eight products on the Canadian list. Mexico joined Canada and the EU on August 18th 2005, levying addition duties that ranged from 9 to 30 percent on 10 products from the United States. On September 1st, 2005, Japan began to retaliate with additional 15 percent duties on 15 products.

FOREIGN SALES CORPORATION

The European Union has challenged the consistency of a provision in U.S. tax code that allowed U.S. companies to a receive a reduction in U.S. federal income taxes for profits derived from exports through an offshore subsidiary, also known as a Foreign Sales Corporation (FSC). In 1997, the EU requested consultations with the United States through the WTO in an attempt to resolve the disputed issue bilaterally. Failing to reach an agreement, panel hearings on the issue were held and appeals were made by the United States. In the end, the U.S. tax provision was found to be inconsistent with U.S. WTO obligations and the United States would have to act to bring its law back into compliance with the WTO or face retaliation. In March 2004, the EU began to retaliate against 1,608 products from the Untied States. Additional duties initially were set at 5 percent and were scheduled to rise one percent each month until March 2005, reaching a maximum level of 17 percent.

In October of 2004, the U.S. Congress passed the American Jobs Creation Act that included a repeal of the special tax provisions for FSC. In response to the passage of this bill, the EU suspended sanctions levied against a group of U.S export products at the end of December 2004. By the time the EU lifted sanctions, 1,608 U.S. export products were being subject to 14 percent additional duties. Upon addition review of the Jobs Act, the EU contends that the transitional mechanism built into the repeal allows some U.S. companies to continue to benefit from the tax treatment for a certain amount of time. A WTO panel review of the Jobs Act repeal found that the JOBS act did not fully bring the United States into compliance. In addition, the panel reaffirmed the original dispute settlement body recommendations and rulings from in 2000 and compliance proceedings from 2002. Based on the panel's ruling, the EU could reinstate additional duties of 14 percent on [a final list of 1,383] U.S. products within 60 days of the panel ruling or on January 1st, 2006, whichever date is later. On November 21st, 2005, the U.S. government appealed the panel ruling on the consistency of the Jobs Act.

Recently Closed Cases

Nothing to report at this time.