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The World Trade Organization this week is expected to tell nine countries how they can get even with the United States for holding on to a law they say hurts their industries. At issue is the controversial Byrd Amendment, which allows the U.S. government to funnel duties on imported goods to American companies injured by the unfair trade practices of foreign competitors. The WTO said in 2002 that the Byrd Amendment had to go, and later threatened sanctions. So far, however, the U.S. government has refused to act. Now, WTO arbitrators are scheduled to tell some of the biggest U.S. trading partners, including Japan, Australia, and the European Union, the amount and type of sanctions they can impose. Trade lawyers are expecting the arbitrators to reveal the penalties today. The decision may be a test of how seriously the United States takes WTO rulings. Though Congress is considering legislation to repeal or amend the law, the bills haven’t advanced far — and aren’t likely to, supporters and foes of the amendment say. The United States has been slow to comply with previous decisions. In 2003, for instance, the WTO said the European Union could impose $4 billion in sanctions against the United States for a tax provision that unfairly benefited U.S. companies. Congress has yet to repeal the tax law. With the Byrd Amendment, Congress may be settling in for another long haul. The law — officially called the Continued Dumping and Subsidy Offset Act — benefits domestic industries that file and win cases over products that have been unfairly subsidized by foreign governments or that have been “dumped” in the United States. Dumping occurs when a company sells a product at an unfairly low price. Written by Sen. Robert Byrd, D-W.Va., and quietly plugged into a 2000 appropriations bill, the amendment has meant big money for some industries. Last year alone, U.S. companies pocketed $293 million in duties collected from other countries, and $330 million in 2002. The Congressional Budget Office projects that money distributed under the law over the next 10 years will amount to $3.85 billion. “People who think it’s going to disappear are kidding themselves,” says trade lawyer Terence Stewart, who represents the biggest recipient of Byrd Amendment money last year: the Timken Co., a bearings manufacturer that collected more than $92 million. It’s also an election year. The economy and trade have been hot-button issues with voters, and Congress may not be willing to kill a law that means millions for industries in members’ districts. Getting a majority of Congress to react to the WTO’s stance on the Byrd Amendment may depend on the magnitude of the penalties, economists and trade lawyers say. “For the most part, the ball is in the U.S.’s court,” says Daniel Ikenson, a Cato Institute trade policy analyst. But “it’s unlikely that the U.S. will repeal [the law] by the end of the year,” says Ikenson, who favors getting rid of it. ‘NOT NECESSARILY A BLESSING’ Stewart, of the international trade firm Stewart & Stewart, says the Byrd Amendment money isn’t a handout. Though his client, Timken, received the largest amount, it is “not necessarily a blessing.” Instead, “it means you were denied a large amount over several years” through losses to unfair trade, Stewart says. In Timken’s case, the bearings industry established that it was damaged by Japan, Europe, and other countries that have dumped bearings in the United States over the years. Supporters like Stewart think that the WTO dispute panel and appellate body went beyond their authority in denouncing the Byrd Amendment. The rulings are a “classic case of judicial activism,” says Kevin Dempsey, a Dewey Ballantine trade partner. Dempsey, who has represented the domestic steel industry, argues that the WTO authorizes countries to impose duties on imports. Thus, the WTO shouldn’t object to the way the money is spent. But Byrd Amendment opponents say companies have been motivated by the potential of million-dollar payouts to file petitions. The law is “absolutely a contributing factor” for people filing a petition, says Laura Baughman, president of Trade Partnership Worldwide and an economist for the Consuming Industries Trade Action Coalition (CITAC), a group actively seeking to repeal the law. In an anti-dumping case involving the shrimp industry, CITAC alleges that promised Byrd Amendment money was used to entice American shrimpers to join a petition against their foreign competitors. Dewey Ballantine, which represents the U.S. shrimp industry in the case, denies the claim. The Congressional Budget Office, in a report on the Byrd Amendment, said the law provides incentive for more companies to file anti-dumping cases. But others argue that the desire to protect U.S. industry — not greed — is what motivates them to file such cases. They also say pursuing those cases is an arduous process. Filing a petition with the Commerce Department and the U.S. International Trade Commission usually leads to an administrative review and appeals that take several years, says Juliana Cofrancesco, a Howrey Simon Arnold & White trade partner. Says Dempsey: “Nobody files a dumping [case] thinking they’re going to get a jackpot down the road.” Even so, some in Congress want to change the law. In March, Rep. Jim Ramstad, R-Minn., introduced a bill to repeal the Byrd Amendment. Sen. Olympia Snowe, R-Maine, is carrying legislation to divert duties to impacted communities as a whole rather than to individual companies. Neither bill has advanced out of committee. With Congress laying low on the issue, the U.S. government may have to rely on trade diplomacy. It has opened discussions at the WTO to look into whether members can distribute money collected from anti-dumping and countervailing duties. If the issue is resolved in trade talks, legislators may not have to act right now, a congressional staffer says. In the meantime, trade experts are waiting to see what the WTO arbitrators will do. Susan Esserman, who chairs the international department at Steptoe & Johnson, says no one is sure how the WTO will act because the countries involved differ on the appropriate sanctions. “The decision on the retaliation will be complex,” Esserman says, “and may have wide repercussions.”

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