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.
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