WTO Dispute Settlement

European Commission > EU and the world > External Trade

UPDATED 04-07

Overview - Cases involving the EU EU & WTO WTO Dispute Settlement EU AND GLOBAL TRADE EU publishes revised smart sanctions to counter US Byrd SECTORAL ISSUES Amendment Brussels, 17 April 2007 BILATERAL TRADE RELATIONS RESPECTING THE RULES The EU has published in the Official Journal revised levels of "smart sanctions" on US Dispute settlement products to respond to the US failure to repeal the Byrd Amendment despite a ruling by the WTO. The sanctions are linked to the amounts distributed to the US industry under the Byrd Trade Barriers Amendment and will therefore automatically stop when the US stops those distributions and Regulation fully comply with its WTO obligations. Anti-dumping The sanction takes the form of a 15% additional duty. The overall retaliation levels and products Anti-subsidy targeted are revised annually to reflect disbursements from the previous year. Revised levels will come Safeguards into force on 1 May 2007.

Injurious Pricing Instrument z The level of retaliation will increase in 2007 to US$ 81.19 million from the US$ 36.91 million applied since 1 May 2006. This is a direct reflection of an equivalent rise in payments to US TDI-Enlargement companies under the terms of the Byrd Amendment in 2006.

TDI-Small & z 32 new products will be added to the list of products subject to the 15% additional import Medium-sized duty. These products are different types of paper products, furniture of plastics, textile Enterprises products, pens, footwear and mobile homes. These products were selected automatically from a reserve list adopted in the same Council regulation that imposed sanctions on 1 May 2005. Monitoring of third country commercial Defence Actions In total, more than US$ 380 million have already been distributed under the Byrd Amendment in 2006. US$ 113 million of this total are duties collected on EU products and paid to US competitors.

Background

The Continued Dumping and Subsidy Offset Act (CDSOA or the so-called "Byrd Amendment"), signed into law in October 2000, provides that proceeds from anti-dumping and countervailing duties shall be paid to the US companies responsible for bringing the case at the origin of the measure. The EU and 10 other WTO members (Australia, Brazil, Canada, Chile, India, Indonesia, Japan, Korea, Mexico and Thailand) brought a complaint to the WTO dispute settlement system against this system in 2001. In January 2003, the WTO ruled the Act as an impermissible response to dumping and subsidisation, effectively applying a double penalty to EU exporters: taxing their imports and then passing the proceeds to their competitors.

Following US failure to repeal the measure, the EU, Mexico and Canada applied annual retaliatory measures.

On 8 February 2006, the United States enacted the Deficit Reduction Act of 2005, which among other provisions, repeal the Byrd Amendment but allows for a transition period. The repeal will not affect distribution of the anti-dumping and countervailing duties collected on imports made before 1 October 2007, which, as collection of duties in the US does not take place at the time of imports but several years after the import, means, in turn, that distribution under the Byrd Amendment may continue for several years after 1 October 2007. The Congressional Budget Office foresees that the repeal of the Byrd Amendment will not produce effects before 1 October 2009.

EU sanctions were imposed on 1 May 2005 and are revised every year as they are directly tied to US disbursements in the most recent annual distribution under the Byrd Amendment. EU sanctions will therefore continue until disbursements cease and phase out as the Byrd Amendment phases out.