The World Trade Organization has authorized Brazil to retaliate against the United States because of what is known as the Byrd Amendment. That piece of legislation makes it possible for US producers to receive part of assessed and collected dumping duties in cases where they bring dumping charges against foreign exporters.
The Byrd Amendment has been in effect since 2000. In 2002 the US collected dumping duties totalling US$ 330 million. In 2003, it is estimated that Brazil paid US$1.5 million in dumping duties just on steel exports to the US. The WTO ruled the amendment illegal in January 2003.
It is not customary to immediately use the right to commercial retaliation in these cases. The right is used to pressure for remedial action – which in this case would be the revocation of the Byrd Amendment, something that is expected to occur shortly.
Back in September, Brazil’s Ministry of Foreign Relations released a note stating that the government will “reserve Brazilian rights in the World Trade Organization (WTO) and hold consultations with other relevant government organs to determine the next steps to be taken by the country in that organization.”
The note was prompted by WTO decision authorizing Brazil and seven other trade partners to apply sanctions against the United States for failing to abolish its anti-dumping laws, which had already been judged illegal by the organization.
“Brazil is very pleased with the outcome of this dispute, since it was confirmed that the so-called ‘Byrd Amendment’ violates the Anti-Dumping and Subsidies and Compensatory Measures Accords, and it keeps other WTO members from adopting measures similar to the American ones,” the note informs.
The Byrd Amendment allows fines received by the United States in dumping cases to be passed along to American export firms. The WTO declared the amendment illegal in 2002.
By way of illustration, it should be observed that anti-dumping and compensatory levies on Brazilian exports amounted to US$ 3,057,908.47 in 2002 and US$ 2,086,983.04 (preliminary figure) in 2003.
In previous years these amounts were considerably larger, and the existence of a WTO decision such as the present one helps discourage the use of such instruments.
Retaliatory measures are authorized only as long as the US continues to disregard the decisions of the Dispute Settlement Body.
The other countries that also obtained the right to apply sanctions against the United States are Canada, Chile, the European Union, India, Japan, South Korea, and Mexico.
Translator: Allen Bennett