U.S. Accused of Flouting Global Trade Rules

The United States imposed duties on Canadian lumber, alleging that Canada subsidizes its industry. NAFTA panels have ruled against the duties five times.
The United States imposed duties on Canadian lumber, alleging that Canada subsidizes its industry. NAFTA panels have ruled against the duties five times. (By Jacques Boissinot -- Associated Press)
By Paul Blustein
Washington Post Staff Writer
Wednesday, October 26, 2005

When it comes to global trade, the United States is starting to act like a scofflaw -- or so its accusers say.

In several recent cases, Washington has ignored the rulings of international trade tribunals or threatened that it will wield its economic power to keep such judgments from being enforced. These actions are evoking outrage among trading partners and arousing criticism that the United States, supposedly the leader in upholding the global trading system, is falling down on its responsibilities.

A few examples:

Although special panels of judges have repeatedly found that U.S. tariffs on Canadian lumber violate the North American Free Trade Agreement, Washington has refused to scrap the tariffs, insisting that the dispute be negotiated. That has so angered Canadian officials that they are threatening to sell the nation's oil and wood to China at the expense of the United States.

In a case in which Brazil won a verdict at the World Trade Organization against U.S. subsidies for cotton farmers, Washington has left the bulk of the subsidies untouched, and it has warned Brazilian officials that pressing their victory could cost their country the right to ship certain goods duty-free into the U.S. market.

The U.S. Congress has failed to change a law concerning the way anti-dumping duties work, despite a WTO ruling that the law violates global trade rules. The law, known as the Byrd Amendment, enables U.S. companies complaining of unfairly cheap foreign competition to receive the duties collected by the government, rather than having the government keep the money.

The result, some experts fret, is an erosion of the United States' moral authority in an area where it has traditionally prided itself on its fidelity to the rules.

"Four or five years ago, the U.S. was very much in the mode of urging other countries to abide by decisions, but the shoe is on the other foot now," said Gary Hufbauer, a scholar at the Institute for International Economics. "The U.S. is on the defensive on a number of these cases."

That could have repercussions when the United States wants other countries to implement commitments, such as China's promises to crack down on piracy of copyrights and patents, said Edward Gresser, a trade specialist at the Progressive Policy Institute.

"If we, the world's biggest trading nation, think we don't have to implement decisions that go against us," said Gresser, "it will create a climate in which it's easier for other countries to feel the same way."

To be sure, many analysts condemn the European Union more harshly than they do the United States concerning developments in another trade arena -- the ongoing global negotiations aimed at lowering trade barriers worldwide. Those talks, known as the Doha round, neared collapse last week after the E.U. failed to follow countries in offering to significantly reduce farm tariffs; a new E.U. proposal is expected Thursday.

And the failures by Washington to implement rulings are relatively few, U.S. officials maintain. "In the overwhelming number of cases, we are in full compliance," said James E. Mendenhall, general counsel at the U.S. Trade Representative's office.

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