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 user 2005-05-02 at 12:02:00 pm Views: 50
  • #9313
    Trade War threatens to Hurt U.S. Jobs
    WASHINGTON (April 05) –
    U.S. clothing, paper products and sweet corn will soon be more expensive for
    Europeans. For Canadians, American cigarettes, hogs, oysters and fish will cost
    more. For the U.S., it’s all part of a new trade war that will mean lost sales
    and probably lost jobs.

    Starting Sunday, American exporters of a wide range of
    products will be hit with penalty tariffs of 15 percent levied by Canada and the
    25-nation European Union because of U.S. government payments to American
    companies that have been ruled illegal by the World Trade Organization.

    Given current feelings in Congress, those penalties and
    additional sanctions pending in other countries could stay in effect for a long
    time, despite the Bush administration’s opposition to the law that authorized
    the payments.

    The law at issue, known as the Byrd amendment for its chief
    sponsor, Sen. Robert Byrd, D-W.Va., enjoys broad support in Congress because of
    the millions of dollars it provides to U.S. companies.

    Under the Byrd amendment, passed in October 2000, companies
    that bring successful cases against foreign firms alleging that their
    competitors’ products are being sold in this country at unfairly low prices not
    only get the benefit of higher penalty tariffs placed on the competing products
    but also receive the tariff revenue that the government collects.

    Before the Byrd amendment, the extra border taxes went into
    the government’s coffers instead of being turned over to U.S. companies. Foreign
    companies complain that the new process amounts to double jeopardy. Not only are
    their products being hit with penalty tariffs but their U.S. competitors are
    getting a windfall from those tariffs.

    The European Union and other nations sued the United States
    before the World Trade Organization and won the case in January 2003.

    When the Byrd amendment was not repealed by the end of
    2003, the EU and seven individual countries – Brazil, Canada, Chile, India,
    Japan, Mexico and South Korea – won the right to impose a total of $150 million
    in economic sanctions on the United States.

    That amount is linked to the levels of U.S. tariffs being
    imposed on companies based in the various countries. The amount is designed to
    rise in coming years as the tariff payouts to U.S. companies increase.

    While the EU and Canada are the first countries to move
    ahead to impose sanctions, the other countries are expected to follow their lead
    in coming months to bring maximum pressure on Congress to repeal the law.

    The EU, which the WTO has given the go-ahead to impose
    sanctions of $28 million in the first year, has levied its 15 percent
    retaliatory tariff on various types of clothing from women’s shorts to men’s
    trousers. Also hit by the EU tariffs will be various paper products such as
    writing pads and diaries, plus sweet corn, eyeglass frames and construction

    Canada, authorized by the WTO to impose $14 million in
    sanctions, is levying 15 percent tariffs on cigarettes, oysters, live hogs, monk
    fish and other types of fish.

    The sanctions will drive up the cost of U.S. products in
    the foreign countries and likely reduce sales, which could lead to job cutbacks
    in the United States.

    And the sanctions starting Sunday are only the beginning.
    In addition to the more than $100 million in sanctions for the other parties to
    the WTO suit aside from the EU and Canada, trade experts predict the level of
    payouts to U.S. companies will grow significantly in future years, meaning
    rising sanctions on U.S. products.

    For Canada, penalty duties just on that country’s shipments
    of softwood lumber to the United States are now running at an annual rate of
    more than $1 billion, an amount the U.S. lumber industry is in line to

    The Bush administration has called these payouts an
    “unwarranted subsidy” and has pledged to work with those in Congress who are
    trying to repeal the Byrd amendment. That fight is expected to be led by new
    U.S. Trade Representative Rob Portman, who was sworn into office Friday,
    succeeding Robert Zoellick. But judging from sentiment on the Hill, Portman, a
    former Ohio congressman, will have his work cut out. To show support for the
    Byrd amendment when it was first being attacked in the WTO, a group of 70
    senators sent President Bush a letter supporting the measure.

    Reps. Jim Ramstad, R-Minn., and Clay Shaw, R-Fla., have
    introduced legislation to repeal the Byrd amendment. Adam Peterman, a Ramstad
    aide, said repeal supporters hope to gain the votes of lawmakers who hear from
    companies being hit by the new sanctions.

    But trade experts predict it will be tough to repeal the
    law, given that the government handed out $284.1 million in payments to U.S.
    companies based on the tariffs collected in 2004. That included 44 corporations
    that got more than $1 million each, according to the Consuming Industries Trade
    Action Coalition, one of the groups leading the repeal effort.

    Repeal supporters say it is needed because the Byrd
    amendment is encouraging more companies to file antidumping cases to get
    government payouts, thus driving up the cost of imports for U.S. consumers.

    “This encourages companies to seek antidumping duties
    against their foreign competition,” said Dan Griswold, a trade expert at the
    Cato Institute, a conservative think tank in Washington. “But because members of
    Congress like distributing this revenue, the prospects are pretty dim that
    Congress will do the right thing.