Washington, DC, USA, 01 May 2006 – /PRNewswire/ – The European Union has today imposed adjusted counter-balancing measures in response to the continuation of payments by the U.S. government to U.S. companies under the terms of the Byrd Amendment, which has been ruled by the World Trade Organization (WTO) as incompatible with WTO rules.

The annual adjustment is required by the WTO, because the duties are tied to the annual disbursement by the U.S. government. Since the amount paid to U.S. companies from duties collected on European Community products has increased in 2005, the level of retaliation will also increase. From today, 01 May 2006, measures will be set at USD 36.91 million, an increase on the USD 27.81 million applied in 2005.

Eight new products will consequently be added to the list of products subject to the 15% additional import duty. These products are different types of blankets, paper products, photocopying apparatus, and drills. These products are taken from an agreed list.

While the Byrd Amendment issue has been a long-running irritant in the U.S.-European Union (EU) trade relationship, the huge bulk of EU-U.S. trade is trouble-free. The EU has always worked hard to ensure that the Byrd issue does not unnecessarily affect the highly successful wider EU-U.S. trading relationship.

The repeal of the Byrd Amendment contains a transition clause that allows the U.S. government to continue paying anti-dumping and countervailing duties collected on imports made before 01 October 2007 to U.S. companies.

In the United States, such duties are often collected several years after the import took place. This means, in turn, that the Byrd Amendment will remain in operation for a number of years, even after October 2007, even if it has technically been repealed.

Following a complaint by the EU and 10 other WTO members, payments made under the Byrd Amendment have been ruled by the WTO to be injurious to non-U.S. companies. While they continue, the EU and other co-complainants have strong grounds to continue to take counter-balancing measures.

As long as distributions continue, the United States will not be in compliance with WTO rules. Because our counterbalancing measures are tied directly and exclusively to the Byrd payments they will cease immediately the payments cease.

This is not just a question of principle. The U.S. administration has estimated that it will distribute more than USD 2 billion in payments in the next two years.

Background

Since 01 May 2005, an additional import duty of 15% has been applied on paper products, textiles, machinery, and sweet corn originating in the United States (selected from the list notified to the WTO in November 2004).

The WTO award determined that the level of retaliation that may apply is 72% of the amount disbursed to U.S. companies from duties collected on EC products in the most recent distribution. We consequently have a WTO obligation to adjust annually our retaliatory measures, whose level will mirror the fluctuations of the disbursements under the Byrd Amendment. Council Regulation (EC) No 673/2005 which imposed retaliation in the first place on 01 May 2005 delegated competence to the Commission to implement this obligation of annual adjustment.

On 08 February 2006, the United States enacted the Deficit Reduction Act of 2005, which among other provisions, repealed the Byrd Amendment, but allows for a transition period of two years or more.

The repeal will not affect distribution of the anti-dumping and countervailing duties collected on imports made before 01 October 2007. Under U.S. practice, collection of duties does not take place at the time of imports since the duty rate may be revised every year and the revised rate is applied retrospectively to the imports of the previous year. It is only after completion of this so-called administrative review that collection will take place. Collection may also be suspended as a result of on-going litigation. Anti-dumping and countervailing duties are therefore usually collected several years after the import, which means, in turn, that distribution under the Byrd Amendment may continue for several years after 01 October 2007.

The effect for the immediate future can already be quantified. The Budget of the United States' Government for the Fiscal Year 2007 forecasts the next two distributions at USD 249 million (in October 2006) and USD 1.93 billion (in October 2007) respectively.

Source: Delegation of the European Commission to the United States