The World Trade Organisation (WTO) yesterday gave the green light for the European Union and seven other WTO members to impose up to $150 million (€123.1 million) a year in sanctions on the US for its failure to repeal a trade law declared illegal by the WTO.
Known as the Byrd amendment, the law requires US customs authorities to distribute the proceeds of anti-dumping and anti-subsidy duties to the companies that initiated the cases.
The ruling by the organisation's arbitrators is certain to fuel anti-WTO sentiment in the US congress and will add to transatlantic trade frictions as the US presidential campaign goes into top gear.
The EU is already applying sanctions to selected US goods in retaliation for the US's failure to alter laws granting companies tax breaks for exports, and disputes are simmering on genetically-modified foods and subsidies to the European Airbus. Since the Byrd amendment was enacted in 2000, about $800 million has been paid out to makers of ball-bearings, steel, candles and pasta, among other products, with $2.35 billion forecast to be disbursed between 2005 and 2009.
The WTO arbitrators said the eight complainants could impose sanctions of up to 72 per cent of the duties on their companies passed on to US rivals. The complainants say this could allow them to levy duties worth up to $150 million in any year.
The European Commission has already drawn up a sanctions list of politically sensitive US products it targeted in the trade dispute over US steel safeguards last year. But Mr Pascal Lamy, EU trade commissioner, said yesterday the EU had not yet decided whether to go ahead with retaliation.
"I hope the US will now take action to remove this measure, thus avoiding the risk of sanctions," he said.
