In their complaint - filed with the global trade agency Thursday and commented on by the EU Foreign Trade Commissioner Pascal Lamy in a statement on Friday - the nine co-sponsors, which also included Australia, Brazil, Chile and Thailand, allege the proposed measures signed into law on Oct. 28 are in breach of global trade rules.
Lamy said in his statement that the legislation, known as the so-called "Byrd amendment" after its sponsor Senator Robert Bird , D-W.Va., "is not a U.S.-EU problem, but a U.S.-rest-of-the-world problem. Our unprecedented joint action will send a very clear signal to the U.S. of the need to repeal legislation that so clearly flies in the face of the letter and the spirit of WTO law."
Lamy said the act is a major concern and can potentially affect all U.S. trading partners.
The measures, claim the nine sponsor countries, would provide a strong incentive for domestic U.S. producers to file or support petitions for anti-dumping and anti-subsidy measures, thereby distorting the application of standing requirements stipulated in WTO accords.
"The distribution of duties to petitioners is a clear incentive to bring cases, it will result in an increase in trade litigation against companies exporting to the United States," Lamy said.
The measures, which could be applied to any sector, are expected to benefit in particular "problematic and protectionist sectors of the U.S. economy, such as steel and textiles," said a senior official from one of the sponsor nations.
"It's a huge issue and it's going to spur many suits," said a Washington-based trade lawyer, who spoke on condition of non-attribution. "The legislation will probably stay in until trading partners raise hell, but it will not go out until Byrd gives the OK, and it might not be taken out."
John Daly, spokesman for U.S. Trade Representative Charlene Barshefsky, asked to comment on the action by the nine powers said: "the administration opposed the (Byrd) amendment because we think it is bad policy, but we are comfortable defending its legitimacy in the WTO."
A senior trade official familiar with the Clinton administration's position said "they were against the amendment from the beginning, but they have been trapped. It has now become law and they have to be loyal to Congress."
As the law does not come into effect until Oct. 2001 the, trade diplomats said the incoming Bush administration may try to get it repealed. In the meantime, the nine aggrieved parties, who filed the request for consultations with the United States, are expected to eventually seek a dispute panel to examine whether the amendment is in line with global rules.
The nine are hopeful the panel will rule before the U.S. law takes effect, thus avoiding being forced to take retaliatory trade measures.
Considering that anything related to anti-dumping and anti-subsidies is always "very politically sensitive," in Congress, we may wait to see what action we can get from Congress before launching panel proceedings, said a senior Japanese official. Other sponsors such as the EU, however, favor an early panel outcome.
"While aware of the current U.S. administration's reservations concerning the legislation, the EU regrets the fact that it was signed into law and calls for its immediate repeal," said the EU's Lamy.
But a number of officials from the sponsor nations reckon that even if a WTO panel ruled that the amendment be removed, it might not be realistic to think that Congress would follow through and implement such a ruling given the sensitivities surrounding the loss of sovereignty debate
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