TRADE WAR THREATENS TO HURT U.S. JOBS
TRADE WAR THREATENS TO HURT U.S. JOBS
2005-05-02 at 12:03:00 pm #9325Trade War threatens to Hurt U.S. JobsWASHINGTON (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 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When the Byrd amendment was not repealed by the end of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.