Euro Clash

Removing tariffs is easy. Breaking down social barriers to trade is hard.

Hewitt is not alone in her criticism. “The bigger challenge to American leadership [in the WTO] comes from inside — not outside — the United States,” warned WTO director-general Supachai Panitchpakdi in a February speech in Washington, D.C. “In America’s current debate about trade, jobs, and globalization, we have heard a lot about the costs of liberalization. We need to be reminded of the advantages of America’s openness and its trade with the world.”

Next month, President Bush may have an opportunity to smooth ruffled feathers when he hosts the annual summit of G8 leaders at Sea Island in Georgia. Four of the G8 nations are European countries, and the EU sits at the table as an unofficial ninth member.

But major trade advances are unlikely in an election year in which American jobs are a key battleground. And although Lamy objected recently to the idea that “the [United States] never moves on trade in an election year,” he also conceded that “we shouldn’t expect much movement after Labor Day, in the high season of U.S. political campaigning.”

“It is evident that we are in an era of what I have called ‘generalized trade fatigue,’” said Lamy, “where the constant pressures and challenges of globalization have the capacity to ‘wear down’ decision-making by governments.” Elections aren’t likely to speed things up.

Tim Reason is a senior writer at CFO.

Dumping Gets the Byrd

In the past few months, the United States has lost several significant trade cases over its own dumping laws. (Dumping is the practice of selling a product at a lower price abroad than in the home market.) Under U.S. and international trade law, countries may retaliate against dumping with tariffs. But some U.S. laws go further.

The Continued Dumping and Subsidy Offset Act — better known as the Byrd Amendment — passed in October 2000, requires the U.S. Treasury to turn over any antidumping tariffs it collects to the U.S. companies that filed the original complaint. The law has resulted in payouts to a wide range of industries, ranging from pasta producers to steelmakers. Last year, the World Trade Organization (WTO) ruled that those payouts amounted to an illegal subsidy, but Congress has refused to change the law. The European Union and seven other countries are seeking authority to retaliate with tariffs equal to the amount of Byrd payouts received by U.S. companies.

The EU won a similar case over another U.S. antidumping law, the so-called 1916 Act, which subjects violators to treble damages. In that case, President Bush urged Congress to repeal the law, but it has yet to do so. In February, the WTO authorized the EU to retaliate if it can prove that European companies have suffered damages.

And the EU isn’t finished. Also in February, it took the first step in initiating a complaint against the United States for “zeroing.” That’s a reference to the U.S. method of calculating how much financial harm is done by dumping. (Under international law, nations seeking to impose tariffs must prove that dumping actually inflicts damage.) The EU says the U.S. method inflates the numbers. Without zeroing, claims the EU, dumping margins in many Byrd Amendment cases would have been minor or even negative.


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