Friday, April 1, 2005
The European Union (EU) and Canada announced they will impose a 15% tariff on some United States (U.S.) imports. Permission for the sanctions was granted by the World Trade Organization (WTO) due to the U.S. maintaining a law known as the Byrd Amendment, which gives its companies billions of dollars collected from foreign rivals.
U.S. Congress failed to repeal the four-year-old Byrd Amendment ruled illegal by the WTO in September 2002. The WTO gave the EU and Canada, in addition to Brazil, Japan, India, South Korea and Mexico the right to impose retaliatory tariffs on November 27. The tariffs will take effect May 1.
The retaliatory tariffs will largely affect U.S. paper, clothing and machinery for the EU and live swine, cigarettes and oysters for Canada.
In the 2004 fiscal year, U.S. based Timken received $40 million, and Lancaster Colony Corp. received about $26 million. The EU says that total payouts will rise as high as $1.6 billion in the fiscal year of 2005 unless the law is repealed. The U.S. Congressional Budget Office estimated that payouts for the fiscal year of 2006 will reach $1.15 billion.
The European tariffs will collect near $26 million, while the Canadian tariffs will amount to near $11.6 million.
The European Commission, in a statement, said the tariffs were caused by “the continuing failure of the U.S. to bring its legislation into conformity with its international obligations.”
According to Canadian Trade Minister Jim Peterson, the tariffs are “a strong message that we are all sending to the U.S. that international rule, those of the WTO, must be respected. We just cannot allow the U.S. to illegally disburse funds that are collected.”
A spokesman for the U.S. Trade Representative, Richard Mills, said “We’re disappointed that this step is being taken. The U.S. is working to comply with the WTO decision.”
Other countries such as Japan and Mexico are considering a similar move.
President Bush has called for congress to repeal the Byrd Amendment since February.