The European Union and Canada said yesterday that they will begin imposing punitive duties May 1 on several American exports because the United States has failed to repeal a controversial anti-dumping law that was ruled illegal by the World Trade Organization.
The duties, which would be set at 15 percent, would affect shipments of U.S.-made paper, clothing and machinery to Europe and shipments of swine, cigarettes and oysters to Canada.
The threat steps up pressure on Washington to scrap or at least modify the law, which is known as the Byrd amendment for its chief author, Sen. Robert C. Byrd (D-W.Va.). That law, passed by Congress four years ago, provides that when foreign manufacturers are found to be dumping goods in the U.S. market -- that is, selling at unfairly low prices -- any anti-dumping duties that are imposed can be handed over to the U.S. companies that brought the dumping case, rather than to the Treasury.
It has benefited U.S. firms in industries including steel and pasta, with one of the largest beneficiaries being Timken Co., an Ohio maker of bearings, which collected about $40 million last year.
The law is popular in Congress, but since the WTO ruled it illegal in 2002, the Bush administration has been trying to persuade lawmakers that they must change it. The WTO last September authorized the E.U., Canada and several other nations to impose more than $140 million in duties on U.S. goods.
One possible solution would be giving duties collected under the Byrd law to workers or communities hard hit by import competition, rather than companies. That would presumably bring the law into compliance with the WTO, which said the law now inflicts a double penalty on foreign companies by forcing them to pay anti-dumping duties while rewarding their U.S. rivals.
Yesterday's move comes at a time of tense trade relations between the E.U. and the United States, which are at odds over subsidies to their leading aircraft makers, among other issues.
"We're disappointed that this step is being taken," said Richard Mills, a spokesman for the U.S. trade representative's office, in a statement. "The United States is working to comply with the WTO decision regarding the Byrd Amendment."
Sen. Charles E. Grassley (R-Iowa), chairman of the Senate Finance Committee, also expressed disappointment. "I hope we'll be able to come to a consensus soon on the Byrd amendment that will enable us to avoid continued trade sanctions," he said in a statement.
But E.U. and Canadian officials said they were running out of patience. "Retaliation is not our preferred option, but it is a necessary action," said Jim Peterson, Canada's trade minister, in a statement. "International trade rules must be respected."